The Necessity of Harmonizing National Accounting Standards, IFRS and the Law on Revenues and Expenditures: The Case of Albania

Abstract

This study addresses the necessity of harmonizing the National Accounting Standards (NAS), the International Financial Reporting Standards (IFRS), and the current Income and Expense Law in Albania. The primary objective is to analyze the existing discrepancies among these regulatory frameworks and to evaluate their impact on the quality of financial reporting and tax administration. The methodology involves a mixed approach: a comparative analysis of accounting and tax legislation, and an empirical survey conducted with accounting professionals and financial auditors. The findings indicate a high degree of divergence between accounting treatment under NAS and the requirements of the tax law, particularly in the recognition and classification of income and expenses for fiscal purposes. This has led to the production of dual reports—one for financial reporting and another for tax compliance—resulting in increased costs and complexity for reporting entities. The study concludes by emphasizing the need for a gradual legal, technical, and institutional harmonization process to ensure coherence between accounting standards and fiscal law. Such harmonization would enhance transparency, clarity, and the overall integrity of financial reporting in Albania.