Türkiye

The Turkish Commercial Code No. 6102 (the Commercial Code) of 2012 (as amended) governs the corporate financial reporting, accounting, and auditing requirements in Turkiye. The Code outlines the preparation and publication of financial statements and provides legal backing to the standards that have been issued by the Public Oversight, Accounting and Auditing Standards Authority (KGK).

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 is not adopted in the jurisdiction, the 2009 version has been translated into Turkish.

Act No. 6103 on the Application of the Turkish Commercial Code of 2011 (as amended) grants authority to the Council of Ministers to determine the scope of entities subject to mandatory audit requirements in Turkiye. In January 2013, the Council of Ministers enacted the Resolution on the Determination of Companies Subject to Independent Audit, 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 and, in 2014 and 2015, significantly lowered previously established thresholds so that companies that satisfy at least two of the following criteria during two consecutive financial years are required to have mandatory audits: (i) total assets greater than or equal to 35 million Turkish Lira (TL); and/or (ii) revenue greater than or equal to 70 million TL; and/or (iii) greater than or equal to 175 employees.

Under the Code, the right to conduct statutory audits is granted to members of the Union of Chambers of Certified Public Accountants of Turkiye (TÜRMOB) who satisfy the requirements established by KGK. The Public Oversight, Accounting and Auditing Standards Authority’s Organization and Responsibilities Statutory Decree No. 660 also authorizes the KGK to issue auditing standards in compliance with international standards. As per those Laws, KGK has published national standards complying with ISAs issued by IAASB with small amendments to take into consideration the Turkish environment. The 2021 Handbook of International Quality Control, Auditing, Review, Other Assurance, and Related Services Pronouncements is the latest version adopted by KGK.

Only Certified Public Accountants (CPA), and Sworn-In Certified Public Accountants (Sworn-In CPA) are regulated at the state level under Professional Law No. 3658 on Certified Public Accountancy (CPA) and Sworn-in CPA of 1989 (as amended).

Under Professional Law No. 3658, universities and the Turkish Higher Education Council determine the curriculum and undergraduate degrees for initial entry to the profession. Candidates for the CPA or Sworn-In CPA designation must (i) obtain a bachelor’s level degree or higher in business administration, economics, law or management; (ii) complete a series of online trainings and exams to 42 professional modules during practical experience (iii) complete three years of practical experience and then (iv) complete a series of final exams (8 subjects) administered by TURMOB for CPAs,. They must then join the Union of Chambers of Certified Public Accountants Turkiye (TÜRMOB) to practice in the jurisdiction. CPAs may keep books, prepare financial statements, conduct general audits—but not tax audits—and provide assurance services and various advisory services such as anti-money laundering, and sustainability reporting. Sworn-in CPAs may conduct tax audits and certify financial statements that are prepared for tax purposes and tax returns in addition to all the services provided by CPAs except bookkeeping.

KGK, in accordance with Statutory Decree No. 660, has been regulating and overseeing the audit profession since 2011. Candidates for authorization to perform audits of non-PIEs must meet the following requirements (i) complete an undergraduate or graduate degree in law, economics, public finance, business administration, public administration or political science or foreign universities approved by Turkish Council of Higher Education; (ii) acquire a CPA or Sworn-in Certified Public Accountant license; (iii) complete at least three years of practical experience in the field of audit; (iv) pass the audit exam for non-PIEs. Candidates for authorization to perform audits of PIEs must meet all the requirements listed above for non-PIEs, as well as a final examination on regulations of capital markets, banking, insurance, and private pension.

KGK’s oversight responsibilities include: (i) setting ethical, accounting, and auditing standards in compliance with international standards and best practices; (ii) carrying out examination, licensing, and registration for members of the profession who want to perform statutory audits; (iii) maintaining a public registry of auditors and audit firms; (iv) implementing investigation and disciplinary procedures for auditors; (v) monitoring continuing professional development requirements for auditors; and (vi) organizing a quality assurance review system.

Meanwhile, under the Professional Law No. 3658, TÜRMOB is authorized to (i) monitor compliance with initial and continuing professional development requirements for its members; (ii) translate and monitor ethical requirements; and (iii) investigate and discipline members for breach of rules and professional standards. KGK delegated the authority to conduct quality assurance (QA) reviews of non-public interest entities (PIEs) to TÜRMOB, under its oversight. All other TÜRMOB activities are subject to oversight by the Ministry of Treasury and Finance.

