Union of Chambers of Certified Public Accountants of Turkey

Statutory Decree No. 660 requires the establishment and operation of a mandatory quality assurance (QA) review systems for all audits in Turkey by the Public Oversight, Accounting and Auditing Standards Authority (KGK). TÜRMOB reports that KGK’s QA system is in line with SMO 1 requirements.

TÜRMOB was delegated the responsibility to conduct QA reviews for auditors of non-public interest entities (PIEs) under the oversight of KGK. TÜRMOB also indicates that it established the system in line with SMO 1 requirements. Inspections are carried out at least every 3 years for audit firms which audit public interest entities, and every 6 years for non-PIEs. Results of inspections performed are announced to the public via an annual report.

Aside from implementing the QA review procedures, TÜRMOB focuses its efforts on supporting members with understanding the processes and requirements through guidance materials. For example, TÜRMOB prepared the Guide on Monitoring Practices, Professional Services and Quality for Accounting, Auditing and Consultancy Practices for members in January 2018.

TÜRMOB reports it assists firms in understanding the objectives of quality control and implementing and maintaining appropriate systems of quality control. In addition to translating guidance material issued by IFAC, TÜRMOB provides its members with training, seminars, and conferences on quality control policies and procedures. There are three regional seminars and conferences on TÜRMOB’s QA review system scheduled to take place in February, May, and October 2020.

TÜRMOB is encouraged to continue collaboration with the Public Oversight, Accounting and Auditing Standards Authority (KGK) to ensure that there are no overlaps between the system established by TÜRMOB and that of the KGK, and to ensure that it complies with the requirements of SMO 1. TÜRMOB is encouraged to demonstrate how it is supporting the effective implementation of the new IAASB Quality Management standards and engaging with the KGK in case their QA review procedures need to updated, such as providing more training to QA reviewers how to assess firms’ context & approach to risk management.

Current Status: Sustain

TÜRMOB shares responsibilities with regulators in the jurisdiction, namely universities, the Turkish Higher Education Council, the Expert Accountants Association of Turkey (EAAT), and the Public Oversight, Accounting and Auditing Standards Authority (KGK), regarding implementation of accountancy education requirements.

In 2022, TURMOB completed a comprehensive review of the existing requirements for professional accountants in the jurisdiction against those of revised 2019 IES and confirms alignment.

TÜRMOB is specifically responsible for offering the Certified Public Accountancy (CPA) and Sworn-in CPA designations and setting the IPD requirements. Candidates for the designations must first (i) obtain a bachelor’s level degree or higher in economics, law or management; (ii) complete a series of final exams (8 subjects) administered by TÜRMOB for CPAs, and inspected by the Public Oversight, Accounting and Auditing Standards Authority (KGK) for Sworn-In CPAs; and (iii) complete three years of practical experience before applying for membership. To maintain their membership, individuals must complete continuing professional development (CPD) requirements that are consistent with those specified by revised IES 7 (i.e., 120 hours over a 3-year rolling period).

TÜRMOB supports implementation of education requirements through the provision of various education, examination preparation, and continuing professional development programs and webcasts to its members. The institute updates members of the profession on any changes to its educational policies via the member journal.

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). According to the Law of Accountancy Profession Numbered 3568, TÜRMOB has authority to communicate both the TDSs and ISA to professional accountants.

KGK has published national standards complying with ISAs issued by IAASB with small amendments to take into consideration the Turkish environment. The 2020 Handbook of International Quality Control, Auditing, Review, Other Assurance, and Related Services Pronouncements is the latest version adopted by KGK.

To raise awareness of the standards, the TÜRMOB collaborates with academics to prepare and publish articles on ISA and related topics and disseminate new and revised IAASB pronouncements.

TÜRMOB also reports to support implementation of the standards through the education program that its Education and Training Center offers. The Center periodically updates the initial professional development and continuing professional development curricula to incorporate the latest requirements of ISA. Lastly, TÜRMOB reports to obtain comments from technical experts to comment on IAASB exposure drafts.

