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IFRS vs Indian GAAP | Top Differences You Must Know! - YouTube
Channel: WallStreetMojo
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hello everyone hi welcome to the channel
of WallStreetmojo watch the video
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clicking the bell icon friends today we're
going to learn a concept which is known
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IFRS versus Indian gaap now Indian
gap has also transformed themselves to
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the international standards which they
call it as India's so you can say that
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you know Indian gaap is has almost
converged themselves to IFRS but
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there are some cow out sand carvings
which is basically some of the
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differences in some of the similarities
which they have created so again I would
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say yeah Indian gap has re-transform
themselves into ifrs but not
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exactly what it is so let's learn the
difference I mean if you are just
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starting out on in accounting it would
be very difficult for you to understand
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the difference between IFRS as an
Indian gaap you know the full form of
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IFRS is international financial
reporting standard this is basically the
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full form of IFRS now it was prepared
and updated by IASB that is the
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International Accounting standard board
it is basically a non-profit and
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independent organization so IFRS as is
used in inclusion of 210 countries
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around the globe
and it is one of the most popular
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accounting standard on the other hand if
you see the Indian gaap if you see the
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Indian gaap
well it is a set of the accounting
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standard that are specifically designed
for the Indian context alright and you
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have standards for GAAP that is he
generally accepted accounting principles
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so most income means follow the gaap
while preparing their accounting records
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so when a company follows IFRS
it needs to provide a disclosure in the
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form of unknown that you know it's it's
complying with the IFRS but for
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Indian gaap the disclosure of the
statement isn't actually mandatory in in
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in that scenario so you can say that
when a company is say to follow the
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Indian gaap it's assumed that they are
complying with the Indian gaap to portray
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the true and the fair view of the
financial affairs now let's understand
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the difference between IFRS as an
Indian gap with the help of the
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infographics the first and the foremost
difference is the meaning of the
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abbreviation IFRS is what we just
learned International Financial
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Reporting Standards so let's break this
it is followed in 112 countries it is
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basically used for interpreting your
financial statement with some set
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shutter calls and to report such
financial those are the standards that
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have been prepared Indian gaap is
basically the Indian version of
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generally accepted principle nowadays it
is known as the end yes
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it's called as the India's the second
point of difference who has exactly
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developed this the IFRS is developed by
the International Accounting Standards
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Board that is known as the IASB but when
we talk about the Indian gaap it has been
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prepared by the Ministry of the
Corporate Affairs who also handles the
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Companies Act 2013 so this are the two
bodies who have actually developed and
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they have tried to integrate all these
standards are in the most efficient
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manner the third is the disclosure if
you see for the IFRS is a company
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that is complying with IFRS needs to
disclose a note that that their
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financial statement complies with IFRS
us we just learned over in my excel
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sheet that for IFRS you need to show on
note shore disclosure but in Indian GAAP
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it's not mandatory when a company say to
follow an Indian gap it is assumed that
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it is complying
a true and fair view of the financial
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effect so there is no compliance or
there is no mandatory thing in Indian
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GAAP to actually disclose that you are
following the Indian gaap so this is the
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disclosure part of the difference now
let's see who exactly adopts or who or
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adopted by whom I mean see companies in
110 countries around the globe have
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adopted the IFRS so that is a really
big number in itself because in when we
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are talking in terms of countries as you
can see more and more countries also
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making the shift to IFRS because it is
actually a set standard which is quite
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efficient enough to report your
financial statement in the most possible
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way that the users can interpret and the
Indian gaap is only adopted by the Indian
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company so this is like you know
standardized form that has been prepared
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for the inning gap or for the Indian
companies itself the Indian gap is
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prepared so that's the big difference
now how to adopt it for the first time
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see IFRS want towards the clear
instruction on how to adopt the IFRS
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is for the first time this is the
standard IFRS number one is a
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standard an Indian gaap does not give any clear instructions of the first time
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adoption so there is no a set of
protocols that they have defined in
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Indian gaap that you know what should be done for the first time or the the
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people who have just started with the
inception level so that's the difference
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now the usage of currencies in the
presentation if you talk about IFRS when
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the financial statements are not
presented in the functional currency
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which is the original currency then the
assets in the a parties of the balance
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sheets are transferred or transmitted by
the exchange rate okay so you will be
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converting all those number if you are
not showing in the functional currency
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then you will be converting that into
that currency which has been used by you
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but in case of the Indian gaap there is
no question of using exchange rate
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because asset it has been followed for
by only the Indian companies it the
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Indian gap is used by only the Indian
companies in itself so there is no point
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of a currency over here
now this is called the CFS the
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consolidated financial statement let me
make you understand what kind of
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financial statements are there is called
the standalone and there is another
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thing that's called consolidated
financial statement right so standalone
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is basically from the word itself you
can make out that you know if you have a
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company which is just a subsidiary or
let's say which is one segment so you
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are reporting them as one single
financial statement but over here if you
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have let's say two subsidiary and let's
say you have a four tooth or let's say
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three jv's that is a joint ventures you
have to associate companies then you'll
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and and there is one holding company
because if you without one holding
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company this three can't be possible
right so when you combine all of this
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you get a consolidated financial
statement so this is a standalone
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reporting and this is the consolidation
of all this so that's the difference now
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if we talk about the IFRS if the
companies don't come under the exemption
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criteria mention in IS 27 the
companies need to prepare the
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consolidated financial statements so
there is a protocol the rule that has
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been or the standard that provides in is
27 in peritonitis say that if you are
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not covered within the exemption then
you actually need to prepare the
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consolidated financial statement and
there are some set of criteria
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which defines the exemption for not
reporting in terms of the CFS the
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consolidated financial statement is
prepared basically the financial
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statement the individual that is a
standalone financial statement and there
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is no requirement of preparing the
consolidated statements so it is
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actually discretionary now what
financial statement needs to be prepared
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so that's the 8 point what are the
financial statements that needs to be
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prepared in IFRS as the company follows
needs to prepare the balance sheet
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income statement and the which is also
known as the comprehensive income so
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remember one thing there are different
types of
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statements that we prepare the balance
sheet which everyone knows there is one
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income statement and there is one more
thing that's called the cash flow
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statement
so in Indian companies following Indian
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GAAP needs to prepare the balance sheet
profit and loss account and the cash
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flow statement so the one thing which is
not over here in the Indian GAAP is the
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cash flow statement I hope you have got
a clear idea of difference between the
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IFRS in the Indian GAAP so that's it for
this particular topic if you have
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learned and enjoyed watching this video
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