Ind AS vs IGAAP: Key Differences Every Auditor Must Know [2026]

India operates a dual accounting framework. Companies above certain thresholds follow Indian Accounting Standards (Ind AS), which are converged with IFRS. Companies below those thresholds continue to follow Indian GAAP (IGAAP), comprising the older Accounting Standards (AS 1 through AS 32) issued by ICAI.

For auditors, this dual framework creates a practical challenge: the audit procedures, risk assessments, and areas of judgment differ materially depending on which framework the client follows. This guide provides a comprehensive comparison of the key differences between Ind AS and IGAAP, along with the practical audit implications that every Indian CA must understand.

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Applicability: Who Follows Ind AS and Who Follows IGAAP?

Ind AS Applicability (as of 2026)

Ind AS is mandatory for the following categories of companies:

1. Listed companies — All companies listed on any recognised stock exchange in India (equity or debt)
2. Unlisted companies with net worth of Rs 250 crore or more — Based on standalone or consolidated financial statements for any of the preceding accounting periods
3. All NBFCs — The Reserve Bank of India mandated Ind AS for all NBFCs in a phased manner, starting with NBFCs with net worth of Rs 500 crore and above, and subsequently extending to all NBFCs
4. Holding, subsidiary, associate, and joint venture companies of entities already required to follow Ind AS
5. Banking companies — As notified by the Reserve Bank of India (implementation has seen deferrals; auditors should verify the current status for specific banking entities)
6. Insurance companies — As notified by IRDAI

IGAAP Applicability

Companies not falling under any of the above categories continue to follow IGAAP. This includes a large number of private limited companies, small and medium enterprises, and entities below the net worth thresholds. These companies apply the older Accounting Standards (AS 1 through AS 32) notified under the Companies (Accounting Standards) Rules, 2021.

Audit Implication

The first step in any statutory audit is confirming which framework applies. Errors in framework applicability can lead to qualified opinions or, worse, incorrect financial statements. For companies approaching the Rs 250 crore net worth threshold, auditors should proactively advise management on transition readiness.

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Comprehensive Comparison: Ind AS vs IGAAP

1. Revenue Recognition — Ind AS 115 vs AS 9

This is one of the most significant differences between the two frameworks.

IGAAP (AS 9 — Revenue Recognition):

• Revenue from sale of goods is recognised when risks and rewards of ownership transfer
• Revenue from services is recognised proportionately or under the completed service contract method
• Relatively straightforward recognition criteria based on transfer of risks and rewards

Ind AS 115 — Revenue from Contracts with Customers:

• Five-step model: (1) Identify the contract, (2) Identify performance obligations, (3) Determine transaction price, (4) Allocate transaction price to performance obligations, (5) Recognise revenue when/as performance obligations are satisfied
• Distinguishes between revenue recognised "at a point in time" and "over time"
• Requires identification of distinct performance obligations within a single contract
• Variable consideration (discounts, rebates, penalties) must be estimated and included in the transaction price using the expected value or most likely amount method
• Contract costs (costs to obtain and fulfil a contract) have specific capitalisation criteria
• Extensive disclosure requirements including disaggregation of revenue, contract balances, and performance obligations

Audit Implication: Auditing under Ind AS 115 requires significantly more judgment — the auditor must evaluate management's identification of performance obligations, allocation of transaction prices (which may involve standalone selling prices), estimation of variable consideration, and timing of revenue recognition. Under AS 9, the primary judgment is whether risks and rewards have transferred.

2. Financial Instruments — Ind AS 109 vs AS 13

IGAAP (AS 13 — Accounting for Investments):

• Investments classified as current or long-term
• Current investments carried at lower of cost and fair value
• Long-term investments carried at cost, with provision for other-than-temporary diminution
• No concept of expected credit loss for trade receivables or loans
• Derivatives not comprehensively addressed

Ind AS 109 — Financial Instruments:

• Classification based on business model and contractual cash flow characteristics: amortised cost, fair value through other comprehensive income (FVOCI), or fair value through profit or loss (FVTPL)
• Expected Credit Loss (ECL) model for impairment — requires forward-looking provisioning even where no actual default has occurred
• Comprehensive hedge accounting framework
• Detailed rules for derecognition, modification, and reclassification
• Embedded derivatives must be assessed and may require separate recognition

Audit Implication: The ECL model under Ind AS 109 is one of the most judgment-intensive areas in financial statement audits. Auditors must evaluate management's ECL methodology, forward-looking assumptions, probability of default estimates, and loss given default calculations. For banks and NBFCs, this is frequently a key audit matter. Under IGAAP, the auditor's focus is on the simpler question of whether there is an other-than-temporary diminution in value.

