Finnish Accounting in Transition : Comparing FAS and IFRS Through Case Analysis

Abstract

This bachelor’s thesis analyses the key differences between Finnish Accounting Standards (FAS) and International Financial Reporting Standards (IFRS) and examines their impact on financial reporting, taxation, and business decision-making in Finnish companies. This study explores how the accounting system in Finland arose from the works of early accounting thinkers, such as Martti Saario, and how his Expenditure-Revenue Theory has influenced financial reporting and policies related to taxation. However, when the European Union mandated IFRS for listed companies in 2005, many Finnish businesses faced the challenge of migrating from FAS to IFRS. This research explores these challenges and evaluates whether IFRS adoption impacts financial reporting practices. The objective is to provide insight for companies, accountants, and investors into the implications of IFRS adoption and the continued presence of FAS in Finland.

This research employs a qualitative approach combining a comparative analysis of FAS and IFRSs and a case study of a Finnish company which adopted IFRS recently. It investigates lease treatment, deferred taxes, share-based payments, inventory valuation, and other differences related to the case company. Also, practical insights are given in the case study regarding financial reporting adjustments to company operations and financial transparency. The findings highlight the most significant changes in the financial statements resulting from IFRS adoption, the difficulties faced by firms during the transition period, and the advantage of having more comparability and more investor confidence. Finally, the research provides guidelines for Finnish companies thinking about adopting IFRS and discusses how firms can manage the transition effectively.