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May 25, 2011

Turkey report: Growing business

Turkey is the sixth-largest economy in the EU and has big plans for economic growth. As it strives to catch up with its neighbours, Turkey’s public accountancy institute has firm goals to align itself with international standards and audit practices. Ozge Ibrahim reports.

 

Table showing survey of TURMOB 2011Complex domestic issues and a sometimes suspicious attitude by western powers to its political processes have, over the years, contributed to slow economic growth in Turkey.

But the country has recently set up its own Commercial Code to harmonise domestic enterprise laws with EU law. The Code is comprised of 6 chapters: enterprise law, transportation law, maritime commerce law and insurance law and while it is too early to predict market response to the law, Turkish financial markets are definitely becoming more international along with the political aspiration to join the EU.

The code is the most important development to date according to Union of Chambers of Certified Public Accountants of Turkey (TURMOB) President Nail Sanli, particularly as it requires all Turkish companies to use IFRS by 2013.

As of last year Turkish Accounting Standards (TMSs) must be fully converged with IASs and IFRSs.

To this end the organisation offers a range of courses to its members. As an umbrella organisation, TURMOB oversees 73 chambers of certified public accountants and 8 chambers of sworn-in public accountants are affiliated to the organisation.

Established in 1989, it is also the only professional body to issue professional certificates to accountants in Turkey and award licences.

A change in law in 2008 has meant that professional development courses are now compulsory and in addition to the formal qualifications for public accountants, TURMOB has a host of courses to help accountants bridge the gap with European and other counterparts in all aspects of professional life.

It offers courses from entry level to professional proficiency preparation for pre-certificate, compulsory education during training, preparatory courses for certified public accountants, tax laws, various legal courses, specialist finance and strategic financial management specialisms.

However, there are still a limited numbers of firms providing the following services together; accounting /outsourcing; audit; management consultancy, reporting, and tax consultancy.

Sanli says the organisation’s efforts to extend help to its members by boosting skills and expertise has been aided by a government bill which aims to help businesses pay tax, and which has meant that accounts have more work this year.

As of the start of 2011, TURMOB says it has approximately 83,000 members and approximately 12,000 students. More than half of its members are working in public practice, while the others are in commerce and academic and governmental institutions. The organisation is not only keen to boost membership but also improve communication between its members using social networking sites such as Facebook and LinkedIn.

TURMOB says its own networking web based project called Luca has been popular since it was introduced in 2005. Lucal, which has evolved since then, is comprised of two products: a financial adviser portal for its member and a commerce portfolio. The system allows members to store all the information they need from the web and work remotely with no risk of losing files and no licence fee.

International agreements

The desire to improve the economic situation in Turkey permeates throughout the financial sector. Continuous improvement to meet this end is a core principle for TURMOB as it works with international organisations to grow its membership base, promote its work and align itself with international standards of practice.

Compliance with international education standards is also vital to the organisation in addition to its aim of establishing a professional development centre which will fuel the creation of new business areas, TURMOB said in a statement.

An agreement with the Association of Chartered Certified Accountants (ACCA) is a large part of TURMOB’s effort to work with international partner organisations.

In 2004, the ACCA and TURMOB signed a partnership agreement which enables its members to follow the ACCA Professional Scheme qualification and achieve ACCA accredited membership.

The organisation now also has strong links with Azerbaijan, which is currently seeking to modernise using a European template and has plenty of oil and gas reserves to realise its vision.

With the help of the Azerbaijan Finance Ministry, the organisation has set up a financial certificate and education centre to tap into its emerging markets.

“We have good relations with IFAC and other international organisations. We are learning from other organisations and have an open mind about further cooperation,” says Sanli.

While accountancy has a long history in the country, the accounting and auditing profession in Turkey has received legal public recognition only very recently.

The Law on Certified Public Accountancy and Sworn-In Certified Public Accountancy was only enacted in 1989.

It now primarily applies to the private sector, was amended in 2009 and aims to establish accounting and auditing as a profession and those who work within it as professionals in their field. TURMOB established the Turkish Auditing Standards Board (TUDESK) in 2003 to develop, set and issue Turkish Auditing Standards (TAS) convergent to International Auditing Standards.

The new Commercial Code also gives authority to TUDESK to set the Turkish Auditing Standards. Within this structure and with all its work, the institute is keen to point out how important ethics and quality control are to all of its work.

“Fighting against unfair competition [with the Turkish Unfair Competition Board, establishing and maintaining quality control systems and their application, carrying out research which complies with international auditing standards are all important focus points as the organisation moves forward,” Sanli says.


INDUSTRY VIEW: Huseyin Gurer, managing partner, Deloitte Turkey

Photograph of Huseyin Gurer, Deloitte TurkeyTA: What are the key issues affecting demand for your services?

Gürer: Growth in the economy is always the fundamental driver of demand for our services, and the strong growth in Turkey is clearly helping us.

There are also other longer term plans as the Turkish economy develops. These include steps that many companies are taking towards improved corporate governance, which is an area where we can often assist our clients.

Also, increasing the efficiency of their operations is a key challenge for many manufactures and service sector companies as competition grows and the exchange rate strengthens in real terms.

Our consulting division is heavily engaged on efficiency improvement projects.

TA: How will the requirements of the new Turkish commercial code impact on the business in the next year?

Gürer: The new commercial code is a very modern law, more so than commercial law applicable in many countries. It can have a transformational and highly beneficial effect on Turkish business life, but this will depend on it being fully and properly implemented. Most of its provisions become applicable from 1 July 2012.

TA: How would you describe the availability of accounting professionals in Turkey?

Gürer: The availability of new graduates is still very promising. We also hope that with the introduction of the new Commercial Code over the next five years the profession will more firmly take its place as a key part of Turkish commercial life.

TA: What are your expectations for the next 12 months?

Gürer: We definitely expect to see more growth. M&A advisory activity should be particularly strong, as should be the energy sector services. Advisory services in respect of the changes required by the new Commercial Code should positively impact the next 12 months, although new audit requirements will not apply until next year. We also hope for better news on audit fee rates.


 

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