For audit procedures specific to NBFCs under Ind AS, including ECL model testing, our industry guide provides detailed workflows.

3. Leases — Ind AS 116 vs AS 19

IGAAP (AS 19 — Leases):

• Classification as finance lease or operating lease based on transfer of risks and rewards
• Operating leases — lessee recognises lease payments as expense on a straight-line basis; no asset or liability on balance sheet
• Finance leases — lessee recognises asset and corresponding liability

Ind AS 116 — Leases:

• Single lessee accounting model — virtually all leases result in recognition of a right-of-use (ROU) asset and a lease liability on the lessee's balance sheet
• Operating lease classification eliminated for lessees (lessor accounting retains the finance/operating distinction)
• ROU asset depreciated over the lease term; lease liability measured at present value of future lease payments and unwound using the effective interest method
• Short-term leases (12 months or less) and low-value asset leases may be exempted
• Significant impact on balance sheet (assets and liabilities increase), EBITDA (lease payments reclassified from operating expense to depreciation and interest), and financial ratios (debt-equity, interest coverage, return on assets)

Audit Implication: Auditing under Ind AS 116 requires the auditor to verify the completeness of the lease population (embedded leases in service contracts are frequently missed), discount rate assumptions (incremental borrowing rate calculations involve judgment), and the accuracy of ROU asset and lease liability calculations. Under IGAAP, the primary audit focus for operating leases is simply verifying the lease expense.

4. Business Combinations — Ind AS 103 vs AS 14

IGAAP (AS 14 — Accounting for Amalgamations):

• Two methods: pooling of interests and purchase method
• Pooling of interests method carries forward book values without recognising goodwill
• Purchase method recognises assets at fair value and computes goodwill as the excess of purchase consideration over net asset value
• Limited scope — applies primarily to amalgamations, not all business combinations

Ind AS 103 — Business Combinations:

• Only acquisition method permitted (pooling of interests eliminated)
• All identifiable assets acquired and liabilities assumed measured at fair value at acquisition date
• Intangible assets (brand, customer relationships, technology) must be separately identified and valued
• Goodwill is not amortised but tested for impairment annually under Ind AS 36
• Contingent consideration measured at fair value and remeasured subsequently
• Step acquisitions (achieving control in stages) require remeasurement of previously held equity interest at fair value
• Bargain purchase gains recognised in profit or loss

Audit Implication: Business combination audits under Ind AS 103 require the auditor to evaluate purchase price allocation (PPA) reports, which involve significant valuation expertise. The auditor must assess the reasonableness of fair values assigned to identifiable intangible assets, the appropriateness of valuation methodologies (discounted cash flow, relief from royalty, multi-period excess earnings), and the accuracy of goodwill computation. Under IGAAP, the pooling of interests method avoids these valuation complexities entirely.

5. Fair Value Measurement — Ind AS 113 (No IGAAP Equivalent)

IGAAP: No comprehensive fair value measurement standard exists under IGAAP. Fair value concepts appear in specific standards (AS 13 for investments, AS 10 for fixed assets in limited contexts), but there is no unified framework for measuring and disclosing fair values.

Ind AS 113 — Fair Value Measurement:

• Defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants
• Establishes a three-level fair value hierarchy: Level 1 (quoted prices), Level 2 (observable inputs), Level 3 (unobservable inputs)
• Requires extensive disclosures about fair value measurements, including the level of the hierarchy, valuation techniques, and sensitivity analyses for Level 3 measurements

Audit Implication: Ind AS 113 applies across multiple standards (financial instruments, investment property, biological assets, business combinations). The auditor must evaluate whether management has applied appropriate valuation techniques, used reasonable inputs, and correctly classified measurements within the fair value hierarchy. Level 3 measurements — which rely on unobservable inputs — require particular scrutiny and often involve auditor's experts.