TÜRMOB has demonstrated an ongoing process to maintain its fulfillment of the SMO 3 obligations and is committed to continuous improvement.

Current Status: Sustain

The Public Oversight, Accounting and Auditing Standards Authority’s Organization and Responsibilities Statutory Decree No. 660 provides authorizes 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 2019 International Code of Ethics Parts 1, 3, 4A, and 4B – however, does not require adherence to Part 2. As of the date of this assessment KGK aims to require adherence to the 2022 International Code of Ethics by Q4 2023 and will be published on its website.

TÜRMOB is authorized to promulgate ethical standards via a Code of Ethics for professional accountants in Turkey. TURMOB presently requires adherence to the 2020 International Code of Ethics and plans to align with and translate the 2022 International Code of Ethics by Q4 2023.

TÜRMOB reports it raises members’ awareness of the IESBA Code of Ethics by (i) publishing articles on ethics in TÜRMOB publications; (ii) designing and delivering training events, such as an annual Ethics Congress; and (iii) updating the education, examination, and training curricula to incorporate revisions to the IESBA Code of Ethics. TÜRMOB also supports member participation in the international standard-setting process by soliciting comments on IESBA Exposure Drafts.

TÜRMOB is encouraged to reduce the time lag in the translation of the IESBA Code. It is recommended that TÜRMOB also consider enhancing its activities to support its members with the implementation of the Code. Such activities may include establishing a hotline for confidential questions and disseminating information on the developments in the area through different communications means, among other activities.

Current Status: Review & Improve

The Public Financial Management and Control (PFMC) Law of 2006 requires the Government of Turkey to adopt international accounting standards in the public sector. Public Accounting Standards Board of Turkey (DMSK) is the entity responsible for overseeing this work. TÜRMOB 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 Turkey (DMSK) issued 30 Government Accounting Standards based on IPSAS standards and plans to issue 8 additional Government Accounting Standards in 2020.

While TÜRMOB has no direct authority for the adoption of public sector standards in Turkey, 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 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 standards setting process.

TÜRMOB has demonstrated an ongoing process to maintain its fulfillment of the SMO 5 obligations and is committed to continuous improvement.

Current Status: Sustain

The Union of Chambers of Certified Public Accountants Turkey (TÜRMOB) shares responsibility for investigation & discipline (I&D) procedures in the jurisdiction. It reports that its I&D system embodies the major requirements of SMO 6 requirements. However, the current Professional Law does not allow for non-professional accountants to sit on the TURMOB Disciplinary Committee as required by SMO 6. As such, the current system of I&D does not completely align with IFAC SMO 6.

TÜRMOB reports that it provides members and the public with workshops to raise their awareness of I&D procedures. Between 2011-2017, six I&D workshops were offered to members, and a seventh in 2020.

The association works to ensure that members of the profession are kept informed of the consequences of non-compliance or misconduct under the I&D system via its professional magazine and by posting the Rules on Disciplinary Procedures on its website. TÜRMOB also informs the public about its members’ obligations and any decisions involving expulsions from its membership.

TÜRMOB is encouraged to continue to work with the KGK to consider how to align the overall I&D system in the jurisdiction with SMO 6 requirements.

Current Status: Review & Improve

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 Turkey.

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.

TÜRMOB does not have authority for the adoption of IFRS but it does have an active role in the implementation process. TÜRMOB is involved 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.

TÜRMOB supports its members with the application of accounting standards by updating the education (IPD), examination, and training (CPD) curricula to incorporate new and revised Turkish Financial Reporting Standards. The TÜRMOB also notes it collaborates with academics to host events and publish articles and other material on the TFRS in TÜRMOB publications and on its website.

TÜRMOB is encouraged to continue to raise awareness of IFRS and emerging issues on adoption and implementation in the country. Additionally, TÜRMOB is encouraged to continue its strong efforts at education, training, and support to members in the application of the standards in practice. Finally, TURMOB is requested to consider to what degree promoting of IFRS for SMEs may be useful to the SME financial reporting environment in its country.

Current Status: Sustain