What is a key difference between traditional Indian accounting standards and international accounting standards such as IFRS?

Introduction / Context:
Accounting standards differ across countries, although many jurisdictions are moving towards convergence with International Financial Reporting Standards (IFRS). Traditional Indian accounting standards were developed under local legal and regulatory environments and have historically shown some differences from international standards in terms of approach and emphasis. This question asks you to identify a key conceptual difference between Indian standards and international standards such as IFRS.

Given Data / Assumptions:

• Indian accounting standards (AS and later Ind AS) were influenced by local company law, tax rules, and regulatory requirements.
• International standards such as IFRS are designed to be principles based and to enhance global comparability.
• Both sets of standards aim to improve transparency and consistency, but their historical emphasis and style may differ.
• The question looks for a broad conceptual difference, not a detailed list of all technical variations.

Concept / Approach:
Traditional Indian standards have often been more prescriptive and closely aligned with legal form and tax considerations. In contrast, IFRS is generally described as principles based, emphasising the economic substance of transactions and requiring professional judgment to achieve a fair presentation. For example, IFRS tends to use more fair value measurements and requires extensive disclosures to explain judgments and estimates. Indian standards have moved closer to IFRS through the Ind AS framework, but the historical distinction in approach helps explain why convergence was needed.

Step-by-Step Solution:
Step 1: Identify that the key difference is likely related to principles versus rules and the influence of local law and tax rules. Step 2: Evaluate option a, which states that Indian standards have historically been more rules based and influenced by local legal and tax requirements, while international standards such as IFRS are more principles based and focus on fair presentation and economic substance. Step 3: Check that this matches common descriptions in accounting literature of the difference between many national GAAP frameworks and IFRS. Step 4: Evaluate option b, which incorrectly claims that Indian standards require no disclosure and IFRS prohibits all disclosure; this is clearly false. Step 5: Evaluate option c, which incorrectly restricts Indian standards to manufacturing and IFRS to services; both apply across sectors. Step 6: Evaluate option d, which asserts no difference at all; this ignores well documented differences in approach, even though convergence has reduced gaps. Step 7: Conclude that option a best captures the key conceptual difference.

Verification / Alternative check:
Reviewing the evolution of Ind AS in India, regulators have explicitly stated that Ind AS are largely converged with IFRS to improve comparability with global financial reporting. This implies that the earlier Indian AS were not fully aligned with IFRS, particularly in areas such as financial instruments, fair value measurement, and consolidation. IFRS emphasises substance over form and requires entities to present financial statements that reflect the economic reality of transactions, sometimes departing from strict legal form when necessary. This principles based approach is consistent with the description in option a.

Why Other Options Are Wrong:
Option b is clearly incorrect because both Indian standards and IFRS require significant disclosures; financial reporting without disclosure would be misleading. Option c mischaracterises the scope of both sets of standards; they are not restricted to particular industries. Option d ignores the reality that differences existed and, in some areas, still exist, even though convergence has reduced many gaps. Therefore, these options do not accurately describe the key difference.

Common Pitfalls:
Students sometimes think that convergence means that there were no important differences to begin with, or that national standards were simply copies of IFRS. In fact, each country's standards reflect local history and regulation. Another pitfall is to over generalise and assume that all national GAAP are completely rule based and all international standards are completely principles based; in practice, there is a spectrum. For exam purposes, however, it is useful to remember that Indian standards have historically been more influenced by local law and tax, while IFRS emphasises principles and fair presentation.

Final Answer:
A key difference is that Indian standards have historically been more rules based and influenced by local legal and tax requirements, while international standards such as IFRS are more principles based and focus on fair presentation and economic substance.