Summary and Discussion

Summary and Discussion
While conducting the survey, questions about the existence of quality control
policies and procedures, and the way of sharing them within the auditing firm, have
been asked both to managers of auditing firms and to the auditors. Auditing firms’
managers affirmed the existence of quality control policies and procedures, and
their transfer to auditors both in written and oral form by 62.50 and 53.76% of
auditors did so. Starting from this determination, it can be concluded that auditing
firms in Turkey have not yet established quality control policies and procedures
outright, put them in black and white, and share of information to the auditors is not
adequate and satisfactory.
Similar to this, both groups answered the questions about the existence and the
functionality of the quality control department. Auditors admit their existence and
functionality by 37.63% and managers of auditing firms did so by 33.33%. From
this, it is commented that auditing firms in Turkey should generally pay more
attention to this issue.
Annual declaration of independence is an ethical issue. One-third of the man-
agers of auditing firms say that auditors at all levels within the auditing firm hand a
written declaration to the audit committee annually. Annual written notification by
all auditors at all levels within the auditing firm, about the existence of any other
employment of any service besides audit by the audit client, is confirmed by half of
the managers of auditing firms. The percentage of the auditing firms’ managers
believing that all auditors at all levels within the auditing firm inform the audit
committee annually in written form, about any circumstance threatening their
independence, is 50%. This group of questions related to auditors’ notifications to
the related authorities concerned got positive answers from the managers of
auditing firms by 60% on the average. Half of the threats on independence, 42% of
the relationships suppressing independence, and 37.5% of possible favors from the
audit client are missing as notifications by auditors. Having the remaining 40% on
the average, on the non-confirming side, apparently reflects the peril of low audit
quality.
© Springer Nature Singapore Pte Ltd. 2019 207

I. Kesimli, External Auditing and Quality, Accounting, Finance,
Sustainability, Governance & Fraud: Theory and Application,
https://doi.org/10.1007/978-981-13-0526-9
208 Summary and Discussion
An audit industry lacking the emphasis on independence will be far from being
efficient. Therefore, further high-quality, satisfactory, and more frequent training
about professional ethics and independence is advised. In addition to this, trans-
parency reports prepared by auditing firms should be properly and effectively
overseen by public authorities.
Factors Related to the Auditing Firm
(1) Organizational structure—network, local office/partner, Web design;

(2) Secondary partnerships and indirect partners;
(3) Business model;
(4) Variety of services supplied by the auditing firm, and their effects on
independence;
(5) Independence—the level and sustainability of it;
(6) Law abidance, abidance to standards, ethics policies, and policy
implementations;
(7) Human resources policies and procedures, and training policies;
(8) Ratio of professional staff to audit partners;
(9) Professional chargeable hours managed per audit partner;
(10) Chargeable hours per audit professional;
(11) Annual professional staff retention;
(12) Yearly training hours per audit professional;
(13) Quality control system;
(14) Number of audit clients;
(15) Time spent on a unique audit by the audit team; and
(16) Who pays the audit fee, and satisfactoriness of it.
Factors Related to the Auditor
(1) Independence of the auditor

• Law abidance, abidance to standards, ethics policies, and policy
implementations;
(2) Years of experience; number of audits realized
• Knowledge about audit client and it’s industry; experience in that specific
industry;
(3) Rotation;
(4) Modified opinions/statements;
(5) Professional skepticism; and
(6) Overconfidence in auditor abilities.
Factors Related to the Audit Client
(1) Characteristics of the board of directors;

Summary and Discussion 209
(2) Characteristics of the audit committee;

(3) Effectiveness of the internal control;
(4) Restatement of financial tables;
(5) Organizational structure;
(6) Corporate governance;
(7) Social responsibility;
(8) Existence of performance-based payment; and
(9) Law abidance, abidance to standards, ethics policies, and policy
implementations.
Factors Related to the Public Authority