Finally, members of TÜRMOB with Certified Public Accountant (CPA), or Sworn-In Certified Public Accountant (Sworn-In CPA) titles may also choose to join Expert Accountants Association of Turkiye (EAAT) to obtain the Expert Accountant Certificate, which is a privileged qualification but does not give its holder any practicing rights.

In accordance with Statutory Decree No. 660, the Public Oversight, Accounting and Auditing Standards Authority (KGK) is the independent audit supervisory authority in Turkiye. KGK is a member of the IFIAR.

KGK oversight responsibilities include: (i) setting ethical, accounting, and auditing standards in compliance with international standards and best practices for statutory auditors; (ii) carrying out examination, licensing, and registration for members of the profession who want to perform statutory audits; (iii) maintaining a public registry of auditors and audit firms; (iv) implementing investigation and disciplinary procedures for auditors; (v) monitoring continuing professional development requirements for auditors; and (vi) organizing a quality assurance review system.

Audits can only be carried out by auditors or audit firms that are authorized by KGK.

Expert Accountants Association of Turkiye (EAAT)

EAAT was established in 1942 as a voluntary membership organization for accountancy professionals in the private sector that hold Certified Public Accountant (CPA), or Sworn-In Certified Public Accountant (Sworn-In CPA) titles from the Union of Chambers of Certified Public Accountants of Turkiye (TÜRMOB). It has no formal legal recognition or powers. EAAT awards the Expert Accountants Certificate to members, which is a privileged qualification but does not give its holder any practicing rights. EAAT and TÜRMOB cooperate on strengthening the accountancy profession in Turkiye. EAAT is a member of IFAC.

Union of Chambers of Certified Public Accountants of Turkiye (TÜRMOB)

TÜRMOB was established in 1989 as a mandatory membership organization for CPAs and Sworn-in CPAs, in accordance with the Professional Law No. 3658 on Certified Public Accountancy and Sworn-in CPA of 1989 (as amended). As of 2022, TURMOB has more than 120,000 fully qualified members and 20,000 future members that are in the pipeline in Turkiye.

Under the Professional Law No. 3658, TÜRMOB is authorized to (i) monitor compliance with initial and continuing professional development requirements for its members; (ii) translate and monitor ethical requirements; and (iii) investigate and discipline members for breach of rules and professional standards. KGK, the audit oversight entity, delegated the authority to conduct quality assurance (QA) reviews of non-public interest entities (PIEs) to TÜRMOB, under its oversight. All other TÜRMOB activities are subject to oversight by the Ministry of Treasury and Finance.

In addition to being a member of IFAC, TÜRMOB is a full member of the Federation des Experts Comptables Mediterraneens, Accountancy Europe, and the Edinburgh Group.

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). The Union of Chambers of Certified Public Accountants of Turkey (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 under the oversight of KGK. TÜRMOB indicates in its SMO Action Plan that it established a system in line with SMO 1 requirements and has completed a self-assessment to demonstrate its level of compliance.

Inspections are carried out at least once every 3 years for audit firms which audit public interest entities (PIEs), and every 6 years for non-PIEs. Results of inspections performed are announced to the public via an annual report.

As of the date of the assessment, IFIAR reports that 249 audit firms are subject to inspections carried out by the KGK. 123 of those firms have been approved to conduct the audits of public interest entities and 126 of them have been approved to conduct the audits of nonpublic interest entities.

Lastly, ISQM 1 and ISQM 2 are adopted and applicable in the jurisdiction.

Current Status: Adopted

Professional Law No. 3658 on Certified Public Accountancy (CPA) and Sworn-in CPA of 1989 (as amended) establish initial professional and continuing professional development (IPD and CPD respectively) requirements for CPAs and Sworn-in CPAs.

Under Professional Law No. 3658, universities and the Turkish Higher Education Council determine the curriculum and undergraduate degrees for initial entry to the profession. Candidates for the CPA or Sworn-In CPA designation must (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 TURMOB 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. They must then be members of the Union of Chambers of Certified Public Accountants Turkey (TÜRMOB) to practice in the jurisdiction. TÜRMOB has set CPD requirements that are consistent with those specified by revised IES 7 (i.e., 120 hours over a 3-year rolling period).

