The Role and Current Status of IFRS in the Completion of the National Accounting Rules – Evidence from Estonia

Abstract

The main purpose of this paper is to provide an overview of International Financial Reporting Standards (IFRS) application in Estonia. After restoration of independence, development of the Accounting and Financial Reporting System in Estonia has been based on internationally accepted accounting principles where IFRS and EU Directives have had an important role. From 2003 to 2013, the system based on the Full IFRS and after that, the switch from the Full IFRS to the IFRS for Small and Medium-sized Entities (SMEs) took place. Estonian position on IFRSs is very positive. IFRSs were heavily used in the system of setting local guidelines and despite switching to the IFRS for SMEs as base for the local guidelines, they are still used as a very important reference point and source of interpretation for national accounting rules based on the EU Accounting Directive.

Keywords:

• adopting IFRSs
• corporate reporting
• Estonia
• IFRS for SMEs
• EU Accounting Directive 2013/34/EU

Notes

1 According to the AA, the Government of the Republic establishes the NAB and the function of the NAB is to direct the activities in the field of accounting. The NAB is an independent committee appointed for three years and it consists of seven members.

2 For instance, it was estimated that by introducing every reporting simplification the Accounting Directive made available for micro-entities, Estonia could reduce administrative burden by up to 38 million Euros. However, in 2010 local independent study assessed that the total administrative burden related to financial reporting of all Estonian entities to be 10.5 million euros (MFRE, 2015).