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    Country by Country Financial Reporting and Auditing Framework

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    Turkey – Kavram Bağımsız Denetim ve YMM A.Ş. (May 2014)

    Preparation of and Filing of Statutory Financial Statements


    All companies in Turkey have to keep their records according to Generally Accepted Accounting Policies and Turkish Tax Legislation. They declare their corporate tax statements by uploading them on Revenue Administration web site (www.gib.gov.tr) until April 24.

    IFRS / TFRS:

    The companies listed below are required to prepare their financial statements according to Turkish Financial Reporting Standards (TFRS) (which is fully compliant with IFRS) or IFRS until the dates mentioned in their special laws.


    IFRS financial statements and explanatory notes of publicly-held companies are uploaded on Public Disclosure Platform (KAP) website and announced to the public. Financial statements of companies which are subject to Public Oversight Accounting and Auditing Standards Authority of Turkey (KGK) legislation are uploaded on the KGK web site.


    Financial statements are comprised of a balance sheet, profit and loss and comprehensive income statement, statement of changes in equity, cash flow statement and explanatory notes to financial statements.


    A financial year in Turkey is generally January 1 - December 31. Some companies may prefer to use special periods due to specific reasons as having headquarters abroad which use different period or seasonal activities of the companies.


    Stock companies need to hold a general assembly meeting until the end of March on each financial year. They can hold an extraordinary general assembly during the year, if required.


    Financial Reporting Framework


    In Turkey, audit service is demanded in two ways: as a requirement of authorized legal authorities demands, and private demands of the companies.


    Companies which are subject to compulsory audit:


    Companies which are subject to Capital Markets Board (SPK) Legislation:

    • Publicly-held companies and financial intermediaries.
    • SMEs which are traded in the Istanbul Stock Exchange (ISE) as an emerging market company in nature.
    • Investment companies, portfolio management companies, mortgage financing institutions, real estate appraisal companies, valuation companies.

    Stock companies, which are subject to KGK Legislation:

    • According to the new Turkish Commercial Code (TTK), stock companies which met certain amounts of annual sales, asset size and number of staff are subject to IFRS according to KGK legislation. Companies should meet 2/3 of the requirements mentioned below on two consecutive reporting periods:
    • Annual sales > 150 million TL
    • Total assets > 75 million TL
    • Employees > 250
    • More companies will be added when KGK lower the limits in the following years.
    • Media service providers, gazettes which exceed certain sizes, small sized publicly held companies, state owned companies

    Companies/banks, which are subject to Banking Regulation and Supervision Agency ("BDDK") Legislation:

    • Banks
    • Other finance corporations


    Companies which are subject to Energy Market Regulatory Authority ("EPDK") Legislation:

    • Companies which operate in energy sector


    Companies which are subject to Turquality legislation:

    • Companies which have Turquality Certificate as Turkish companies, operate abroad and have trade mark will be audited


    All stock companies which are subject to Customs and Trade Ministry legislation:

    •  All stock companies will be audited according to a new regulation of Customs and Trade Ministry which will be published soon


    Companies which demand private audit services


    Certain part of audit service is provided to clients due to:

    • Loan demands from banks (abroad and local)
    • Audit report demands of headquarters abroad
    • Audit report demands to see the financial statements and position according to IFRS


    Audit Reports and Periods


    Publicly-held companies which are traded in ISE and banks have to prepare their (consolidated / non-consolidated) financial statements and their explanatory notes quarterly. They are audited as of June 30 and December 31.


    Audit reports for publicly-held companies are presented to the Board of Directors and Audit Committee of the client. They are uploaded to KAP to be announced to public.


    Audit Appointment and Rotation


    Auditors are selected and voted during the General Assembly of the company. Clients have the right to remove their auditor, and they have to declare it to the public. Also, auditors have the option of resignation if there is a conflict according to IASs. Auditor resignations or removals must also be approved by SPK or KGK.


    In Turkey, according to mandatory rotation rule of audit firms, companies cannot be audited continuously for 7 years. Partner rotation within an audit firm or rotating to another member firm of the same network is not allowed


    Auditing Standards


    All audit firms in Turkey are required to carry out their audits and express an opinion on the financial statements in accordance with ISA if they are conducting an IFRS audit.


    Ethical Framework

    Kavram accepts the Code of Ethics of IESBA and ISQC1, which are accepted by KGK at the moment and will be explained in detail with a communiqué soon.


    Audit Regulation


    All audit firms in Turkey are subject to the following external and internal monitoring processes with regard to their audit practice.


    External Monitoring


    According to regulations of SPK and KGK, audit firms are subject to periodical audit of these organizations. Crowe Horwath International also, makes periodical audits to member firms every 3 years.


    Internal Monitoring - Quality Control


    Audit firms in Turkey have to make an internal quality control for the audit process, working papers and all files for each reporting period.  Kavram A.S. formed a quality control system which monitors the audit work which is followed by a quality control report. Quality control work is directed by a partner and managed by controllers who are assigned by board of directors. The results of the quality control work are declared to related audit team and ask for additional work or corrections if needed.


    Audit Certification


    Kavram Bagimsiz Denetim ve Yeminli Mali Musavirlik A.S. has authorizations and certificates to provide audit services of:

    •  KGK (Public Oversight Accounting and Auditing Standards Authority of Turkey),

    • BDDK (Banking Regulation and Supervision Agency) and

    • EPDK (Energy Market Regulatory Authority).

    • It also has ISO 9001: 2008 certificate.

    As the first step, all auditors need to have a SMMM (Certified Public Accountancy Certificate valid in Turkey) certificate to become a qualified auditor. And they have to enter and pass the exams and satisfy the requirements of KGK and SPK to become a registered auditor to perform audits.

    Transparency Report / Quality Assurance Report


    Each audit firm has to prepare an annual transparency report and quality assurance report which cover information about the firm's governance and ownership structure, its quality control and monitoring system, its independence policies and measures and its continuing professional education processes due to KGK and SPK legislations.




    All audit firms are obliged to have insurance policies, which cover a financial year.



    • KGK: Public Oversight Accounting and Auditing Standards Authority of Turkey
    • SPK: Capital Markets Board of Turkey
    • TTK: Turkish Commercial Code
    • KAP: Public Disclosure Platform
    • ISE: Istanbul Stock Exchange
    • BDDK: Banking Regulation and Supervision Agency
    • EPDK: Energy Market Regulatory Authority

    Contact Us
    David Chitty - Audit
    London, United Kingdom
    +44 20.7842.7292

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