COMPARATIVE ANALYSIS OF ACCOUNTING SYSTEMS IN AZERBAIJAN AND TURKEY

Proper and effective establishment of the accounting system in the country is one of the tools to stimulate economic development. Therefore, it is important to have accounting, auditing, and assessment mechanisms for professional accountants, and for these processes to be managed by independent professional accountants. This article examines the current state of the accounting system of the Republic of Azerbaijan and the Republic of Turkey. The aim of the study is to identify the strengths and weaknesses of the accounting system to be applied in both countries. The Ministry of Finance of Azerbaijan is responsible for the implementation of accounting in Azerbaijan. The current accounting system in Azerbaijan is based on the 2004 Law on Accounting. For the first time, this law obliges commercial organizations and budget organizations to apply local standards developed on the basis of IFRS and IPSAS. Following fundamental changes to the Accounting Law in 2018, local accounting standards were abolished and IFRS was adopted directly. At the same time, certain chief accountants are required to have a professional accountant certificate and be a member of a PAO. In addition, this law for the first time forced the application of IFRS for SME by medium and large enterprises. Public Oversight, Accounting, and Auditing Standards Authority (PAASA) is the body responsible for IFRS in Turkey. The PAASA was established by the existing Turkish Trade Code to provide a more effective system of independent audit and public oversight. In Turkey, local standards such as TFRS and BOBI FRS, where financial statements are prepared on the basis of international standards, are applied. TFRSs are used by public benefit organizations, while LMS FRSs are used by large and medium-sized businesses. In 1989, the "Union of Chambers of Certified Public Accountants of Turkey" (CPAT) was established, which played a major role in the development of the professional accounting profession. To become a professional accountant in Azerbaijan, university graduates must pass IFRS and law exams, regardless of the type of specialty. In Turkey, graduates in economics and management must pass IFRS and law exams, as well as financial statement analysis, cost accounting, and audit. In addition, despite the fact that professional accountants in Turkey should have some experience, there is no such condition in Azerbaijan. As a result, the conditions for becoming a professional accountant in Turkey are more difficult than in Azerbaijan. Auditors and professional accountants in Azerbaijan are organized in two separate bodies - the Chamber of Auditors of the Republic of Azerbaijan and the PAOs. The members of the PAOs are professional accountants which are non-profit organizations accredited by the Ministry of Finance. In Turkey, professional accountants are organized with CPAT. Compared to CPAT, the capacity of Azerbaijani PAOs to manage and organize accountants is much weaker. IFRSs in Azerbaijan are translated by the Ministry of Finance and shared with accounting entities. At the same time, the rules of accounting are approved separately for accounting entities, except for micro-business entities. In Turkey, the PAASA develops local standards for organizations that are not subject to an independent audit. As a result, the modern accounting system in post-Soviet Azerbaijan is developing, and serious steps have been taken in this regard. The direct translation of IFRS is one of the correct steps for Azerbaijan in terms of flexibility and completeness. Nevertheless, Turkey`s PAO and professional accountants system can be taken as a model in Azerbaijan