Financial Accounting · Introduction to Accounting Standards (GAAP, AS and Convergence to Ind AS)

What Are IFRS and IASB? Notes for CMA Inter

Updated 10 October 2026 · Fact-checked

IFRS are the International Financial Reporting Standards, a single set of high-quality global accounting standards issued by the IASB, the International Accounting Standards Board. They aim to make financial statements comparable across countries. India does not adopt IFRS word for word. It uses Ind AS, which are converged with IFRS.

Understand International Financial Reporting Standards (IFRS) and IASB

Every country once had its own accounting rules. A company in one country and a similar company in another reported profit in different ways. Investors could not compare them easily. Global trade and cross-border investment made this a real problem.

The answer was harmonisation: one common set of standards used worldwide. The IASB (International Accounting Standards Board) is the independent body that develops and issues these standards. It is based in London and works under the IFRS Foundation, a not-for-profit organisation that oversees it.

The IASB's standards are called IFRS (International Financial Reporting Standards). Standards issued by its predecessor, the International Accounting Standards Committee (IASC, set up in 1973), are called IAS (International Accounting Standards). The IASB took over from the IASC in 2001. The IASB adopted the existing IAS and continues to use them, so both IAS and IFRS are in force together.

IFRS are principle-based. They state the objective and the principle, and leave room for professional judgement rather than listing detailed rules for every case. Many countries have adopted IFRS or based their national standards on it.

India chose convergence, not full adoption. Ind AS are Indian Accounting Standards that follow IFRS closely, with a few changes for Indian law and conditions (called carve-outs). So IFRS is the global model, Ind AS is the Indian version for notified companies, and the older AS are for other companies.

Key rules to remember

IASB role: IASB develops and issues IFRS; IFRS Foundation oversees the IASB; Do not say the IASB is a government body. It is an independent standard-setter.
IAS vs IFRS: IAS = issued by IASC (before 2001); IFRS = issued by IASB (from 2001); Both are in force together unless withdrawn or replaced.
India's approach: IFRS → converged (with carve-outs) → Ind AS; India converged with IFRS. It did not adopt IFRS as issued.
Core aim: Harmonisation = comparability + transparency + quality across countries; Use these three words in theory answers.

How to solve International Financial Reporting Standards (IFRS) and IASB questions

Theory questions on IFRS and IASB are usually 'explain', 'distinguish' or 'state the benefits'. Use this method.

1Read the verb. 'Explain' needs meaning and purpose. 'Distinguish' needs a point-wise comparison. 'Discuss benefits' needs a list with a reason for each.
2Open with a one-line definition: IFRS are global accounting standards issued by the IASB.
3Add the background in one or two lines: IASC to IASB in 2001, IAS and IFRS both in force.
4Develop the main body in points. Give each point a heading and a one-line reason.
5For comparisons, use two columns on bases such as issuing body, nature, applicability and approach.
6Link to India: say Ind AS are converged with IFRS and IFRS is not adopted as issued.
7Close with a one-line conclusion on harmonisation and comparability.

Quickest way: The 'Who, What, Why, India' check

When to use it: Use for MCQs and short notes when you have only a few minutes.

Who: IASB issues, IFRS Foundation oversees.
What: IFRS are principle-based global standards; IAS came from the IASC.
Why: comparability, transparency, easier cross-border capital raising.
India: Ind AS are converged with IFRS, not identical.
In an MCQ, reject options that say India adopted IFRS as it is or that IASB is a government agency.

Common mistakes in International Financial Reporting Standards (IFRS) and IASB

Writing that India has adopted IFRS fully.
The words 'adoption' and 'convergence' sound the same.
Fix: Write: India has converged with IFRS through Ind AS, which keep a few carve-outs for Indian conditions.
Treating IAS and IFRS as completely separate or one as replacing the other.
Students see two names and assume a full switch.
Fix: Remember: IAS were issued by the IASC, IFRS by the IASB. The IASB adopted the existing IAS, so both are in force.
Calling IASB the same as the IFRS Foundation.
Both are named in the same sentence in textbooks.
Fix: The Foundation oversees and funds. The IASB sets the standards.
Listing benefits without reasons, such as 'better comparison' only.
Students memorise keywords and skip the explanation.
Fix: Pair every benefit with a reason, e.g. comparability: investors can judge companies of different countries on the same basis.
Saying IFRS gives detailed rules for every case.
Confusing IFRS with detailed rule-based codes.
Fix: Say IFRS are principle-based and rely on professional judgement.

Worked examples

Example 1

Explain what IFRS and IASB are and state why they were introduced. (Short answer)

Show the solution

Define IASB: the independent standard-setting body, working under the IFRS Foundation, that develops and issues IFRS.
Define IFRS: global, principle-based accounting standards issued by the IASB. Its predecessor, the IASC, issued IAS, and both are in force together.
State the reason: national rules differed, so statements of companies from different countries could not be compared.
State the purpose: one set of high-quality standards for comparability and transparency.
Link to India: Ind AS are converged with IFRS.

Answer: IFRS are global accounting standards issued by the IASB to make financial statements comparable and transparent across countries. They were introduced because differing national rules made cross-border comparison difficult. India follows Ind AS, converged with IFRS.

Example 2

Distinguish between IFRS and Ind AS in four points.

Show the solution

Choose bases: issuing body, applicability, nature, relation to law.
Issuing body: IFRS are issued by the IASB; Ind AS are Indian standards prescribed under Indian law.
Applicability: IFRS are used by many countries worldwide; Ind AS apply to companies in India covered by the notified roadmap.
Nature: IFRS are the global original; Ind AS are converged with IFRS and contain carve-outs for Indian conditions.
Legal backing: IFRS become binding only when a country adopts them; Ind AS are notified under the Companies Act, 2013.

Answer: IFRS differ from Ind AS in issuing body (IASB vs Indian authorities), applicability (global vs Indian notified companies), nature (original vs converged with carve-outs) and legal force (needs national adoption vs notified under Indian law).

Exam tips

Short notes and 'distinguish' questions are common here, so learn a four-point IFRS vs Ind AS comparison.
In MCQs, watch for the words 'adopted' and 'converged'. India converged.
Always connect the answer to India. A pure global answer loses marks.
Write the full forms: IASB, IASC, IFRS, IAS. Use them correctly.
For a benefits question, give four to five points with a one-line reason each.

Practice questions from Introduction to Accounting Standards (GAAP, AS and Convergence to Ind AS)

International Financial Reporting Standards (IFRS) and IASB in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

International Financial Reporting Standards (IFRS) and IASB: frequently asked questions

What is the difference between IFRS and IAS?

IAS were issued by the IASC, which preceded the IASB. IFRS are issued by the IASB from 2001 onwards. Both are in force together unless a standard has been withdrawn or replaced.

Is IFRS the same as Indian GAAP?

No. Indian GAAP is the set of accounting rules applicable in India, including the older Accounting Standards and Ind AS. IFRS is the global set. Ind AS are converged with IFRS, but they are not identical to it.

What are the benefits of adopting IFRS?

It improves comparability of financial statements across countries. It increases transparency and helps investors. It also eases cross-border fund raising and reduces the cost of preparing multiple sets of statements for group companies.

Who is responsible for IFRS?

The IASB develops and issues IFRS. The IFRS Foundation, a not-for-profit organisation, oversees the IASB.