In March 2006, the Turkish Accounting Standards (TAS) has been published by Turkish Accounting Standards Board which was declared to be effective as of January 1, 2006. The legal requirements to apply TAS has been referred to in the draft revised Turkish Commercial Code; however, such draft has not yet been approved by the Grand National Assembly of Turkey. Accordingly, companies follow the existing Turkish Commercial Code, Turkish Procedural Tax Law and the communiqué issued by Ministry of Finance in 1992 applicable to all Turkish entities (excluding financial institutions) in preparing the statutory financial statements. Starting in 1994, the communiqué requires such entities to prepare their financial statements in a prescribed format using a uniform chart of accounts and certain fundamental accounting and reporting concepts specified in the communiqué.
Under Capital Markets Board (CMB) regulations, all listed companies, financial intermediaries, mutual funds, investment partnerships, and companies not listed but considered as publicly traded due to high number of shareholders (more than 250) are subject to CMB regulations. With minor exceptions, these CMB standards generally conform to International Financial Reporting Standards (IFRS) prevailing as of December 31, 2004. However, since updates in IFRS thereon could not be implemented in CMB standards, CMB announced that financial statements prepared in accordance with IFRS are also acceptable.
Starting from December 31, 2006, financial institutions other than insurance companies, prepare their financial statements in accordance with the Turkish Accounting Standards which are in line with IFRS. However, there are certain departures from IFRS as explained in communiqués of Banking Regulations and Supervision Agency (BRSA) like non-consolidation of non-financial institutions.
A separate set of accounting principles together with uniform chart of accounts applicable to insurance companies are issued by Undersecretariat of Treasury.
Statutory Financial Statements
The statutory financial statements should include at least the following:
• Balance sheet
• Profit and Loss Statement and
• Notes to the Financial Statements.
Supplementary financial statements, which are not mandatory for all companies are:
• Statement of Changes in Shareholders’ Equity
• Statement of Cash Flows
• Statement of Cost of Sales
• Statement of Profit Distribution