Financial Crime World

Financial Reporting Regulations Tighten Grip in Turkey

To boost transparency and accountability, Turkey has introduced stricter financial reporting regulations for businesses operating within its borders. The new rules came into effect on January 1, 2013, requiring certain companies to prepare their financial statements in accordance with Turkish Accounting Standards (TAS) and Turkish Financial Reporting Standards (TFRS), which are based on International Financial Reporting Standards (IFRS).

New Regulations and Requirements

The Public Oversight Accounting and Auditing Standards Authority (KGK), established in 2011, is the sole body responsible for publishing accounting and auditing standards in Turkey. The authority has designated specific companies that must use TAS/TFRS to prepare their financial statements, including:

  • Organizations of public interest
  • Listed companies
  • Companies subject to statutory audit by the Council of Ministers

Statutory Audit Criteria

The KGK has introduced new criteria for determining which companies are required to undergo a statutory audit. These include:

  • Total assets exceeding TRY 35 million
  • Annual net sales above TRY 70 million
  • A workforce of at least 175 employees

If these criteria are met in two consecutive accounting periods, the company will be required to undergo a statutory audit from the subsequent period.

Additional Criteria

Certain companies will also be subject to statutory audit due to their specific industries or activities, including:

  • Financial institutions regulated by the Banking Regulation and Supervision Agency
  • Insurance companies
  • Pension funds
  • Media outlets that own national terrestrial satellite and cable television channels

Compliance Requirements

The KGK has emphasized the importance of ensuring that all joint stock companies not covered by the above list, cooperatives under Law No. 4572, and their parent organizations comply with audit regulations. The Ministry of Customs and Trade will issue supervisory rules and procedures for these companies after consultation with the KGK.

Conclusion

As Turkey continues to strengthen its financial reporting framework, businesses operating in the country must adapt to the new requirements to ensure compliance and maintain transparency.