Accountancy-Related Matters In Turkey

I wrote an article a while back about the difficulties of finding good service providers in the area of accountancy titled "Finding an English-speaking accountant in Turkey." In Turkey as well as in other countries, bookkeeping is very closely related to legal matters and foreign companies working in Turkey can face problems due to a lack of quality communication with their accountant.

Finding a good service provider in any field who speaks English is difficult but accountancy and legal services are the most problematic because these professions have their own vocabulary. Furthermore, looking for other languages than English in Turkey would be an epic adventure. Learning by experimental methods is usually the most expensive way to learn and the expression “experience is expensive” seems to be very true.

Simple bookkeeping procedures are not very complex but must be handled with care and maintain good communication with the client. Input from the client and an accountant who understands the client are a must to get a proper result. Usually an accountant only receives the invoices and looks at the figures without communicating with the client or understanding the business of the client. An accountancy report prepared in English every month is a necessity for a foreign company.

In previous articles, I explained some of the changes introduced by the new Turkish Commercial Code (TCC). Today, I will touch on the accounting and auditing system under the new TCC and difficulties faced by companies as a result of problems with their accountants.

The accounting and auditing system changed with the new TCC which came into force on July 1, 2012, with several questions and unclear areas along with it. Most things are not black or white in Turkey and therefore we find a lot of gray areas here. As you can see, the streets are full of gray cars; It is easy to manage without washing for several days. The new TCC is now pushing companies to leave gray areas and toward becoming more transparent by applying the new Turkish accountancy standards which are said to be close to International Financial Reporting Standards (IFRS) rules. Most big companies, especially ones with multinational ties, had asked for IFRS standards, but this is becoming even more important.

According to the new TCC, individuals and real entities are required to comply with the rules and regulations announced by the Ministry of Finance while keeping their commercial books and preparing their financial tables. The new TCC also stipulated that businesses must comply with Turkish accounting standards while keeping their commercial books.

Furthermore, the new code permitted the implementation of specific and exceptional standards to enterprises of different scales and sectors.

Another amendment is about auditing companies. With the new TCC, the auditing of the financial tables of joint stock companies is undertaken according to Turkish Auditing Standards Board -- the important point being that the Cabinet determines which companies will be subject to auditing.

The new TCC determines who can audit companies. They must be independent audit companies whose shareholders are certified public accountants or independent accountant and financial advisors. Additionally, the Ministry of Finance also determines the establishment and working rules along with the qualifications of the audit personnel of independent audit companies , So, there is more reliable system for auditing -- we hope.

Besides these issues, companies may face difficulties as a result of other problems with their accountants. As I mentioned above, it is very difficult to find an English-speaking accountant in Turkey. In addition, most of the time accountancy-related problems are closely related to legal issues. For example, you might have a franchise agreement and according to the agreement cannot sell cookies other than those of the franchisor. However, you buy cookies for your staff and without knowing the effect on the franchise agreement -- which is the backbone of your business -- this purchase transaction is recorded on the company's books inappropriately and you may face legal ramifications as a result of your accountant's mistake.

NOTE: Berk Çektir is a Turkish lawyer and available to answer questions on the legal aspects of living and doing business in Turkey. Please send inquiries to b.cektir@todayszaman.com. If a sender's letter is published, names may be disclosed unless otherwise is expressly stated by the sender.

DISCLAIMER: The information provided here is intended to give basic legal information. You should get legal assistance from a licensed attorney at law while conducting legal transactions and not rely solely on the information in this column.

BERK ÇEKTİR (Cihan/Today's Zaman)