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Adoption of Ifrs in Bulgaria

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Adoption of Ifrs in Bulgaria
Introduction of IFRS for small and medium companies in Bulgaria
In this essay we discuss the development and adoption of the International Financial Reporting Standards (IFRS) in the Republic of Bulgaria. Most of the characteristics and features apply not only to this country, but also to most developing economies in Europe. The IFRS are a set of standards which imply rules, methods and governance for reporting and interpreting financial data. The purpose of the IFRS is to develop a set of universal standards to be applied and comprehended worldwide, in order to achieve harmonization and standardization among reporting entities.
Bulgaria was accepted as a member of the European Union on 1 of January 2007. A number of obligations set by the EU had to be completed in order for this to happen. One of them was the adoption of the IFRS for listed companies by the end of year 2005. Actually, this happened by the end of year 2003.
Considering the small to medium businesses, the decision was left to each member of the union to decide whether or not to adopt the new standards. Bulgaria decided to accept them by the end of year 2005.
However, the change is not just a formal process- changing the name from “National GAAP” to “IFRS”. There are some serious differences between the two systems. The old system was mainly tax oriented. Some changes affect assets and liabilities valuation, income taxes, provisions, depreciation and amortization. The simplest examples would be the growth of significance of the fair value concept or the amount of the reported profits of the companies under Bulgarian GAAP or the IFRS. There are also differences in provision percentages and disclosures, depreciation methods, income taxes calculation procedures etcetera. Perhaps the ones of greatest importance are changes related to financial instruments. The overlapping National Accounting Standards (NAS) 25 and NAS 32, which lacked
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