A study on the evaluation of the conversion process of financial statements prepared according to different accounting regulations, problems encountered, and proposed solutions

Companies subject to independent audit in Turkey prepare their financial statements according to different accounting regulations. Companies follow General Communiqué on Accounting System Implementation (ASAGC) in accounting entries and preparing financial statements added in tax returns, while they follow Turkish Accounting / Turkish Financial Reporting Standards (TAS / TFRS) or Financial Reporting Standard for large and Medium Sized Entities (FRS for LMSE) in preparing their financial statements that are subject to independent audit. Financial statements prepared in accordance with TAS / TFRS or BOBI FRS are prepared through a conversion process carried out at the end of the period which is based on the trial balance prepared in accordance with MSUGTs. This conversion process is carried out by professionals working in independent audit companies. The aim of this study is to evaluate the conversion process of the financial statements of companies, which are subject to independent audit in Turkey, prepared according to the ASAGC to TAS / TFRS or FRS for LMSE, to determine problems encountered and to propose possible solutions to deal with these problems. In the study, in which the qualitative research method is used, face-to-face or online interviews are conducted with 25 professionals working in independent audit companies and taking an active role in the conversion process of financial statements, through a semi-structured interview form. According to findings, although the participants mostly find the dual accounting system more beneficial, it is observed that it is difficult to implement the system due to the accounting infrastructures of companies and the additional costs that the system would bring. During conversion process, it is documented that the participants have problems in obtaining documents from the customer companies and they respond that cash flow statement is the most challenging financial statement to prepare. While the majority of the participants respond that the information disclosed in the financial statements prepared through conversion process has the qualitative characteristics that useful financial information should have, some participants respond that the disclosed information is not presented in a timely manner. It is also observed that the participants who stated that reporting according to different regulations is unnecessary, respond that companies should follow a single regulation in preparing their financial statements and this regulation should be TAS / TFRS. However, the results demonstrate that if companies continue to prepare financial statements by following two different regulations as in the current practice, the majority of participants would prefer to follow FRS for LMSE. Besides, participants experience significant problems arising from classification, valuation, calculation and accounting of valuation differences, and lack of information during the conversion process of financial statements. In addition to these problems, it is stated that there are problems arising from the companies, standards, regulations, other people, institutions and organizations. Participants who play active role in the conversion process, propose solutions within the framework of increasing the quality of the conversion process, ensuring standardization in financial reporting, accounting plan and improvements, training activities, and activities of regulatory institutions in order to deal with these problems.