16.1.2024
What is the IFRS and what is its purpose? - International Financial Reporting Standards with General Definitions
IFRS stands for International Financial Reporting Standards. Developed by the International Accounting Standards Board (IASB), these standards are designed to regulate the financial reporting processes of companies around the world. IFRS aims to increase global financial comparability by making companies' financial statements more transparent and comparable.
Are IFRS and TFRS the same?
Yes, TFRS (Turkish Financial Reporting Standards) is the Turkish implementation of IFRS, in other words, TFRS is the Turkish translation of IFRS. Turkey adopted IFRS in 2005 and aligned Turkey's financial reporting standards with IFRS. IFRS is a local implementation that takes the principles of IFRS and adapts them to the legal and economic conditions of Turkey.
What are IFRS and TFRS?
IFRS (International Financial Reporting Standards): A set of standards set by the International Accounting Standards Board (IASB) that standardize the financial statements of companies around the world. They aim to increase transparency and comparability in global financial markets. Promotes trust and transparency.
TFRS (Turkish Financial Reporting Standards): Financial reporting standards used in Turkey. TFRS are based on IFRS and are harmonized with Turkey's legal regulations.
Is IFRS important?
Compliance with IFRS or TFRS is necessary for companies to prepare their financial reports. Valuation reports support compliance with these standards in terms of determining the fair value of assets and liabilities.
Valuation reports provide transparent and reliable information about a company's financial position. They provide an objective determination of the company's value for investors, shareholders and other stakeholders.
Can be used as a basic guide in the company's financial planning and strategic decisions. Accurate valuation of assets and liabilities allows for more accurate financial planning for the company's future activities.
Regular valuation of company assets can improve asset management processes. Provides accurate baseline data for performance evaluations.
It can be subject to an independent audit of the company's financial position. Provides auditors and managers with information on potential risks and warnings.
Ensures compliance with legal requirements and tax regulations. Contains accurate valuation information for tax returns and other legal obligations.
Why is there a need for International Financial Reporting Standards?
The increase in global trade, investments and transaction volume has caused companies to cross the borders of the geographies in which they operate. This has led to the need for a broader and more generalized framework for financial reporting.
The use of different accounting standards in different countries makes it difficult to compare the financial performance of companies. An international set of standards enables companies and investors to compare financial statements more easily.
Compliance with international standards builds trust among investors. A common language and set of standards enables investors to evaluate companies more accurately.
Global financial crises have emphasized the importance of financial stability. A common set of financial reporting standards can help financial markets to be more transparent and on a sound footing.
As a result, International Financial Reporting Standards have been established to enhance integration in the global economy, comparability of companies and stability of financial markets. By promoting transparency, these standards enable investors, businesses and other stakeholders to make better financial decisions.
IFRS and Valuation
IFRS 13 defines fair value as the price received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
According to International Valuation Standards (IAS), market value is the estimated amount that would be received to realize the fair value of an asset or liability in an arm's length transaction between a willing seller and a willing buyer, as a result of appropriate marketing activities, in which the parties act knowledgeably, prudently and without compulsion.
In this comparison, the fair value of all assets following IFRS 13 and the market value of all assets by the IAS are mutually exclusive.
Valuation reports prepared by international valuation standards are used to determine the current or retrospective fair values of property, plant and equipment to be used in financial reporting.
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