If your Indian entity reports to a parent in North America, the United Kingdom or the Middle East — or you are preparing for a listing, an acquisition or an investor — you will eventually have to reconcile numbers prepared under different accounting frameworks. Ind AS, IFRS and US GAAP agree on far more than they differ on, but the differences that remain sit in exactly the places that move reported profit and net assets.
This is a practical overview of the areas that most often need attention in group reporting. It is not exhaustive, and every fact pattern deserves its own analysis.
First, the relationship between the three
- IFRS is the global baseline, issued by the IASB and used across the UK, Europe, the Middle East and much of Asia.
- Ind AS is India's set of standards converged with IFRS. Numbering mirrors IFRS (Ind AS 116 corresponds to IFRS 16, Ind AS 115 to IFRS 15) but Ind AS contains specific carve-outs and additional guidance where the Indian standard-setter chose to depart from IFRS.
- US GAAP is a separate body of standards issued by the FASB. Revenue (ASC 606) and leases (ASC 842) were developed alongside their IFRS counterparts, but important differences persist elsewhere.
Whether your entity applies Ind AS or Indian GAAP (AS) depends on the applicability thresholds under the Companies (Indian Accounting Standards) Rules — listed companies and larger unlisted companies apply Ind AS, while many smaller companies still report under AS. That question comes before any conversion work.
Where the differences usually bite
Leases
Under IFRS 16 and Ind AS 116, lessees apply a single model: almost all leases go on the balance sheet, with depreciation and interest replacing rent expense. US GAAP (ASC 842) also brings leases on balance sheet but keeps a dual model for lessees — operating leases show a single straight-line lease cost, finance leases show depreciation and interest. The expense profile and EBITDA differ, which matters for covenants and KPIs.
Impairment
IFRS and Ind AS test assets using a one-step recoverable-amount approach and permit reversal of impairment losses on assets other than goodwill. US GAAP uses a two-step approach for long-lived assets held and used and prohibits reversals. Groups with cyclical businesses see this difference repeatedly.
Inventory
US GAAP permits LIFO; IFRS and Ind AS do not. Write-downs of inventory can be reversed under IFRS and Ind AS if circumstances change; US GAAP generally treats a write-down as a new cost basis.
Development costs and intangibles
IFRS and Ind AS require capitalisation of development costs once specific criteria are met. US GAAP expenses research and development as incurred, with narrow exceptions such as certain software costs. Technology and pharmaceutical groups feel this in both profit and net assets.
Property, plant and equipment
IFRS and Ind AS allow a revaluation model for property, plant and equipment; US GAAP requires historical cost. Component depreciation is required under IFRS and Ind AS and less common in US GAAP practice.
Business combinations and Ind AS carve-outs
Ind AS contains India-specific departures that a group reporting under IFRS or US GAAP needs to reverse. Well-known examples include the treatment of a bargain purchase gain (recognised in other comprehensive income and accumulated in capital reserve under Ind AS 103, rather than in profit or loss) and specific transitional and common-control provisions. These are precisely the items that a conversion memo should list explicitly.
Presentation
Ind AS financial statements follow the formats prescribed in Schedule III to the Companies Act, 2013, which are more prescriptive than IFRS and differ from typical US GAAP presentation. Reclassification from Schedule III to a group reporting pack is routine but must be documented and controlled.
What good conversion work looks like
- A gap analysis listing every standard that applies to the entity, the treatment under each framework, and whether a difference exists.
- Quantified adjustments with supporting workings for every difference, built so they can be rolled forward each period.
- A reporting pack and reconciliation from local statutory numbers to group numbers, reviewed and signed off on the same cadence as the close.
- Position papers for judgemental areas — revenue recognition, lease terms, impairment triggers, capitalisation criteria — written to be audit-ready.
- Training for the local team so that the conversion becomes part of the close, not a year-end scramble.
The most expensive conversions are the ones discovered by an auditor or an acquirer. A conversion done as part of the monthly close costs a fraction of one done under deal pressure.
How Finactro can help
Finactro's former Big 4 professionals advise on Ind AS, IFRS and US GAAP conversions, technical accounting questions and group reporting — as a one-off opinion or as part of an outsourced finance function or GCC. Talk to an advisor about your reporting requirements.