Reporting the Total Quality Management Costs in Compliance With International Financial Reporting Standards

Suppliers have started to focus on costs as tough competing market conditions have been triggered by globalization and leaving of national protection. Under the competitive market conditions, the measures taken firstly are cost information and reducing them. As result of these precautions, suppliers have attempted to research in reducing costs, cost accounting, and managerial accounting in this area, and also they have started to implement those techniques in their enterprises. Quality costs are also defined as inferiority costs. A business cannot recognize any cost to increase the quality of the product as quality cost after having been established to produce any goods to meet the consumers' needs. Any incremental cost that incurred as a result of disorder of the organization cannot be accounted as quality cost. It can be considered as inferiority-cheapness cost. Eventually quality costs comprise of all the expenditures that are incurred to reduce the errors and to correct them. Quality costs are generally classified as in 4 groups. These are prevention costs, measuring costs, internal failure costs and external failure costs. Quality costs can be measured for the entire organization and also it can be prepared on the basis of product and department. Depending on the situation, calculation period can be monthly, three-month, yearly and etc. In the report, comparison between periods, new developments in comparison to same period of the previous year, trends of quality costs' components and various graphical representations take place. Each organization must find the most appropriate reporting scheme and period according to their characteristics. Being able to compare quality costs with sector will be more useful for firms to analyze their quality costs. Having started to apply quality cost practices, feedbacks to the company must be monitored. In general, financial statements are prepared within an accounting model based on recoverable historical cost and protection of nominal capital. According to IFRS, Financial information -to be beneficial- must be appropriate with the requirements and it must be presented in a realistic way what it aims to explain. If financial information is comparable, verifiable, and understandable also presented in a timely manner, benefits of this mentioned information increases. In quality costs reporting which is prepared taking IFRS into accounting, first of all reporting must be done as fitting for purpose and realistically which are considered as basic qualitative characteristics.