RUSSIAN CORPORATE GOVERNANCE ROUNDTABLE MEETING SESSION 4: HOW SHOULD IFRS BE ENFORCED? THE EXPERIENCE OF TURKEY November11, 2004-Moscow Dr. A.R. Zafer SAYAR Head of Accounting and Auditing Standards Department Capital Markets Board of Turkey Vice Chairman Turkish Accounting Standards Board
CAPITAL MARKETS BOARD OF TURKEY • Regulatory and supervisory authority in the capital markets. • Capital Markets Law (CML) enacted in 1981. • MISSION STATEMENT: “to take the necessary measures for fostering the development of capital markets, and hence to contribute to the efficient allocation of financial resources in the country while ensuring investor protection” • Establishment of accounting and auditing standards in capital markets in harmonization with international standards • Membership to the IOSCO the relationships with the relevant groups in the OECD and EC are continued.
IMPROVEMENTS IN TURKISH CAPITAL MARKETS • EuropeanCommission • IMF and WorldBank • Inflationary Accouting • Consolidated Financial Statements • IFRS • Turkish Accounting Standards Board • Corporate Responsibility • Restored Confidence in CapitalMarkets • Ethical Standards • Independence of Auditors • Corporate Governance
NEW ACCOUNTING STANDARDS • Moved Closer to Anglo-Saxon Model (IFRS) • An important step on the road to ensuring fair presentation of financial statements (2003); • “Inflation-adjusted consolidated financial statements” • “Inflation-adjusted financial statements”
WHAT ABOUT IFRS IN TURKEY? • All EU companies listed on a regulated market to use IFRS from 2005 onwards and allowed Member States to extend this requirement to all companies. • Existing regulations have been made harmonious withIFRS. • Consists 33 IFRS.Newly issued IFRS will be adopted immediately. • Required for all listed companies by the year 2005 • Until then, IFRS may be applied. • Today, we have many listed companies applying IFRS (%75 of market capitalization in Istanbul Stock Exchange)
TURKISH GAAP • A single robust general-purpose system in compliance with IFRS. • Turkish Accounting Standards Board (1999) • Sets uniform national accounting standards compatible with IFRS. • Has its own public legal entity and administrative and financial autonomy, • CMB supports TASB. • Formal relationship with IASB.
ENFORCEMENT OF IFRS • Making regulations would mean nothing unless effective implementation and enforcement exist in the market. • Enforcement of standards is vital for global capital markets • We need convergence in; • Accounting • Auditing • Disclosure-Corporate Governance
AUDITING AND CORPORATE GOVERNANVE PRINCIPLES IN TURKEY • Existing regulations have been revised in accordance with Sarbanes-Oxley Act: • A project: the full revision of existing auditing standards compatibly with International Standards on Auditing. • CMB Corporate Governance Code has been promoted (OECD principles) • Rating agencies can rate the level of corporate governance of companies under “Corporate Governance Practices” of Capital Markets Board of Turkey.
ROLE OF NATIONAL STANDARD SETTER • We need to work to continue • to enhance cooperation and consistency in regulatory review and enforcement, and • to improve training and interpretive mechanisms as well. • We have to work to develop processes that would encourage consultation amongst regulators, thereby reducing the chances for multiple interpretations.