International Financial

Reporting Standards(IFRS)
vs.
Generally Accepted
Accounting Standards
(GAAP)

presented by Group No. 5

(Roll nos.2,4,12,16,17,26,44,45,54)
13th Aug 2014
What Is IFRS, Indian
GAAP & US GAAP?
International Financial Reporting Standards(IFRS)

• An independent, non- profit organization

• A set of international accounting standards.
• States how particular types of transactions and other
events should be reported in financial statements.
• Issued by the International Accounting Standards Board
(IASB).
• progressively replacing the many different national
accounting standards.
• Why? businesses are crossing their national
boundaries,promoting the synchronization of accounting
standards across the globe
Advantges & Disadvantages

• Unified set of accounting • Not being rule based, it

and reporting standards may develop challenges at
• To build a single global certain stages of
financial reporting implementation.
language.
• High quality, transparent,
understandable, globally
enforceable
 Generally Accepted Accounting
Principles (GAAP)
• Common set of accounting principles, standards and
procedures that companies use to compile their
financial statements.
• GAAP are a combination of authoritative standards
(set by policy boards)
• Commonly accepted ways of recording and reporting
accounting information.
 GAAP
What is INDIAN GAAP?
• a set of accounting
standards.
• every company operating in
India has to follow when
reporting its financial results
• ICAI is the body in India
that has set the Accounting
standards(Indian
Accounting Standards)
What is US GAAP?
• US has its own set of
accounting Standards
termed as US GAAP
• a non-US company when
presenting its financial
results in US has to follow
US GAAP
INDIAN GAAP
VS
US GAAP
 TOPIC IFRS INDIAN GAAP U.S. GAAP

INCOME STATEMENT Does not prescribe a Does not prescribe a As a single step or multiple
standard format although standard format but certain step format.
expenditure is presented in income ad expenditure items Expenditures are presented
one of two formats (function are disclosed in accordance by functions.
or nature). Certain minimum with accounting standards SEC registrants should
items are presented on face and companies act. follow SEC regulations
of income statement. Industry specific formats are
prescribed by industry
regulations.
 REVENUE RECOGNITION

• IFRS has two primary and three revenue focused

standard interpretation laid without an exception to
specific industries unlike US GAAP where the guidance
is industry specific.
• absence of standard guidelines in Indian GAAP allows
varied practices to be followed by corporate which may
not comply with IFRS and the US GAAP
Topics IFRS Indian GAAP US GAAP

Revenue Revenue is Several Principally more

recognized on differences in or less similar to
Recognition various criteria detail even in the IFRS. US GAAP
such as when risk, criteria defined for has more than
rewards & control revenue hundred
have been standards on
transferred to revenue &
buyers & revenue industry specific.
can be measured
reliably
 CASHFLOW STATEMENT
IFRS US GAAP INDIAN GAAP

•in flow and outflow of • also uses both •used direct and indirect
cash can be reported by methods where indirect methods. indirect
direct or indirect is commonly used. method for listed
methods where indirect enterprises and direct
method is commonly method (cash from
used (non cash items aggregated cash
like depreciation receipts) for insurance
included) companies.
Finance minister Arun Jaitley made it clear
that “Indian Accounting Standards have
to converge with International Financial
Reporting Standards (IFRS) by 2016-17”