Turkey

Member Organizations

Member Organization Associate Other PAOs

  Expert Accountants' Association of Turkey
  Union of Chambers of Certified Public Accountants of Turkey

Legal and Regulatory Environment

  • Overview of Statuatory Framework for Accounting and Auditing

    Accounting and Reporting Requirements

    The Republic of Turkey adopted a new Turkish Commercial Code in 2012 (Law No. 6102) which contains provisions on the formation and operation of entities in the jurisdiction, and stipulates the accounting, auditing, and ethical standards to be applied by companies and professionals. The Code requires application of Turkish Accounting Standards (TAS) in the preparation of the financial statements of public interest entities (PIEs). Entities under this definition include (i) listed entities, brokerage and portfolio management firms, debt issuers; (ii) banks and their subsidiaries; (iii) insurance companies; and (iv) pension companies. In addition, limited liability companies that meet certain criteria are also required to apply TAS in the preparation of their financial statements.

    TAS are issued by the Public Oversight, Accounting and Auditing Standards Authority (KGK). KGK was established in 2011 with the legal authority to set and issue accounting and financial reporting standards (Statutory Decree No. 660) and took over accounting standard setting responsibilities from the Turkish Accounting Standards Board. KGK adopted and translated IFRS without modifications as TAS to be applied in both separate and consolidated financial statements of PIEs.

    All other entities are mandated to prepare financial statements in accordance with the Uniform Chart of Accounts as outlined in the 1993 Communiqué of Accounting System Implementation issued by the Ministry of Finance.

    The Turkish Capital Markets Board, under the Capital Markets Law, establishes financial reporting requirements with respect to listed entities, financial intermediaries, and portfolio management companies, along with their subsidiaries, associates, and joint ventures. Similarly, the Banking Regulation and Supervision Agency sets financial reporting requirements for entities under its purview, while the Under secretariat of Treasury supervises insurance, reinsurance companies as well as pension funds. As mentioned above, as PIEs all regulated entities are required to apply TAS.

    Auditing Requirements

    The 2012 Code on the Validity and Application of the Turkish Commercial Code (Law No. 6103) grants authority to the Council of Ministers to determine the scope of entities subject to mandatory audit requirements in Turkey. In January 2013, the Council of Ministers enacted the Resolution on the Determination of Companies Subject to Independent Audit (Official Gazette No. 28509) which stipulates that listed companies, banks, insurance companies, and brokerages are required to have mandatory annual audits of their financial statements. The Council of Ministers also sets the audit requirements based on the size of entities. Companies which meet at least two of the following criteria during two consecutive financial years are required to have mandatory audits: (i) total assets > 50 million Turkish Lira (TL) (approximately US$17 million); revenue > 100 million TL (approximately US$34 million); and average number of employees > 200.

    Under the law, the right to conduct statutory audits is granted to members of the Union of Chambers of Certified Public Accountants who satisfy the requirements established by KGK.

    KGK, under the Public Oversight, Accounting and Auditing Standards Authority’s Organization and Responsibilities Statutory Decree No. 660, has the authority to approve auditors and audit firms, and is also responsible for setting auditing standards. KGK has adopted and translated into Turkish the 2012 version of ISA as Turkish Auditing Standards.

  • Regulation of Accountancy Profession

    The accountancy profession is regulated both at the state level (auditors) and through self-regulation.

    Prior to 2011, the profession was largely self-regulated under the Law on Certified Public Accountancy (CPA) and Sworn-in Certified Public Accountancy (Law No. 3658), enacted in 1989 and amended in 2009. The Law defines accounting and auditing as a profession and recognizes two qualifications of accounting and auditing professionals granted by the Union of Chambers of Certified Public Accountants (TÜRMOB): Certified Public Accountant (SMMMs) and Sworn-in Certified Public Accountant (YMMs). Only accountants who have been awarded a license by TÜRMOB are entitled to render professional services. TÜRMOB and its mandate, organizational structure, operations and obligations, have been established in accordance with Law No. 3658.