(1) Effectiveness of the public oversight;
(2) Peer review;
(3) Autonomy—independence from political power;
(4) Organizational structure;
(5) Efficient controls; and
(6) Penalties for those who do not abide laws, standards, and ethics.
Suggestions
Under suggestions, the Audit Firms Quality Index (AFQI) and the Payment Pool
are handled. The purpose of the Index is mediating the process of the choice of the
specific audit firm by facilitating the audit client to make a rational choice, where
the choice will be based on objective criteria. The purpose of the Payment Pool is to
increase auditor’s independence, hence improving audit quality. While Audit Firms
Quality (AFQI) is discussed in detail, the Payment Pool is a suggestion open for
further discussions. PCAOB has a project to enhance audit quality by determining
audit quality indicators. The Board’s project on audit quality indicators seeks to
develop a portfolio of quantitative measures that provide new insight into audit
quality and explore how those measures might be deployed in a manner that best
promotes quality. These indicators would be designed to help audit committees,
investors, and others seeking the services of auditors to evaluate a firm’s potential
performance (Harris 20.03.2014). The PCAOB’s project has similarities to the
index proposed here, but Audit Firms Quality Index (AFQI) is original. The leg-
islative requirements are not included in the index to function as parameters.
Several institutions exercise their specific quality control inspections. What are
questioned in the index are the audit quality-impacting indicators not covered by
these inspections. The index is a unique and incremental tool that will help
enhancing audit quality.
Audit Firms Quality Index (AFQI)

The audit market has an oligopolistic market structure, and this has many indica-
tors. Auditing firms must comply with the various regulations introduced by reg-
ulators; most of the regulations further protect the oligopoly and make it more solid.
Regulations punish audit firms' international growth in favor of the Big Four, thus
causing concentration. For example, only two of the companies listed on the S&P
500 work with an audit firm other than the Big Four, and the Big Four get
two-thirds of the revenue of the accounting industry. Companies believe that small
audit firms do not have the required skill packages. Despite numerous legal vio-
lations during the course of their own engagements and the bankruptcy of Lehman
https://doi.org/10.1007/978-981-13-0526-9
212 Suggestions
Brothers-like customers, accounting circles pointed out that they were able to parry
them without much damage. Aiming to help breaking down the oligopolistic
structure and to rationalize the preferences of the audit client firms, this study
recommends the Audit Firms Quality Index (AFQI). The purpose of the index is
mediating audit client's rational choice of the specific audit firm by facilitating
objective criteria. Having high scores from this index, thus ranking high will be
criteria for audit clients in choosing their audit engagement firms. Besides, the
index will serve as a feedback instrument for audit firms, from which they can
benefit as an input in their audit process.
In the future, the index is recommended to be combined with the ratings of the
audit client companies, especially public companies listed in stock exchanges. Such
a combined rating that influences the rational choice of investors based on objective
criteria will function much more effectively and will be bounding. The index is to
be updated and published periodically. Making the audit firm choice by considering
the prominent criteria listed as Main Indicators of Audit Quality on Table 3.10 will
impact audit quality positively. For the audit to be high quality, the audit firm’s
organizational structure is to be well designed; the audit firm should not have
affiliates, side and/or indirect partners aiming to take advantage of casus omissus1;
should not have side and/or indirect partners to provide the services that are no
allowed by legislation; and have an ethical business model are prerequisites.
An audit firm, which confirms to the law and audit standards, establishes ethic
policies and procedures, has a quality control system, and is to be preferred at the
first hand. In case the audit firm has any foreign partner, within the frame of this
partnership, experts of the foreign partner are required to assess the quality of the
work performed, and the audit approach of the affiliate/local firm and its policies.
Otherwise, there will not be any advantage of having a foreign partner or being a
member of an international network regarding the audit quality. Here comes another
reservation to be taken into consideration—the extent of the foreign partner’s
records being respectable—and how it is assessed against audit quality indicators
are significant determiners.
One of the questions is asked in all three surveys. It is the statement “The audit
firm having a partnership with a foreign audit firm or making an agreement affects
the audit quality positively.” The audit client entities’ managers agree with this
statement by 67.57%, while 26.43% did not agree that a foreign partner’s existence
makes a positive contribution. As these responses are re-evaluated regarding the
foreign partners of respondents if any, it is seen that managers of audit client entities
that currently have a foreign partner agree at 64.29–21.42% disagree. Responses of
those from three groups, who took the questionnaire, are tabulated in Table 1.
As it is not that easy to reveal the impacts of having a foreign partner or being a
part of an international network, an analysis of audit firms responsible in the
accounting scandals lived during 1980–2014 may give a hint about this issue.
1
casus omissus: a case not provided for by the statute
Suggestions 213
Table 1 Opinions of respondents about the statement related to foreign partner