6. Consolidated Financial Statements — Ind AS 110 vs AS 21

IGAAP (AS 21 — Consolidated Financial Statements):

• Control defined primarily through majority of voting power (ownership of more than 50% of voting shares)
• Exemptions available for certain subsidiaries
• Less prescriptive consolidation procedures

Ind AS 110 — Consolidated Financial Statements:

• Control defined as power over the investee, exposure to variable returns, and ability to use power to affect returns — a more substance-based definition
• De facto control possible even without majority ownership (through contractual arrangements, potential voting rights, etc.)
• No exemptions from consolidation for subsidiaries (all subsidiaries must be consolidated)
• Structured entities (SPEs) must be assessed for consolidation under the control model
• Non-controlling interests measured either at fair value or proportionate share of net assets

Audit Implication: The broader definition of control under Ind AS 110 means the auditor must evaluate whether entities that might not be subsidiaries under IGAAP (due to less than 50% ownership) are nonetheless controlled under the Ind AS definition. This requires analysis of contractual arrangements, potential voting rights, and de facto control indicators. For firms auditing listed companies with complex group structures, this is a critical area.

7. Impairment of Assets — Ind AS 36 vs AS 28

IGAAP (AS 28 — Impairment of Assets):

• Impairment testing required when indicators of impairment exist
• Recoverable amount is the higher of net selling price and value in use
• Value in use calculated using pre-tax discount rates
• Reversal of impairment permitted (except for goodwill, which is amortised under IGAAP rather than impairment-tested)

Ind AS 36 — Impairment of Assets:

• Annual impairment testing mandatory for goodwill, indefinite-life intangible assets, and intangible assets not yet available for use (regardless of indicators)
• Other assets tested when impairment indicators exist
• Cash-generating unit (CGU) concept more rigorously applied
• Detailed requirements for discount rates, cash flow projections, and terminal value assumptions
• Goodwill allocated to CGUs for impairment testing purposes

Audit Implication: Goodwill impairment testing under Ind AS 36 is one of the most judgment-heavy audit areas. The auditor must evaluate management's CGU identification, cash flow projections (typically 5-year forecasts), terminal growth rates, and discount rates (weighted average cost of capital). Under IGAAP, goodwill is simply amortised over its useful life (not exceeding 5 years unless justified), avoiding the complex impairment analysis.

8. Employee Benefits — Ind AS 19 vs AS 15

IGAAP (AS 15 — Employee Benefits):

• Defined benefit obligations measured using projected unit credit method
• Actuarial gains and losses recognised immediately in profit or loss (or deferred using the corridor approach, though this is rarely used in India)
• Discount rate based on government bond yields

Ind AS 19 — Employee Benefits:

• Defined benefit obligations also measured using projected unit credit method
• Actuarial gains and losses (remeasurements) recognised in Other Comprehensive Income (OCI) — they do not pass through profit or loss
• No corridor approach available
• Discount rate based on high-quality corporate bond yields (where a deep market exists) or government bond yields

Audit Implication: Under Ind AS 19, the auditor must verify that remeasurements are correctly classified in OCI rather than profit or loss. The discount rate determination (corporate bonds vs government bonds) requires assessment of whether a deep market exists. The presentation difference means the auditor must also verify that OCI items are correctly presented in the statement of profit and loss and other comprehensive income.

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Summary Comparison Table

Area	IGAAP Standard	Ind AS Standard	Key Difference
Revenue recognition	AS 9	Ind AS 115	Five-step model vs risks-and-rewards
Financial instruments classification	AS 13	Ind AS 109	Business model test vs current/long-term
Impairment of financial assets	AS 13 (diminution in value)	Ind AS 109 (ECL model)	Forward-looking ECL vs incurred loss
Leases (lessee)	AS 19	Ind AS 116	Single model (on-balance sheet) vs dual classification
Business combinations	AS 14	Ind AS 103	Acquisition method only vs pooling permitted
Goodwill	AS 14 (amortised)	Ind AS 103/36 (impairment tested)	Annual impairment testing vs amortisation
Fair value framework	No comprehensive standard	Ind AS 113	Unified hierarchy vs ad hoc
Consolidation control	AS 21 (voting power)	Ind AS 110 (power + returns)	Broader substance-based control
Impairment of non-financial assets	AS 28	Ind AS 36	Mandatory annual testing for goodwill/indefinite life intangibles
Employee benefits (actuarial gains/losses)	AS 15 (P&L or corridor)	Ind AS 19 (OCI only)	OCI classification vs P&L
Borrowing costs	AS 16	Ind AS 23	Broadly similar; Ind AS requires capitalisation for qualifying assets
Foreign currency	AS 11	Ind AS 21	Functional currency concept introduced in Ind AS
Investment property	Not separately addressed	Ind AS 40	Separate classification and measurement
Biological assets	Not addressed	Ind AS 41	Fair value measurement for agricultural produce
Government grants	AS 12	Ind AS 20	Broadly similar; presentation options differ
Provisions and contingencies	AS 29	Ind AS 37	Broadly similar; discount to present value required under Ind AS for long-term provisions

