IFRS Reporting

International Financial Reporting Standards have been translated into Turkish from the expression International Financial Reporting Standards (IFRS) and are briefly referred to as IFRS. International Financial Reporting Standards, which stands for URFS, is a set of standards that enable companies from different countries to compare their financial reports with each other.

With IFRS, companies that have invested in different countries can track their investments and thus have the opportunity to review their financial reports. Another important feature of IFRS, which stands for International Financial Reporting Standards, is that it can be interpreted through a single standard, or in other words, through a single language. To put this a little more clearly, it is quite easy for an investor to read companies’ reports prepared in accordance with IFRS. Moreover, it does not matter in which country the company is located. Investors can easily invest in any company they want, regardless of country.

IFRS became a requirement for companies in European Union member countries in 2005. The reports of companies using International Financial Reporting Standards can be understood very clearly by those who know these standards.

What is IFRS?

International Financial Reporting Standards, which stands for IFRS, is a series of accounting standards developed and published by the International Accounting Standards Board (IASB) that makes it easier for companies and investors to compare their financial statements. This term, expressed in English as International Financial Reporting Standards (IFRS), is also known as International Accounting Standards (UMS). These standards, which were published as IAS until 2001, started to be published as IFRS since 2001.

It was accepted by 150 countries in 2017 and became a standard for international reporting. Turkey is among the countries that accept these standards. This innovation, called IFRS, which stands for International Financial Reporting Standards, is a set of accounting standards and rules that determine how accounting events in your company’s financial statements should be reported. The organization that organizes and publishes studies on TMS (Turkish Accounting Standards) and IFRS in our country is the Public Oversight Board.

For what purpose was IFRS created?

The purpose of creating International Financial Reporting Standards, which stands for URFS, is to enable investors, financial statement users and public companies to compare their financial statements with each other and with the financial situation of their own businesses at an international level. IFRS, which also offers the opportunity to measure performance thanks to this feature, is a system applied worldwide.

In the old Turkish Commercial Code (TTK), only the balance sheet was mentioned. However, in the new TCC, regulations regarding the creation of new financial statements were included, taking into account the International Financial Reporting Standards, which stands for IFRS. Articles 69, 72 and 78 of the Turkish Commercial Code contain provisions regarding the preparation of financial statements. To summarize, these standards, which ensure that comparisons are accurate and consistent, have now become a part of our lives.

What are the Benefits of IFRS?

The main benefits provided by IFRS, which stands for International Financial Reporting Standards, can be listed as follows:

  • IFRS is an expression that represents global standards. If companies claim or aim to have a global presence, they must adopt IFRS.
  • Thanks to IFRS, companies gain comparability, transparency and understandability.
  • Since the language used in financial statements is the same, a reliable and easy environment is created for investors.
  • Since it is not necessary to follow the reporting standards of each country and prepare reports according to these standards, great savings in labor and time are achieved.
  • Reports prepared in accordance with IFRS do not include the perspective or interpretation of the person who prepared the report. Thus, the reports do not contain unnecessary, biased, incomplete or incorrect information.

What Does IFRS Include?

International Financial Reporting Standards, which stands for IFRS, specify how companies should maintain and report their accounts. Prepared to create a common accounting language, the aim of URFS is to make financial statements consistent across different sectors and countries. IFRS covers a wide range of topics such as income taxes, inventories, revenue recognition, fixed assets, business combinations, exchange rates and financial statement presentation.
There are many different IFRS standards to consider. Some areas where IFRS provides comprehensive rules can be listed as follows:

  • Statement of Financial Position – Commonly referred to as the balance sheet, IFRS details the different components and how these components should be reported.
  • Statement of Comprehensive Income – This statement may be presented as a single statement, profit and loss statement, or other income statement in accordance with URFS.
  • Statement of Changes in Equity – This table is sometimes referred to as the statement of retained earnings. A statement of changes in equity should document your company’s change in profits over a specific financial period.
  • Cash Flow Statement – This document should break down your company’s cash flows into Financing, Operations, and Investing, thus providing a summary of your financial transactions over a specific period.