    In distinguishing between the two titles, SMMMs may keep books, prepare financial statements, conduct general audits, but cannot perform tax audits nor provide consulting services. With the exception of bookkeeping, YMMs are allowed to perform all the services provided by CPAs in addition to tax audits and certifying financial statements that are prepared for tax purposes and tax returns.

    The Law stipulates the qualifications for entry to the profession, establishes TÜRMOB, and defines its mandate, organizational structure, operations, and obligations. TÜRMOB is also authorized to set and administer education and certification requirements, operate an investigative and disciplinary (I&D) system for non-compliance of its members with relevant standards and regulations, as well as other instances of professional misconduct. The activities of TÜRMOB, as the national umbrella organization for the 81 local chambers of SMMMs (73) and YMMs (8), are subject to oversight by the Ministry of Finance.

    TÜRMOB is also authorized to set and administer education and certification requirements, operate an (I&D system for non-compliance of its members with relevant standards and regulations, as well as other instances of professional misconduct. The activities of TÜRMOB, as the national umbrella organization for the 81 local chambers of SMMMs (73) and YMMs (8), are subject to oversight by the Ministry of Finance.

    Since 2011, the Public Oversight, Accounting and Auditing Standards Authority (KGK), in accordance with Statutory Decree No. 660, regulates and oversees the audit profession. The KGK regulates the audit profession by (i) setting Turkish accounting and auditing standards in compliance with the international standards and supporting their implementation; (ii) carrying out examination, licensing and registration for members of profession who would perform independent audit; (iii) executing discipline and investigation procedures; (iv) determining continuing education standards and professional ethic rules; and (v) organizing a quality assurance system.

    In addition, the Turkish Capital Markets Board and the Banking Regulation and Supervision Agency authorize auditors who provide services to entities under the purview, oversee auditing firms, and perform quality control reviews of their work.

  • Audit Oversight Arrangements

    The Public Oversight, Accounting and Auditing Standards Authority (KGK), was created by the Statutory Decree No. 660 in 2011 as the regulatory and oversight agency of the audit profession. KGK regulates independent auditors and audit firms through monitoring their activities within a quality assurance framework and determining auditing and ethics standards.

    Based on Statutory Decree No. 660, KGK has the following responsibilities: (i) to set financial reporting and auditing standards in compliance with international standards and supporting their implementation; (ii) to establish working principles, requirements and qualifications of statutory auditors and audit firms; (iii) to approve statutory auditors and audit firms as part of the public oversight system and monitor their activities; (iv) to organize a quality assurance system independent from the reviewed statutory auditors and audit firm; (v) to determine the rules of professional ethics and continuing education standards; and (vi) to conduct disciplinary and investigative procedures on statutory auditors or audit firms.

    The oversight agency is a member of the International Forum of Independent Audit Regulators.

  • Professional Accountancy Organizations

    The Expert Accountants Association of Turkey (EAAT)

    The (EAAT is a private organization established in 1942 and serves as the oldest association of professional accountants in the country. The EAAT is a voluntary association and has no formal legal recognition or mandate. It cooperates with the Union of Chambers of Certified Public Accountants and Sworn-in Certified Public Accountants of Turkey (TÜRMOB) on providing professional accountancy education and training as well as in the implementation of standards that regulate the profession. Regarding membership requirements, candidates for EAAT membership must hold a licensed Certified Public Accountant or Sworn-in Certified Public Accountant qualification awarded by TÜRMOB. The EAAT awards the Expert Accountants Certificate to members, a distinguished title however it does not give its holder any practicing rights unlike the professional licenses issued by TÜRMOB. EAAT and TÜRMOB maintain a collaborative partnership to strengthen the accountancy profession in Turkey. EAAT is a member of IFAC.

    The Union of Chambers of Certified Public Accountants and Sworn-in Certified Public Accountants of Turkey (TÜRMOB)

    The TÜRMOB was founded in 1989 based on Law No. 3658. TÜRMOB is a professional accountancy body in the country and its organizational structure is supported by two distinct chambers, the Chamber of CPA and the Chamber of Sworn-in CPAs. As the national umbrella organization for the 81 local chambers of CPAs (73) and Sworn-in CPAs (8), TÜRMOB’s activities are subject to oversight by the Ministry of Finance and the Public Oversight, Accounting and Auditing Standards Authority.

