Expert Accountants' Association of Turkey

The EAAT is not responsible for establishing a quality assurance (QA) review system; however, it reports that it has been supporting the Public Oversight, Accounting and Auditing Standards Authority (KGK) and the Union of Chambers of Certified Public Accountants of Turkiye (TÜRMOB) with the implementation and results of their respective quality assurance review systems, which both align with SMO 1 best practices.

EAAT and TÜRMOB have a QA Taskforce and through this taskforce, EAAT and TÜRMOB develop related training programs and maintain communication with the KGK. As of the date of the assessment, the institutes have completed a translation of the quality management standards and have disseminated guidance for implementation to their members.

In addition, EAAT reports that it participates in recruiting members to become QA reviewers,

Current Status: Sustain

EAAT, an organization with voluntary membership, sets educational requirements for individuals who wish to join. Members of EAAT are first required to meet education requirements as prescribed by TÜRMOB and then fulfill additional requirements set by EAAT, by submitting a dissertation paper and passing an oral examination with its membership committee. EAAT awards the Expert Accountants Certificate to members, which is a privileged qualification but does not give its holder any practicing rights and is more academic in nature.

EAAT reports that it works closely with TÜRMOB and supports the Public Oversight, Accounting and Auditing Standards Authority (KGK) in activities related to professional education. EAAT indicates that TÜRMOB’s requirements were updated to reflect revisions from the 2019 IES and that it monitors discussions held by the International Panel on Accountancy Education.

EAAT members are required to complete 120 hours of Continuous Professional Development (CPD) each year and offers a CPD calendar. It applies an input-based approach. EAAT monitors if its members are fulfilling the CPD obligations set by the institute, TÜRMOB, and the KGK as appropriate.

Current Status: Sustain

The Public Oversight, Accounting and Auditing Standards Authority’s Organization and Responsibilities Statutory Decree No. 660 states that auditing and assurance standards are issued by the KGK under the title of Turkish Auditing Standards (TDSs).

EAAT states that its role is to promote full convergence with ISA and to support its members with the implementation of the standards through trainings and other educational activities. Additionally, EAAT focuses on supporting the Union of Chambers of Certified Public Accountants of Turkiye (TÜRMOB) in the translation of the IAASB pronouncements, the operation of the quality assurance review system that ensures proper implementation of ISA; providing an ISA Guide for Small and Medium Practices; and offering educational and training courses that incorporate ISA requirements. EAAT provides a link on its website to the KGK’s dedicated page on auditing standards. As of the date of this assessment, the 2021 Handbook has been disseminated to its members for application.

Additionally, EAAT collaborates with academics to prepare and publish articles on ISA and related topics and disseminate new and revised IAASB pronouncements. Lastly, EAAT reports to obtain comments from technical experts to comment on IAASB exposure drafts.

Current Status: Sustain

The Public Oversight, Accounting and Auditing Standards Authority’s Organization and Responsibilities Statutory Decree No. 660 provides general authority to the Public Oversight, Accounting and Auditing Standards Authority (KGK) to issue ethical standards in compliance with international standards for auditors. The KGK presently requires adherence to the 2020 International Code of Ethics. Specific authority for the issuance of a Code of Ethics for other professional accountants is vested in TÜRMOB. TÜRMOB has also adopted the 2020 International Code of Ethics, which is, in turn, applicable to all EAAT members.

EAAT reports that it continues to work together with TÜRMOB in the translation of the 2018 International Code of Ethics. Additionally, through its training and website, EAAT provides members with access to updates, resources, and guidance about the IESBA Code of Ethics. Between May and November 2020, it offered two trainings on ethics for members.

EAAT also supports member participation in the international standard-setting process by soliciting comments on IESBA Exposure Drafts.

It is in the public interest that all professional accountants adhere to the latest ethical requirements issued by the IESBA. The 2022 Handbook is currently effective, incorporating the conforming amendments to IAASB's quality management standards, revisions to the non-assurance services (NAS) and fee-related provisions, and revisions to address the objectivity of an engagement quality reviewer (EQR) and other appropriate reviewers, that are effective since December 2022. These revisions should be incorporated into its educational and advocacy plans with TURMOB, KGK, and other stakeholders.