The audit firm having a partnership with a foreign audit firm or Mean M Agree
making an agreement affects the audit quality positively Disagree
Managers of audit firms 1 Strongly disagree 8.33% 3.79 37.50
2 Disagree 16.67%
3 Partly disagree 12.50%
4 No opinion 0.00% 0.00
5 Partly agree 20.83% 62.50
6 Agree 33.33%
7 Strongly agree 8.33%
Audit client entities’ managers 1 Strongly disagree 7.43% 3.75 26.35
2 Disagree 12.16%
4 No opinion 6.08% 6.08
6 Agree 29.73%
Auditors 1 Strongly disagree 4.30% 4.27 17.20
2 Disagree 7.53%
4 No opinion 3.23% 3.23
6 Agree 32.26%
Table 2 is a shorter one of Table 1.5 focusing on the role they undertook in
accounting scandals before and after Enron Scandal.
Analyzing the table may help to overcome prejudicial approaches in audit firm
choice. This is not an issue specific to Turkey, but a worldwide one to deal with.
First, the investors and then the audit clients should be aware of functioning merits
of an audit firm; it is not a matter of being popular, but performing high-quality
audits by abiding the rules and legislation.
Table 2 Top five audit Auditing firm Scandals Share (%)

firms involved in 1980–
2014 accounting scandals Ernst & Young 12 20.69
Deloitte & Touche 11 18.97
PricewaterhouseCoopers 10 17.24
KPMG 7 12.07
Big Four 40 68.97
Arthur Andersen 11 18.97
Others 7 12.06
Total 58 100.00
214 Suggestions
The variety of the services the audit firm provides and the impacts of these
services on independence are to be evaluated. The party paying audit fee, the
satisfactoriness of this fee and the bondage to an audit client for generation of the
revenue, and independence within this context are altogether important issues to be
taken into consideration, while making the audit firm choice. The human resource
policies and procedures, training policies, average yearly training hours of audit
personnel are very important. Following and assimilating the current legislation and
practices and providing their implementation will be possible with continuous
education/training. The human resource policies and procedures directly affect the
audit professional retention rate. Each audit conducted reaching the desired/
acceptable level of quality and sustaining the quality obtained regarding all audits
are the keys. The ratio of audit professionals to partners that is defined as leverage;
chargeable hours per audit professional; professional chargeable hours managed per
audit partner; time spent on an audit are the indicators of audit quality. Having local
office or partner and the number of companies audit firm audits are the other
indicators.
There are 51 quality-impacting indicators listed as Main Indicators of Audit
Quality in Table 3.10. First group of indicators are audit firm related; some are
under the control of the firm, shaped under the organizational structure and human
resources it has. Even though it cannot be isolated from the audit firm itself, some of
the quality-impacting indicators are auditor related. The environment the auditor is
brought up, the personality, and his/her education are altogether audit
quality-impacting factors. The audit firms have some kind of control of
auditor-related indicators by recruiting the most appropriate auditors, and adding
value to them, which in turn will positively enhance the qualifications of audit
firm’s human resources. The third group of indicators is audit client related. The
organizational structure of their entities, their management styles, characters of their
managers, the nearby and distant environments they are in, and the like. Some of
these seem to be neither reportable nor controllable, thus not auditable. Therefore,
these indicators are not considered to be evaluated for index creation purposes.
However, in case this is desired, then with the help of the degrees of their com-
pliance to laws and legislation and their corporate governance indices will be a
factor in calculating Audit Firms Quality Index (AFQI). As seen from Table 3.10,
the last group of indicators is those related to the regulating institutions; thus similar
to the audit client related indicators, these are not controllable factors, thus excluded
from calculations.
The logic behind inventing such an index lies in the fact that any component to
