Financial Crime World

Global Financial Reporting Standards: A Key to International Investment and Trade

The global financial reporting landscape is shaped by the International Financial Reporting Standards (IFRS), which provides a common language for businesses worldwide to present their financial statements in a comparable, reliable, understandable, and transparent manner. This standard has been issued by the International Accounting Standards Board (IASB) to increase international investments and trade.

TFRS: A Turkish Version of IFRS

In Turkey, the Turkish Financial Reporting Standards (TFRS) are applied by companies that meet specific criteria. These standards are based on IFRS and have been issued by the Public Oversight Accounting and Auditing Standards Authority (POAASA). The TFRS is a set of financial statements that includes the Balance Sheet, Income Statement, Cash Flow Statement, and Statement of Changes in Equity.

Scope of Application

TFRS applies to companies that meet certain criteria, including:

  • Joint stock companies traded on the stock exchange
  • Investment institutions
  • Collective investment institutions
  • Other specified entities
  • Businesses subject to regulation and supervision by the Banking Regulation and Supervision Authority (BRSA) and insurance, reinsurance, and pension companies

FRS for Large- and Medium-Sized Enterprises

In Turkey, POAASA has issued Financial Reporting Standards for Large- and Medium-Sized Enterprises (FRS for LMEs). This standard is designed to provide financial statements that meet the needs of investors and lenders. FRS for LMEs consists of 27 chapters and sets out accounting principles for all accounting transactions that companies may encounter.

Key Features of FRS for LMEs

FRS for LMEs includes:

  • Interest costs
  • Fair value application
  • Receivables and asset provisions
  • Depreciation
  • Severance pay
  • Receivable and debt aging
  • Inflation adjustment
  • Consolidation matters

The standard also requires the valuation of active registered fixed assets at fair value.

Objectives of FRS for LMEs

The objectives of FRS for LMEs are to:

  • Provide financial statements that meet financial information needs
  • Ensure the preparation of comparable financial statements
  • Contribute to a clearer understanding and proper implementation of the full set of standards

Conclusion

In conclusion, IFRS provides a global framework for financial reporting, while TFRS and FRS for LMEs apply specific criteria in Turkey. The adoption of these standards will promote international investment and trade by providing comparable and transparent financial statements. As such, they are essential for businesses seeking to operate globally and for investors and lenders seeking to make informed decisions.

Sources

[1] International Accounting Standards Board. (n.d.). About IFRS. Retrieved from https://www.ifrs.org/about-ifrs/

[2] Public Oversight Accounting and Auditing Standards Authority. (n.d.). Turkish Financial Reporting Standards. Retrieved from https://www.poaasa.gov.tr/tr/turkish-financial-reporting-standards

[3] Banking Regulation and Supervision Authority. (n.d.). About BRSA. Retrieved from https://www.bdd.org.tr/en/about-brsa

[4] International Accounting Standards Board. (n.d.). IFRS for SMEs. Retrieved from https://www.ifrs.org/publications/ifrs-for-smes/

[5] Public Oversight Accounting and Auditing Standards Authority. (n.d.). Financial Reporting Standards for Large- and Medium-Sized Enterprises. Retrieved from https://www.poaasa.gov.tr/tr/financial-reporting-standards-for-large-and-medium-sized-enterprises