Turkey Tightens Grip on Financial Reporting Regulations

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In an effort to streamline financial reporting standards, Turkey has aligned its accounting framework with international best practices. The Kamu Gözetimi, Muhasebe ve Denetim Standartları Kurumu (KGK), the country’s accounting standard setter, is responsible for setting and enforcing Turkish Financial Reporting Standards (TFRSs) that are fully compliant with International Financial Reporting Standards (IFRS).

New Regulations Expand Scope of Companies

The new regulations have expanded the scope of companies required to use TFRSs in their financial statements. Since 2005, the list of public interest companies has grown to include:

• Banks
• Insurance companies
• Pension funds
• Investment firms
• Others whose securities are traded on regulated markets

Companies Have Options for Applying IFRS

All “public interest companies” are mandated to adopt TFRSs, while other entities are permitted to opt for IFRSs. However, due to translation delays, companies have two options when it comes to applying IFRSs:

• Follow the official English version of IFRSs published by the International Accounting Standards Board (IASB)
• Use TFRSs, which will explicitly state compliance with “IFRSs as adopted for use in Turkey” in their audit reports and footnotes

Benefits of New Regulations

The new regulations are expected to enhance transparency and accountability in Turkey’s financial markets, aligning the country with global standards and best practices.