be used in index calculation has to be observable, measurable, reportable, and
comparable. Another point to be emphasized is that the regulating institutions’
power is needed in assuring data flow from audit firms to indexing body. As
discussed so far, the index does not have a claim to benefit from all indicators listed
in the Main Indicators of Audit Quality. The explanation of index formulas follows.
Creation of this index emphasizes the transparency of audit firms and reminds that
the cost of sustainable quality is to be taken into consideration.
Suggestions 215
There are two alternative equations proposed for Audit Firms Quality Index
(AFQI). Each equation benefits from the same factors as coefficients, and the
difference is that the first equation sums the factors, where the second one multiplies
them. Both have merits and demerits. The methods are explained below.
AFQI ¼ ðiÞ ðiiÞ ðiiiÞ ðivÞ ðvÞ ðviÞ ðviiÞ ð1Þ
The first equation given above multiplies the coefficients calculated. The second
equation below summates the multiplication of each coefficient by the weight
assigned. The weights are not yet assigned and are expected to be determined
following discussions and research in the future.
AFQI ¼ w1 ðiÞ þ w2 ðiiÞ þ w3 ðiiiÞ þ w4 ðivÞ þ w5 ðvÞ þ w6 ðviÞ þ w7 ðviiÞ ð2Þ
w = weight
When Eq. 1 is applied, the ideal audit firm would have a score of 100, where
another audit firm, each of the seven coefficients of which are 99%, will score
93.207. Another audit firm that provides mediocre audit quality and has coefficients
around 50% each will score 0.781, less than one. If the constant weight assigned to
each seven coefficients is to be criticized, then it will be considered assigning
weights to coefficients following research in this area. Another suggestion regarding
Eq. 1 is adding up the coefficients of each audit firms, accepting the highest scoring
audit firm as the ideal one, and dividing any audit firm’s score to the ideal audit
firm’s score. The scores of audit firms will be proportionate to the ideal audit firm’s
score.
Coefficients
Coefficients are (i) Auditor Experience Year Multiplier, (ii) Leverage,
(iii) Chargeable Hours per Audit Staff, (iv) Workload Coefficient, (v) Annual
Professional Staff Retention Rate, (vi) Training Hours Coefficient, and
(vii) Audit Firm Independence Coefficient Factor. The minuscules (lowercase
Roman numerals) are representing the coefficients in equations.
(i) Auditor Experience Year Multiplier: The weighted average years of expe-
rience of audit firm’s audit professionals at all levels after becoming licensed as
a CPA.
A hypothetical audit firm is designed to calculate the auditor experience year
multiplier. The audit firm is assumed to have a balanced audit staff, composed of
three staff assistants, eleven auditors, ten senior auditors, eight managers, and eight
engagement partners. By assuming it this way, each level of auditors has a balanced
share in audit staff, and the shares are calculated. Thus, 20% of audit staff of any
audit firm ideally is to be engagement partners, 20% managers, 25% senior audi-
tors, 27.5% auditors, and 7.5% staff assistants. Another hypothetical factor in
calculating Auditor Experience Year Multiplier is the years of experiences of
216 Suggestions
each personnel. An experience of minimum 27 years is advised for an engagement

partner, 26 years for managers, 18 years for senior auditors, nine years for auditors,
and one year for assistant staff. The third component of Auditor Experience Year
Multiplier is the weight assigned to each level. Hypothetical weights assigned are
40, 35, 21, 3, and 1, respectively. These weights are used in the formula below.
Engagement Manager In-charge Auditor Staff Title

partner auditor assistant
100.00 40.00 35.00 21.00 3.00 1.00 Weight
40 8 8 10 11 3 Audit staff
100.00 20.00 20.00 25.00 27.50 7.50 Weight in audit
staff (%)
27 26 18 9 1 Years of
experience
5.000 2.160 1.820 0.945 0.074 0.001 Score
n
X
weight
Score ¼ Weight in Audit Staff Years of Experience
u
100
u = title
According to the above-given formula, a hypothetical ideal audit firm will score
5.000. Audit firms’ calculated scores will be divided by 5.000, and the multiplier
will be determined. Naturally, the hypothetical ideal audit firm’s multiplier will be
100%.

