FRS for LMSE and adapting of period-end financial statements to FRS for LMSE: An example application

Enterprises, transfer the financial transactions they have realized to the accounting records and present them to the interested parties by summarizing them in financial statements. Keeping accounting records and preparing financial statements are carried out within certain rules. The fact that these applied rules differ according to the countries prevent the comparison between the financial statements of a domestic enterprise and the financial statements of foreign enterprises. At the same time, it makes it difficult for foreign investors and credit institutions to interpret the financial statements of the enterprise and make decisions about the enterprise. With the effect of globalization, managements operating outside the borders of the country and the increase in the number of multinational enterprises, a common language requirement has emerged in accounting. To do so, International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS) have been published and these standards have been adopted and put into practice by many countries. Accounting practices in Turkey are carried out within the framework of Tax Procedure Law (TPL) and General Communique on Application of Accounting System (GCAAS). However, Turkey translated IAS and IFRS into Turkish and published them as Turkish Accounting Standards (TAS) and Turkish Financial Reporting Standards (TFRS). Today, the authorization to prepare and publish accounting standards is given to the Public Oversight Authority (POA). Today, TAS/TFRSs are required to be implemented by Public Interest Organizations (PIE). Financial Reporting Standard for Large and Medium-sized Enterprises (FRS for LMSE) has been published for medium and large-sized enterprises, which are subject to independent audit and are not PIE, and has been put into practice as of 01.01.2018. Accordingly, managements that are subject to independent audit but not within the scope of PIE and do not prefer to apply TAS/TFRS, make their financial statements conform to FRS for LMSE at the end of the year and their financial statements are prepared in accordance with the standards which are subject to independent auditing. With this thesis, it is aimed to guide the practitioners by considering an example application for the conversion of financial statements to FRS for LMSE at the end of the year. In this context, in the application section, adjustments were made in order to prepare the year-end financial statements of a sample enterprise in accordance with the standards, and the accounts were reclassified in accordance with FRS for LMSE. As a result, Statement of Financial Position, Statement of Profit or Loss, Statement of Changes in Equity and Statement of Cash Flows in accordance with FRS for LMSE were prepared.