The International Financial Reporting Standards (IFRS), an accounting standards established to provide a global framework for public companies to prepare their financial statements is all set to be converged in India to Ind AS. However, a recent KPMG report says the requirements of Ind AS are significantly different from policies and practices currently followed by Indian companies.

The report highlights the need for stakeholders to understand the impact of the transition, and the necessity for a prior preparation for the change. The transition to Ind AS is likely to have an impact on the revenues, profits, earnings per share and net worth of most Indian companies.

Here's a look into the difference between International Financial Reporting Standards (IFRS) and Ind AS:

• IFRS allows the profi t and loss account to be presented either as one statement (statement of comprehensive income) or as two statements (as profit and loss account and a statement of other comprehensive income). Ind AS allows only the one statement approach.

• IFRS requires the statement of changes in equity to be presented as a separate statement. Ind AS requires the statement of changes in equity to be shown as a part of the balance sheet.

• IFRS requires a company to present expenses recognised in the profit and loss account using a classification based on either their nature or their function within the company. Ind AS requires such classification by nature.

• In the case of companies other than financial companies, IFRS gives an option to classify the interest and dividend paid and interest and dividend received, as item of operating cash flows. Ind AS does not provide such an option and requires these items to be classified as items of financing activity and investing activity, respectively. 

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