40 35 21
Score ¼ 20% 27 þ 20% 26 þ 25% 18
100 100 100

3 1
þ 27:5% 9 þ 7:5% 1
100 100
Score ¼ 5:000
0
Audit Firm s Years of Experience Factor
Years of Experience Factor ¼
5:000
(ii) Leverage: Ratio of professional staff to audit partners.

In calculating the leverage, the formula given below will be used. In order to get
healthy results, audit firms are expected to timely and transparently report to public
oversight institutions. The leverage calculated for any audit firm will be compared
to the leverage of the hypothetical ideal firm’s leverage; thus, the leverage multi-
plier will be calculated.
Suggestions 217
number of audit professionals

Leverage ¼
number of engagement partners
LeverageIdeal Audit Firm

Leverage Coefficient ¼
LeverageAudit Firm
The comparison of audit staff of the auditing firms having license agreements
with Deloitte & Touche, Ernst & Young, KPMG and PricewaterhouseCoopers, and
others is given in Table 2.7. The ratio of audit professionals to partners is defined as
leverage. Generally, the leverage is calculated with the help of the formula given
below:
Number of Non Partner Audit Staff

Leverage ¼
Number of Partners
The leverage is discussed under the title 2.2.1. The Profile of Auditing Firms in
Turkey. As seen from the calculations, the leverage of Big Four is 12.93 in 2012–
2013 era and is almost four times of the leverage of the remaining auditing firms.
The gap enlarged in 2015 and Big Four leverage reached 20.12, which is almost
5.34 times of the leverage of the remaining 91 auditing firms. The leverages for the
two time periods are comparatively tabulated in Table 2.8. As seen from Table 2.8,
among Big Four, Akis CPA has the highest leverage—23.85. The lowest leverage
among all auditing firms is 0.25 and belongs to BD CPA, the audit staff of which
consists eight partners and two staff assistants. As stated earlier, auditors and/or
auditing firms with a higher proportion of non-audit services (NAS) in their product
mix are expected to have higher leverage (Deltas and Doogar 2005: 13). The
average of the leverages of all audit firms is 5.27 in 2012–2013 era and 6.75 in
2015. It is and will be emphasized throughout the text that the composition of the
audit team has an effect on audit quality. Nonetheless, quantitative criteria solely do
not become an indicator; they act as determinants in assessing the audit quality.
According to Robert Conway, a depressed leverage is one of the factors positively
impacting audit quality (Conway 25.11.2009: 11).
(iii) Chargeable Hours per Audit Staff: The average of the chargeable hours per
audit staff at each level.
In order to calculate chargeable hours per audit staff, at the first step for each of
the audit staff the hours required to conduct proper audits within an ideal workload
under a yearly plan will be determined. The next step will be determining the
average hours each staff at every level to complete audits yearlong. The division of
these two will generate the average for an audit firm. This will be compared to the
average of the hypothetical ideal audit firm’s average, and the deviation will be
found.
218 Suggestions
X
n
0
Professional Chargeable Hours ¼ an auditor s total hours spent on audits in a year
u
Pn
auditor0 s total hours spent on audits in a year
Average Hours Worked ¼ u
number of auditors
Chargeable Hours per Audit Staff Coefficient

Average Hours WorkedIdeal Audit Firm
¼
Average Hours WorkedAudit Firm
(iv) Workload Coefficient: Professional chargeable hours managed per audit

partner.
Professional Chargeable Hours calculated in the previous coefficient will be
divided to the numbers of partners to find the workload. This will be compared to
the workload of the hypothetical ideal audit firm; thus the coefficient will be
calculated.
Professional chargeable hours

Workload ¼
Number of Partners
Workload Ideal Audit Firm
Workload Coefficient ¼
WorkloadAudit Firm
This calculation will have an effect of diminishing the multipliers of audit firms
that have higher workloads.
(v) Annual Professional Staff Retention Rate: The percentage of professionals
employed a year ago, who are still employed to date.
the number of professionals employed a year ago, who are still employed to date
Rate ¼
the number of professionals employed a year ago
The rate probably will be less than 100%; for audit firms with higher rates it will
bring positive comments and impact the index positively.
(vi) Training Hours Coefficient: The weighted training hours are calculated,
based on training programs planned and realized and the numbers of audit
personnel at all levels attending these.
First, training hours of each auditor at each level will be calculated, and the sum
will be taken for the audit staff, and then total training hours will be divided in the
total number of audit profession of the audit firm. The audit firm’s average will be
compared to the hypothetical ideal audit firm’s average, and the coefficient will be
determined.
Suggestions 219
X
n
Total Training Hours ¼ Score ¼ ½Training hours of each auditor
u
u = title
Pn
½Training hours of each auditor
Average Training Hours ¼ u
Total number of audit professionals
Average Training HoursAudit Firm

