IFRS

IFRS and local accounting standards exhibit significant differences. Unlike local standards that vary by country, IFRS is universally applicable. IFRS adopts a principles-based approach, allowing for greater judgment and interpretation, whereas local standards tend to be more rule-based. IFRS places emphasis on presenting financial statements that offer relevant information, prioritizing fair value measurement and transparency. Consequently, the treatment of specific transactions may diverge between IFRS and local standards.

Under IFRS, financial reporting comprises key components. The balance sheet portrays the company's assets, liabilities, and equity at a specific time, reflecting its financial position. The income statement reveals revenues, expenses, and net profit or loss, indicating financial performance over a period. The statement of comprehensive income combines the income statement with other comprehensive income items, offering a holistic view. The statement of changes in equity illustrates changes in equity, including contributions, distributions, profit or loss, and comprehensive income. Lastly, the statement of cash flows outlines cash inflows and outflows from operations, investments, and financing activities, showcasing cash flow activities.

Yes, there are differences between International Financial Reporting Standards (IFRS) and US Generally Accepted Accounting Principles (GAAP). While both frameworks aim to provide guidance for financial reporting, they have distinct approaches and requirements. Some key differences include the treatment of inventory costing methods, revenue recognition criteria, lease accounting, and the use of principles-based versus rules-based standards. It is important for multinational companies and investors to be aware of these variations when analyzing financial information across jurisdictions.

In India, IFRS are applicable to certain categories of companies. Listed companies in India are required to comply with IFRS for financial reporting purposes. Additionally, unlisted companies with a net worth of Rs 250 crores or more are also expected to follow IFRS guidelines. These requirements aim to promote consistency and transparency in financial reporting practices. It is crucial for companies to stay informed about the applicable regulations and consult with our chattered accountants and company secretaries to ensure compliance with IFRS standards.