Reporting and auditing of government incentives according to financial reporting standards

Government incentives are given to businesses in return for fulfilling certain conditions in the past or in the future in order to increase the welfare of the society and develop the country's economy in the long run. Incentive system in Turkey is realized with the aim of eliminating regional imbalances and increasing employment together with economic targets. Controlling whether the relevant incentives are used in accordance with their purpose is as important as the allocation of incentives. Government incentives that are not used properly cause waste of resources and also harm the country's economy. On the other hand, it is seen that government incentives used appropriately and in accordance with the purpose of giving have positive results for both the enterprise and the government. In this context, government incentives should be reported in accordance with the financial reporting standard to which the enterprise is subject and transferred to the statement of financial position and profit loss statement. It is very important to follow up and control the government incentives used. It is aimed to determine the place of follow-up and audit in government incentives through independent auditing. In this study, the reporting of government incentives benefited by a business according to financial reporting standards and the independent audit process are discussed by making a sample application. In the related sample application, government incentives are reported on the basis of Turkish Financial Reporting Standards (TFRS), Accounting for Government Incentives and Disclosure of Government Aids' (TMS-20), Financial Reporting Standard for Large and Medium-sized Enterprises (BOBI FRS). In the audit process, the process followed during the independent audit of government incentives was revealed and the effect of incentives on business records was discussed. In addition, government incentives have been identified as a key audit matter. Thanks to the independent audit of government incentives, it has been concluded that the incentives are used in accordance with the purpose for which they are given, both for the enterprise and the government. As a result of the audit, the independent auditor expressed an unqualified opinion in a reasonable assurance environment.