At present there is no set of generally-accepted accounting principles that apply equally to all Turkish companies although over the past few years there have been some tentative steps in that direction. Instead, there are general rules that govern aspects of accounting in the Tax Procedures Code and, in addition to these general rules, there are others that apply specifically to banking and insurance companies and to companies registered with the Capital Market Board. The most recent development has been the introduction of a uniform chart of accounts, which prescribes certain fundamental accounting concepts, a code of accounts, and a format for the presentation of financial statements which, with the exceptions listed below, are applicable to all companies from 1 January 1994 onwards. The exceptions to this general rule are:

  • Banking and insurance companies
  • Private finance houses
  • Leasing and factoring companies
  • Mutual funds, institutions, and investment trusts.

The basic elements of the uniform chart of accounts are as follows:

  • Accounting should be made according to twelve fundamental concepts given in the communique as: 

 1. Social responsibility concept
 2. Business entity
 3. Going concern concept
 4. Matching concept
 5. Monetary unit concept
 6. Cost concept
 7. Objectivity and authentication through documents
 8. Concept of consistency
 9. Full disclosure concept
10. Concept of prudence
11. Materiality concept
12. Substance over form concept

  • The balance sheet starts with the items that are most liquid. Non-current items are listed at the bottom. (This system is contrary to the EC balance sheet model.)
  • There are two alternatives for cost entries. The "A" type tracks each transaction according to three classifications: function, type of expense, and cost center. The "B" type tracks the costs according to the type of expense. At year end, the accumulated data should be reclassified according to function. The "B" type is for small businesses whereas "A" is for medium and large businesses.
  • There are seven financial statements to be submitted to tax authorities which are obligatory for companies whose net sales are more than TL 50 billion or whose balance sheet total is more than TL 25 billion. The financial statements are as follows; 

1. Balance sheet
2. Income statement
3. Cost of sales table
4. Fund statement
5. Cash flow table
6. Profit appropriation table
7. Statement of changes in shareholders' equity

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

For further information contact Murat Ece on Tel: +90 212 2321210 (ext:210), Fax: +90 212 2308291 or e-mail: murat.ece@arthurandersen.com or enter a text search 'Arthur Andersen' and 'Business Monitor'.