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Practical Audit Implications: What Changes When a Client Follows Ind AS

1. Audit Planning Requires Additional Expertise

Ind AS audits involve areas that require specialist knowledge — fair value measurements, ECL models, purchase price allocations, actuarial calculations, and complex financial instrument accounting. The audit plan must identify where auditor's experts (valuers, actuaries, IT specialists) are needed.

2. Judgment Areas Multiply

Under IGAAP, many accounting treatments are rules-based or straightforward. Ind AS is principles-based, which means management exercises more judgment, and the auditor must evaluate more estimates. Key areas of judgment include:

• Transaction price allocation under Ind AS 115
• ECL model assumptions under Ind AS 109
• Discount rates for lease liabilities under Ind AS 116
• Cash flow projections for impairment testing under Ind AS 36
• Fair value of identifiable intangibles under Ind AS 103

3. Disclosure Requirements Expand Significantly

Ind AS disclosure requirements are substantially more extensive than IGAAP. The auditor must verify compliance with disclosure requirements under each applicable standard. Incomplete disclosures are a common NFRA finding and can result in qualified opinions.

4. First-Time Adoption Creates Transition Risks

When a company transitions from IGAAP to Ind AS for the first time, Ind AS 101 (First-time Adoption) applies. The auditor must verify the opening balance sheet adjustments, the elections made under Ind AS 101 (there are numerous optional and mandatory exemptions), and the consistency of accounting policies in the comparative period.

5. Documentation Standards Increase

The complexity of Ind AS audits demands more robust documentation. The auditor's working papers must record the basis for evaluating management's judgments, the work of experts relied upon, and the conclusion reached on each significant area. This connects directly to the requirements of SQM 1, which mandates documentation standards at the firm level.

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Transition Considerations for Firms

For CA firms that audit both IGAAP and Ind AS clients, maintaining dual competence is essential. Consider the following:

1. Training — Ensure all audit staff who work on Ind AS engagements have received specific training on the applicable standards. The learning curve from IGAAP to Ind AS is not trivial.
2. Templates and checklists — Maintain separate audit programs and disclosure checklists for IGAAP and Ind AS engagements. Using an IGAAP checklist on an Ind AS audit (or vice versa) is a common source of error.
3. Access to specialists — Build relationships with valuation experts, actuaries, and IT specialists who can support Ind AS audits. For smaller firms, consider formal arrangements for specialist access.
4. Technology — Audit automation platforms that support both frameworks can reduce the risk of applying incorrect procedures. Modern platforms can adapt audit programs based on the applicable accounting framework.
5. Quality review — EQCM reviews for Ind AS engagements should specifically address framework-specific risks, including fair value measurements, ECL models, and complex consolidation issues.

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Key Takeaways

1. Framework identification is step one — Confirm applicability before beginning any engagement. The threshold is Rs 250 crore net worth for unlisted companies; all listed companies and NBFCs follow Ind AS.
2. Revenue and financial instruments are the biggest divergence areas — Ind AS 115 and Ind AS 109 require fundamentally different audit approaches compared to AS 9 and AS 13.
3. Fair value pervades Ind AS — From financial instruments to business combinations to impairment testing, fair value measurement is central to Ind AS. Auditors must be comfortable evaluating valuation methodologies.
4. Judgment increases under Ind AS — More estimates, more assumptions, more management judgment means more auditor skepticism and more documentation.
5. Disclosure testing is not optional — Ind AS disclosure requirements are extensive. Incomplete disclosures are a frequent regulatory finding.
6. Dual competence is a firm capability — Firms auditing both IGAAP and Ind AS clients must invest in training, templates, and quality processes that cover both frameworks.

Understanding these differences is not merely academic — it directly affects how you plan, execute, and conclude every engagement. Firms that invest in deep Ind AS competence will deliver higher-quality audits and face fewer regulatory challenges.

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This guide covers the principal differences between Ind AS and IGAAP as applicable in India. Standards are subject to amendment by ICAI and the MCA. Auditors should always refer to the current text of the applicable standards for specific engagement requirements.