    TÜRMOB’s mandate includes: (i) to perform activities related to development of the profession; (ii) protect the interest of the profession and ensure that ethical standards are upheld by its members; (iii) represent members of the profession; prepare relevant regulations to enable the Union to fulfill its duties; and (iv) represent the profession nationally and internationally. Under the Law 3658, TÜRMOB is authorized to set and administer education and certification requirements for its members, operate an investigative and disciplinary system for non-compliance of its members with relevant standards and regulations, as well as other instances of professional misconduct.

    TÜRMOB is a member of IFAC, the Federation des Experts Comtables Mediterraneens, Federation des Experts-Comptables Europeens, South Eastern European Partnership on Accountancy Development, and the Edinburg Group.

  • Projects or Other Information

Adoption of International Standards

  • Quality Assurance

    The Public Oversight, Accounting and Auditing Standards Authority (KGK), established in 2011 under Statutory Decree No. 660, is responsible for the oversight of quality assurance (QA) review system for auditors and has been working to establish a QA review system, in which all auditors and audit firms are subject to a system of QA reviews.

    As of 2016, only auditors who provide services to the entities regulated by the Banking Regulatory Supervision Authority (BRSA) and the Turkish Capital Markets Board (CMB) are subject to QA reviews. The BRSA and CMB share the results of the inspections with KGK. However, it is not clear whether the systems operated by the regulators fulfill the requirements of SMO 1.

    In addition, the Union of Chambers of Certified Public Accountants and Sworn-in Certified Public Accountants of Turkey (TÜRMOB) has the authority for establishing a QA review system for its members in accordance with the Union’s internal regulations. TÜRMOB reports that it is in the process of establishing a QA review system that complies with the requirements of the revised SMO 1.

    Audit firms in Turkey are required to comply with the 2013 version of ISQC 1, which has been adopted by the KGK and translated by TÜRMOB.

    Current Status: Partially Adopted

  • International Education Standards

    The Law on Certified Public Accountancy (CPA) and Sworn-in CPA (Law 3658) establishes initial professional development (IPD) and continuous professional development (CPD) requirements for the accountancy profession. The responsibility for implementing these requirements is shared between the providers of higher education, the public oversight authority, and the profession. Although many of the requirements of IES have been incorporated into national education programs, the extent of compliance with all the requirements of IES needs to be clarified.

    Universities and the Turkish Higher Education Council determine the curriculum for initial entry to the profession based on Law 3658. The Law also grants the Union of Chambers of Certified Public Accountants of Turkey (TÜRMOB) authority to establish IPD and CPD requirements and programs, including professional examinations and certification, for members of the profession subject to approval by the Ministry of Finance. An amendment in 2009 introduced mandatory CPD requirements.

    The Expert Accountants Association of Turkey (EAAT), whose members must have certification from TÜRMOB, are also required to meet educational requirements as prescribed by TÜRMOB. In addition to the TÜRMOB requirements, EAAT also determines experience prerequisites and sets additional examinations for entry to the association and CPD obligations for its members.

    In accordance to the more recent Statutory Decree No. 660 which came into force in 2011, the Public Oversight, Accounting and Auditing Standards Authority was given the authority to determine CPD requirements and carry out examinations for the audit profession. No information on the status of development of these requirements is available.

    Current Status: Partially Adopted

  • International Standards on Auditing

    Under Statutory Decree No. 660, since 2011 the Public Oversight, Accounting and Auditing Standards Authority (KGK) has been responsible for setting and promulgating auditing standards in Turkey.

    According to its website, the KGK adopted and translated into Turkish the 2012 version of ISA as Turkish Auditing Standards.

    Current Status: Adopted

  • Code of Ethics for Professional Accountants

    The responsibility for setting ethical standards for the profession is shared between the professional accountancy organizations and the public oversight authority.