Current Status: Review & Improve

The Public Financial Management and Control (PFMC) Law of 2006 requires the Government of Turkiye to adopt international accounting standards in the public sector. Public Accounting Standards Board of Turkiye (DMSK) is the entity responsible for overseeing this work. EAAT reports that, since 2003, the Central Government has been implementing a modified accrual-basis of accounting (IFAC, CIPFA) and is working to converge its standards with IPSAS. In 2019, the Public Accounting Standards Board of Turkiye (DMSK) issued 30 Government Accounting Standards based on IPSAS standards and plans to issue 8 additional Government Accounting Standards in 2020.

While EAAT has no direct authority for the adoption of public sector standards in Turkiye, it reports to support the convergence process by participating in the DMSK’s work program committee and encouraging the regulator to submit comments on Exposure Drafts issued by IPSASB. Additionally, it has been working with TURMOB to encourage relevant authorities to maintain an ongoing process to translate the most recent version of IPSAS into Turkish in accordance with IFAC Translation Policy as part of the DMSK standard-setting process.

EAAT is encouraged to monitor international developments in this area and disseminate IPSAS amongst its members through its magazines, websites, and publications. It is also encouraged to include IPSAS-related material in its training and educational activities for members who work in the public sector. Furthermore, EAAT is encouraged to consider additional events to promote adoption and implementation of IPSAS including organizing roundtables to meet key stakeholders and users of financial information; and continuing to provide trainings and technical expertise. It may find IFAC’s Train the Trainers: Introduction to IPSAS resource helpful in this regard.

Current Status: Review & Improve

All EAAT members are subject to at least the Union of Chambers of Certified Public Accountants of Turkiye (TÜRMOB)’s enforcement system, which largely meets the SMO 6 benchmark. Its members might also be subject to sanctions by the KGK if they are auditors.

EAAT has a Disciplinary Board for its members, comprising the EAAT President and three members. It mostly functions to apply any sanctions as handed down by TÜRMOB, which has the legal authority for I&D in Turkiye among professional accountants. EAAT’s Disciplinary Board is closely connected with TÜRMOB’s system whereby any disciplinary action taken by TÜRMOB will also be taken by the EAAT.

As all EAAT members are subject to TURMOB’s system, EAAT advertises and promotes members’ participation in TURMOB workshops to raise member awareness of I&D procedures. Between 2011-2020, seven I&D workshops were offered to members.

I&D procedures that meet the SMO 6 benchmark are foundational to supporting public trust and confidence in the profession. Given that its members might be subject to both TURMOB and KGK disciplinary procedures, the EAAT is encouraged to collaborate with both entities to determine what, if any, actions may be taken to have a unified approach to enforcement efforts in the jurisdiction that meets global best practices.

Current Status: Execute

The Public Oversight, Accounting and Auditing Standards Authority (KGK), which was established in accordance with the Public Oversight, Accounting and Auditing Standards Authority’s Organization and Responsibilities Statutory Decree No. 660, is responsible for setting corporate accounting standards in Turkiye.

KGK requires the application of Turkish Financial Reporting Standards (TFRS) which are fully converged with IFRS as issued by IASB for the financial statements of all public interest entities (PIEs). PIEs include companies whose securities are traded in a regulated market, banks, insurance companies, pension companies, and investment firms.

Other companies that are not included in the list above are permitted to apply IFRS or the Financial Reporting Standard for Large and Medium Sized entities (BOBI FRS) established by the KGK. BOBI FRS is the financial reporting framework for entities, which are not required to apply TFRS but are within the scope of entities subject to audit. Differences between BOBI FRS and IFRS for small and medium-sized entities (SMEs) are outlined here. While IFRS for SMEs was previously permitted in the country, it is not permitted at this time. However, the 2009 version has been translated into Turkish and was made available.

EAAT does not have authority for the adoption of accounting standards but it does have an active role in the implementation process. EAAT supports TÜRMOB in the process of translating IFRS in accordance with the IFRS Foundation Translation Policy. It also participates in the international standard-setting process by providing comments on Exposure Drafts issued by the IASB.

EAAT also supports its members with the application of accounting standards by providing access to guidance on its website and updating the education (IPD), examination, and training (CPD) curricula to incorporate new and revised Turkish Financial Reporting Standards.

EAAT is encouraged to continue to raise awareness of IFRS and emerging issues on adoption and implementation in the country. EAAT could coordinate with TURMOB and consider to what degree advocating for the adoption of IFRS for SMEs would help bring SME reporting in line with international best practices and would benefit the SME financial reporting environment in its country.

Current Status: Sustain