AGENDA / INFORMATION   REPORTING DEADLINE IN TURKEY UPDATED! (End of March) SUBJECT: IMPORTANT AMENDMENT IN INDEPENDENT AUDITING REGULATIONS: The Regulation on the Amendment of the Independent Auditing Regulation has been published in the Official Gazette dated July 21, 2017 and numbered 30130 by the Public Oversight, Accounting and Auditing Standards Authority “POA". The most remarkable and crucial point in the amended Regulation is as follows: ARTICLE 19 - The following paragraph has been added to Article 30 of the same Regulation. “(3) In the audits conducted in accordance with the Turkish Commercial Code, the audit reports must be delivered to the audited entity's board of directors at least 20 days before the ordinary general assembly meeting for the accounting period in which the audited financial statements belong and in any case until the end of maximum duration for ordinary general assembly meetings according to regulation.The above clause has entered into force at the date of its publication and has also influenced the 2017 Independent Audit process. With this arrangement, the preparation of Financial Statements for the years subject to the Independent Audit and the Independent Audit report, must be signed at the end of March of the following year at the latest! As it is known, according to the Turkish Commercial Code (TCC), the ordinary meeting of general assembly must be executed within 3 months from the end of each accounting period (TTK, article 409 / c.1). Therefore, for companies whose accounting period is calendar year, ordinary general meetings (following the accounting period) are required to be executed within the first three months of the year (so by the end of March at the latest), and for companies with special accounting periods within the first three months following the end of the accounting period. It is known that the relevant TCC provision is applied flexibly due to the absence of an administrative sanction in practice and also it is known that general assemblies of incorporated companies are executed after March. However, with the recent amendment to the independent audit regulation, the independent audit reports of the companies which are subject to independent audit according to TCC, should be completed in legally valid period and 20 days before the date of the general assembly (within the first three months of the year following the accounting period). Taking as an example the 2017 Annual Report on the rule, the probabilities and probable dates have been schematized as follows: In this scope;  1.    It is important for the companies that are subject to Independent Audit and will be newly included in the scope, to establish the necessary reporting units and systems as soon as possible or to provide necessary training for their staff to perform this function for the completion of the independent auditing in the above-mentioned periods if measures are not taken.  2.    Also, their subsidiaries and affiliates that are in the reporting scope and will be consolidated are required to be organized in accordance with this process.  3.    To determine the reporting dates and to prepare reports as early as possible, considering both the care and quality required by the audit work, as well as the intensity of the conclusion of these audits on a limited time, (We recommend that you take the necessary measures to prepare the financial statements and notes at the end of January at the latest (in the case of companies with special accounting periods at the end of the first month following the closing of the financial period),  4.    It is important that from the preliminary audit stage, all audit evidence and documents, especially those related to specialized studies such as Depreciation calculation and Revaluation transactions, Provision for Termination Indemnities, Related Party Transactions, Inventory Depreciation, Loan and Other Financial Instruments, which are controlled by independent auditors should be submitted to audit teams full and on time.  We highly recommend you tocommunicate with your auditors regarding your doubts and detailed information requests related to this topic.  With the amendment of the related regulation, while the definition of "Freelance Independent Auditor" is included in the regulation draft for the ones who are engaged in auditing activities individually "Engaged Independent Auditor" is used in the regulation published in the Official Gazette dated July 21, 2017. Furthermore, in the regulation, the statement expressing auditors who just audit on their own behalf and account has been replaced with "Engaged Independent Auditor" but the statements expressing all independent auditors remain unchanged. Other points in the amended Regulation are as follows: 1.    Regarding those conducting auditing activities on their behalf, the third clause of Article 14 relating to the authorization of auditors will not be applied to audits undertaken before January 1, 2019. 2.    For the Independent Auditors, a new set of arrangements on constant education provisions have been made. In this scope, the period of constant education which is expected to be done once in every five years is connected to one and three-year terms in order to adapt the European Union countries.  3.    It has also been added that those whose audit activity suspended will not be able to sign new contracts within the period of suspension decision continues.  4.    The duration of the signing of the audit contracts has been determined and the signing of the contract rule related to election of auditor within sixty days from the date of the General Assembly has been established.  5.    In a case of justifiable termination of audit contracts, the issue of determining justifiable reason has been left to the auditors due to the search for the approval from Authority is slowing down in practice. Also the reasons of these cases will be notified to the Authority in writing.  Arranged third paragraph of Article 15 of the Regulation related to practical vocational training, on January 01, 2018,  Validity related to durations in clauses a and b of the first paragraph of Article 28 and determining the duration of professional experience in terms of being a responsible auditor, on January 01, 2019, The amendment articles to the other provisions will enter into force on July 21, 2017, on the date of its publication. For further information: Contact Levent Ergüven – Partner                                     Ozan Arıkan – Senior Audit Manager                  Regards  

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