GAAP Readiness Services

A GAAP readiness engagement prepares an organisation to adopt a new accounting framework or to confirm continued compliance with an existing one. The work begins with a gap analysis comparing current accounting policies against the target framework, followed by policy redrafting, a review of financial statement formats and disclosures, process and control documentation, a transition plan, and orientation for the finance team. The aim is a controlled move to compliant reporting, with the differences identified and quantified before the first reporting period.

Indian companies report under one of two frameworks. The Accounting Standards (AS), often called Indian GAAP, are the older standards used by companies outside the Ind AS net. The Indian Accounting Standards (Ind AS) are the newer standards converged with IFRS and applied by listed and larger companies. IFRS itself is the global framework issued by the IASB; India does not apply IFRS directly but uses Ind AS, which mirrors IFRS with specific national adjustments. Which framework applies depends on a company's size, listing status and group structure.

Ind AS applies in phases under the Companies (Indian Accounting Standards) Rules, 2015. It is mandatory for all listed companies and companies in the process of listing, for unlisted companies with a net worth of Rs 250 crore or more, and for the holding, subsidiary, associate and joint venture companies of any company that is covered. NBFCs follow a separate phased roadmap, and banks and insurers follow transition roadmaps set by the RBI and IRDAI. A company below the threshold may also adopt Ind AS voluntarily.

Net worth for Ind AS applicability is taken from the company's audited standalone financial statements. It is the aggregate of paid-up share capital and all reserves created out of profits and securities premium, reduced by accumulated losses, deferred expenditure and miscellaneous expenditure not written off. Revaluation reserves, write-back of depreciation and amalgamation reserves are excluded. The test is applied to the figures as at the end of the relevant financial year specified in the Rules.

Yes. Once Ind AS applies to a company, it applies to that company's holding, subsidiary, associate and joint venture companies as well, regardless of whether each entity independently meets the net worth threshold. This group-wide reach is one reason a transition is planned at group level. It lets subsidiary accounting be aligned with the parent framework so that consolidated financial statements are prepared on a single, consistent basis.

A private limited company follows Ind AS only if it meets the net worth threshold of Rs 250 crore or more, or if it belongs to a group where Ind AS already applies; otherwise it reports under the Accounting Standards. Limited liability partnerships and partnership firms are generally outside the Ind AS framework and continue under the applicable Accounting Standards, unless a specific regulator requires otherwise. We confirm the position for each entity before any transition work begins.

No. Ind AS adoption is irrevocable. Once a company prepares its financial statements under Ind AS, whether because it became mandatory or because it chose to adopt early, it must continue to apply Ind AS in every subsequent period. This is one reason a voluntary early adoption is weighed carefully, since the decision cannot be reversed in later years.

The Accounting Standards (AS) are largely rule-based and rely on historical cost, with simpler disclosure requirements suited to smaller and domestic companies. Ind AS is principle-based, gives greater weight to economic substance and fair value, and requires far more extensive disclosures. The presentation also differs: AS companies use Division I of Schedule III, while Ind AS companies use Division II. A readiness engagement maps each difference that affects the specific company's reported numbers.

Ind AS is India's version of IFRS and is substantially converged with it, though not identical. The differences take the form of carve-outs and carve-ins, which are deliberate departures the ICAI and MCA introduced so the standards fit Indian law, tax rules and market practice. Presentation must also follow Schedule III of the Companies Act. For most transactions the accounting outcome matches IFRS, with specific exceptions that a readiness review identifies for the entity concerned.

Ind AS 101 is the standard that governs a company's first set of Ind AS financial statements. Its central principle is retrospective application: the company prepares its accounts as if Ind AS had always been used. To keep this practical, Ind AS 101 provides mandatory exceptions, where retrospective application is not permitted, and voluntary exemptions, which ease the burden in areas such as property, plant and equipment, business combinations and share-based payments. Choosing these options well is a core part of a transition.

The transition date is the beginning of the earliest period for which the company presents full comparative information under Ind AS. For a first Ind AS year ending 31 March 2027, the transition date is 1 April 2025. On that date the company prepares an opening Ind AS balance sheet: it recognises all assets and liabilities that Ind AS requires, removes items Ind AS does not permit, reclassifies items as needed, and remeasures them under Ind AS, with the net effect taken to retained earnings or another component of equity.

Ind AS 101 requires a first-time adopter to show how the move from the previous framework affected its reported position and performance. The company prepares a reconciliation of equity from previous GAAP to Ind AS, both at the transition date and at the end of the latest comparative period, and a reconciliation of total comprehensive income for that comparative period. These reconciliations let readers trace each material adjustment, and they form part of the disclosures in the first Ind AS financial statements.

Companies applying Ind AS present their financial statements under Division II of Schedule III to the Companies Act, 2013. NBFCs applying Ind AS use Division III, while companies on the older Accounting Standards use Division I. Division II prescribes the structure of the balance sheet, the statement of profit and loss, the statement of changes in equity and the notes, including disclosures such as shareholdings above 5% and ageing of receivables and payables. Aligning to this format is part of readiness.

Adopting Ind AS changes accounting profit, but taxable income is computed under the Income Tax Act's own rules, including the Income Computation and Disclosure Standards (ICDS), which apply regardless of the accounting framework. The main interaction is the Minimum Alternate Tax under Section 115JB [ITA 2025: s. 206], because MAT is charged on book profit. For Ind AS companies, the one-time transition adjustments to other equity, known as the transition amount, are brought into the MAT base over five years, one-fifth each year. The book profit and MAT are reported under Rule 40B [ITR 2026: r. 137] in Form 29B [ITR 2026: Form 66], the chartered accountant's certified report. We model this impact during readiness so the tax position is understood in advance.

Common challenges include identifying every accounting policy that changes, gathering the historical data needed for retrospective application, applying fair value measurement where the previous framework used cost, and building the wider set of disclosures Ind AS requires. Companies also need to select Ind AS 101 exemptions carefully, align group entities to one framework, and prepare the finance team for new judgements. A structured readiness assessment works through these in sequence, so the first reporting period is not the point at which problems surface.