Candidates for authorization to perform audits of non-PIEs must meet the following requirements (i) complete an undergraduate or graduate degree in law, economics, public finance, business administration, public administration or political science or foreign universities approved by Turkish Council of Higher Education; (ii) acquire a CPA or Sworn-in Certified Public Accountant license; (iii) complete at least three years of practical experience in the field of audit; and (iv) pass the audit exam for non-PIEs. Candidates for authorization to perform audits of PIEs must meet all the requirements listed above for non-PIEs, as well as pass a final examination on regulations of capital markets, banking, insurance, and private pension.

EAAT maintains a system for certification in addition to the one operated by TURMOB. EAAT awards the Expert Accountants Certificate to members, which is a privileged qualification but does not give its holder any practicing rights.

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

Current Status: Adopted

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 2021 Handbook of International Quality Control, Auditing, Review, Other Assurance, and Related Services Pronouncements is the latest version adopted by KGK.

Current Status: Adopted

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 2018 International Code of Ethics Parts 1, 3, 4A, and 4B – however, does not require adherence to Part 2.

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 of the Code of Ethics.

Members of the Expert Accountants Association of Turkey (EAAT) must also comply with the Code as issued by TÜRMOB.

Current Status: Partially Adopted

The Public Financial Management and Control (PFMC) Law of 2006 requires the Government of Turkey to adopt international accounting standards in the public sector.

The Union of Chambers of Certified Public Accountants Turkey (TÜRMOB) reports that, since 2003, the Central Government has been implementing a modified accrual-basis of accounting (IFAC, CIPFA).

The government established a Public Accounting Standards Board, which issued 30 Government Accounting Standards based on IPSAS in 2019. The Government intends to issue 8 additional Government Accounting Standards based on IPSAS in the near future to achieve full convergence.

Current Status: Partially Adopted

As noted by the Union of Chambers of Certified Public Accountants Turkey (TÜRMOB) Action Plan, the Public Oversight, Accounting and Auditing Standards Authority (KGK) does not maintain a separate mechanism for Investigation and Discipline (I&D). However, under Decree Law No. 660 and Turkish Commercial Code (TCC), KGK has authority to initiate disciplinary procedures based on the findings of its quality assurance review system. KGK is limited however, to issuing a warning, suspending, or revoking audit practice rights. Given KGK's scope of authority over auditors, punishments are only related to auditing. To include non-audit activities among these punishments, the case must be submitted to TURMOB's Discipline Board.

TÜRMOB has established mechanisms for I&D for all professional accountants in Turkey, which embody the requirements of SMO 6 and in accordance with the Professional Law No: 3568 and Disciplinary Regulation. 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.

The Expert Accountants Association of Turkey (EAAT) maintains a supplemental I&D system for its members, which as of the date of the assessment is also not aligned with revised SMO 6 requirements. All members of the EAAT are, however, subject to the I&D procedures of TÜRMOB.

Current Status: Partially Adopted

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 accounting standards in Turkey.

KGK requires (according to the decision of its Board published in the Official Gazette on 26/08/2014) 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) The definition of public interest entities has been made in Statutory Decree No. 660 in line with EU’s Audit Directive 2006/43/EC. 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.

Current Status: Adopted

Relevant Organizations

• Expert Accountants’ Association of Turkiye (EAAT)
• Public Oversight Accounting and Auditing Standards Authority (KGK)
• Union of Chambers of Certified Public Accountants and Sworn-in Certified Public Accountants of Turkiye (TÜRMOB)

Relevant Legislation

• Act No. 6103 on the Application of the Turkish Commercial Code of 2011 (as amended)
• Law of Certified Public Accountancy (CPA) No. 3658, 1989 (as amended)
• Turkish Commercial Code No. 6102 of 2012 (as amended)

Relevant Publications

• Altintas N. & Yilmaz F., The Accounting Profession: A Descriptive Study of the Common and Code Law Countries, 2012.
• EAAT, SMO Action Plan, 2021
• Global Accountancy Development Institute, Global Accountancy Education Country Characteristics: Turkiye, 2012.
• International Forum if Independent Audit Regulators, Member Profile: Turkiye, 2023.
• IFRS Foundation, IFRS Application Around the World?Jurisdictional Profile: Turkiye, December 2018.
• KGK, Introductory Booklet: Public Oversight, Accounting and Auditing Standards Authority, April 2015.
• Organisation for Economic Co-operation and Development, OECD Policy Round Tables—Competition and Regulation in Auditing and Related Professions, 2009.
• TÜRMOB, SMO Action Plan, September 2020
• World Bank, Report on the Observance of Standards and Codes: Accounting and Auditing—Turkiye, September 2006.