Regulation and Purpose
The current regulatory framework has been established to ensure that businesses' activities and outcomes are properly and reliably accounted for, to maintain the consistency and comparability of the information provided to stakeholders through financial statements, and to facilitate audits in businesses.
ACCOUNTING FUNDAMENTALS - FINANCIAL STATEMENT PREPARATION PRINCIPLES AND ACCOUNT PLAN
The General Communiqué on the Implementation of the Accounting System, which entered into force with the Official Gazette dated December 26, 1992, and subsequent communiqués are currently referred to as the applicable regulations for accounting practices.
The purpose of the current regulation is to ensure that businesses' activities and results are properly and reliably accounted for, to preserve the consistency and comparability of the information provided to stakeholders through financial statements, and to facilitate auditing within businesses.
The stakeholders directly involved with a business's activities and results are not only its owners or partners. In addition to business owners or partners, other businesses or individuals with commercial, financial, and economic relationships with the business, as well as credit, financial, and investment institutions, and various public institutions and organizations are interested in the business's activities and results and wish to obtain reliable and accurate information.
The financial statements, which are based on the business's accounting records and documents, serve as the source of information for stakeholders.
In decision-making processes based on financial statements, the most important factor for decision-makers is that the information is accurate and comparable. On a macro scale, ensuring uniformity in accounting is crucial for national income calculations, development planning, regulating national and international capital movements, and managing economic activities by the government.
The regulation aims to:
- Ensure that accounting information reaches decision-makers accurately and sufficiently,
- Enable comparisons between different businesses and different periods of the same business,
- Ensure that the account names in the financial statements mean the same to all parties,
- Ensure that accounting terminology is consistent and understandable,
- Establish trust among stakeholders.
Compliance with the procedures and principles outlined in the regulation is mandatory, and any inconsistencies must be corrected during the preparation of financial reports and declarations by the businesses.