IFRS Standards
Turkey: a strong starter

Overview

Turkey's level of preparation for the IFRS conversion is within the European average: 86% of companies believe they are prepared for the transition, compared to 87% across the 12 countries surveyed. In addition, 69% of companies have already prepared their opening balance sheet (European average of 74%) and 67% have completed a simulation of their 2004 financial statements (66% average across Europe). It appears that Turkish companies are justified in thinking themselves prepared for conversion.

80% of companies surveyed do not see conversion as constituting a major cost; this is the second highest rate in Europe. As could be expected, the cost of conversion is thought to be justified, even by companies who found it to be high.

Indeed, the Turks are convinced that the new standards will improve accounting in their country: 84% of companies believe that IFRS will allow easier comparison between countries. The particular enthusiasm of the Turks explains the efforts undertaken by these companies.

Investor communication

Turkish companies have communicated with their shareholders en masse, as 80% have already done so. This rate is only slightly lower than that of the Germans, who are the leaders in this area. Companies in Turkey have thus foreseen the impact that IFRS conversion could have on shareholders. In addition, this communication was quantified in 75% of cases, a number again higher than the average.

Companies who had not yet communicated at the time of the survey appear resolved to do so as quickly as possible: 63% planned to communicate imminently.. We estimate that 87% of Turkish companies have now communicated with their shareholders regarding the impact of IFRS.

In general Turkish companies do not plan to delay issuing their first IFRS annual reports with only 20% planning to publish later. These numbers support the image of a modern Turkey which has anticipated the changeover to IFRS, with encouraging results.

Employee training and readiness

Their employees' knowledge of IFRS is judged satisfactory by Turkish companies: 72% consider IFRS knowledge of their teams to have been good to excellent. This rate (even if the 16% of companies who judge themselves to be somewhat prepared are added) is somewhat lower than the European average. In addition, the percentage of employees who have received training in IFRS is much lower than average (57% versus 73%).



Turkey stands out clearly, however, in its approach to IFRS conversion. 67% of companies have chosen not to externalise this project. This is the lowest rate among all countries surveyed. Turkish companies thus prefer to capitalise on their employees' expertise. As a result, the size of their internal conversion teams are much higher than average (slightly more than 7, compared to an average of more than 5 across Europe).

Financial impact



Only 30% of companies came across effects different from those expected.

Finally, the rate that intended modifying performance measures shows that Turkish companies intend to make the most of the new standards. With 67% of companies planning to change their measures, Turkey has gone the farthest among European countries in infusing their management with the new standards.





Specific standards

The area of fixed assets created the greatest challenges for Turkish companies (23% - first place). The strongly inflationary context, unique to a country which is not yet a member of the European Union, should be noted. The most common second choice is the area of employee benefits and pensions. Finally, financial instruments are cited in third place.

In contrast to their treatment of performance measures, only 28% of companies have changed their management of financial operations. This is almost equal to the European average.

Turkey is one of the countries most convinced that margins for interpretation are greater with IFRS. However, only 58% of respondents would welcome further interpretation from IFRIC, which is equal to the European average.

Turkish companies are only partly satisfied with the appropriateness of the new standards to different business sectors: 43% of those surveyed were satisfied.

Around half of respondents would have liked to see the creation of European standards, one of the highest rates in all countries surveyed. Rejection of the U.S. GAAP option is quasiunanimous, however: with only 2% of companies in favour of this latter solution. Turkey thus demonstrates its strong European ambition.

Finally, Turkish companies are very willing to apply IFRS to their national accounting: 56% already use these standards and 20% plan to change over as soon as possible. These rates are the highest in Europe.