    The Union of Chambers of Certified Public Accountants and Sworn-in Certified Public Accountants of Turkey (TÜRMOB) has the responsibility for establishing professional ethics standards for its members in accordance with Law 3658 of Certified Public Accountancy (CPA) and Sworn-In CPA 1989. In collaboration with the Experts Accountants Association of Turkey (EAAT), TÜRMOB has adopted, translated (in accordance with the IFAC Translation Policy), and published the 2014 version of the IESBA Code of Ethics. Members of EAAT must also comply with the Code as issued by TÜRMOB.

    The Public Oversight, Accounting and Auditing Standards Authority (KGK), which oversees auditors, has been granted authority to determine standards of professional ethics for the audit profession in accordance with the Public Oversight, Accounting and Auditing Standards Authority’s Organization and Responsibilities Statutory Decree No. 660. KGK has also adopted and translated the 2014 version of the IESBA Code of Ethics according to IFAC Translation Policy.

    Current Status: Adopted

  • International Public Sector Accounting Standards

    In 2006, the Public Financial Management and Control (PFMC) Law of 2006 required the government of Turkey to adopt international accounting standards in the public sector. Based on the PFMC Law, the government established a Public Accounting Standards Board, which by 2013 had issued 22 Government Accounting Standards based on IPSASs. The timeline for complete convergence with IPSASs and whether IPSAS have been translated into Turkish needs further clarification.

    Current Status: Partially Adopted

  • Investigation and Discipline

    The responsibility for the implementation of an investigative and discipline (I&D) system is shared between the public oversight authority and the professional accountancy organizations (PAOs). The Statutory Decree No. 660 in 2011 mandates the Public Oversight, Accounting and Auditing Standards Authority (KGK) to implement I&D system for the audit profession while the PAOs have also established I&D systems for their members.

    In accordance with Statutory Decree No. 660, KGK is authorized to sanction registered auditors and audit firms for non-compliance with applicable standards and legislations, with respect to the performance of statutory audits. The KGK is also mandated to conduct disciplinary and investigative procedures and in case of breaches, suspend or cancel the license of the statutory auditors or audit firms. As of 2016, more information is needed to confirm if the system has become fully operational and whether it is in line with the revised SMO 6 requirements.

    Both IFAC member organizations in Turkey have established I&D systems for their members. The Union of Chambers of Certified Public Accountants of Turkey (TÜRMOB) has established an I&D system to enforce compliance by its members with applicable professional standards, rules and regulations in accordance with the Law 3658 of Certified Public Accountancy and Sworn in Certified Public Accountancy of 1989 and its internal disciplinary regulations. TÜRMOB reports that its system is fully in line with the revised SMO 6 requirements.

    The Expert Accountants Association of Turkey maintains a supplemental I&D system for its members; however, more information is required to assess if the system is aligned with the requirements of the revised SMO 6.

    Current Status: Partially Adopted

  • International Financial Reporting Standards

    The Public Oversight, Accounting and Auditing Standards Authority (KGK), established in 2011 in accordance with Statutory Decree No. 660, is responsible for setting accounting standards in Turkey. The KGK, which took over accounting standard setting responsibilities from the Turkish Accounting Standards Board, adopted and translated IFRS without modifications as Turkish Accounting Standards (TAS).

    The Union of Chambers of Certified Public Accountants of Turkey reports that as of 2016 the latest version of IFRS is being applied.

    Statutory Decree No. 660 and the Turkish Commercial Code requires the application of TAS in the preparation of financial statements of public interest entities and LLCs that meet two of these three criteria: total assets > 75 million Turkish Lira (TL) (approximately US$25 million); revenue > 150 million TL (approximately US$51 million); and average number of employees > 250.

    Entities that are not required to apply TAS must apply the Uniform Chart of Accounts and accounting principles stipulated in the Communiqué of Accounting System Implementation issued by the Ministry of Finance.

    IFRS for SMEs Standard has not been adopted.

    Current Status: Adopted

Disclaimer

IFAC bears no responsibility for the information provided in the SMO Action Plans prepared by IFAC member organizations. Please see our full Disclaimer for additional information.

Methodology

Methodology
Last updated: 11/2016
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