Training Hours Coefficient ¼
Average Training HoursIdeal Audit Firm
Probably the rate will be less than 100%; for audit firms with higher rates it will
bring positive comments and impact the index positively.
(vii) Audit Firm Independence Coefficient Factor: The weighted average of the
independence factor of each auditor at each level assigned to audits, and the
overall independence factor of the audit firm.
Audit Firm Independence Coefficient Factor will compose of two compo-
nents. The first one is the one related to the audit firm itself Audit Firm
Engagement Independence Coefficient. This coefficient will be calculated by
taking into consideration the services the audit firm provides to its audit clients,
under different names, or by a CPA and/or CPA firm to the audit client’s affiliates,
or third parties in relation with the audit client. Providing any service forbidden by
laws will score null, and an engagement that does not include any service against
regulations will score one. Since a zero will cause serious problems in Eq. 1, an
audit firm in this category will encounter problems. However, in Eq. 2, the audit
firm will end up with a lower index score.
As stated in Independent Audit By-Law [22](5), audit firms and auditors cannot
render any service to the audited entity other than ratification, tax consultancy, and
tax audit and carry out them through related audit firms and other firms included in
the audit network. Services rendered by the natural entity partners of the audit firm,
its auditors, and key management personnel also fall within this scope. Table 3
displays these services and scores assigned. In light of data in this table, Audit
Firm Engagement Independence Coefficient is to be calculated as follows.
AuditPFirm Engagement Independence Coefficient
n
½Score of Service Provided
¼ i¼1
Number of services rendered
The second component is Audit Team Independence Score. Principally, it is

suggested that quarterly auditors should hand a written notification of indepen-
dence. This notification will be done through the Web site of POA personally by the
auditors; the employer of the auditor will keep a track as well. The audit firms
having additional independence criteria on their own are much more desirable. This
220 Suggestions
Table 3 Services audit firms are allowed to provide to their audit clients and the scores assigned
Service Laws and regulations Score
Independent audit Allowed 1
Tax consultancy Allowed 1
Assertion and certified councillorship (CPA) Allowed 1
Tax audit Allowed 1
Finance consultancy Forbidden 0
Legal consultancy Forbidden 0
Training Forbidden 0
Management consultancy Forbidden 0
Accounting services Forbidden 0
Internal audit Forbidden 0
Outsourcing Forbidden 0
Change management Forbidden 0
Investment consultancy Forbidden 0
Human resource Forbidden 0
Tourism consultancy Forbidden 0
Information Technology consultancy Forbidden 0
Customs advisor Forbidden 0
is to guarantee that auditors are independent in substance and appearance. This

system would also enable the Audit Team Independence Score to be calculated
almost automatically. This score is to be calculated by disregarding the titles the
auditors carry. Then, the score of each auditor will be summed and divided in the
total numbers of auditors in the audit team. In case the auditors in audit team are
from related CPA firms, or are CPAs not employed by the audit firms, this will be a
matter to be taken care of. If there is any relation not allowed by the law, then the
score will be null. A fully law-abiding audit firm will score one. These relations are
like having shares of the other firm, or board membership.
X
n
Audit Team Independence Score ¼ ½Auditors0 Independence Score
i¼1
i = team members
Pn
Audit Engagement Team i¼1 ½Auditors Independence Score
¼
Independence Coefficient Numbers of Auditors in the Engagement Team
Multiplication of both coefficients will generate Audit Firm Independence

Coefficient. When the average of all audits the audit firm carries throughout a
calendar year is taken, Audit Firm Independence Coefficient Factor will be
calculated.
Suggestions 221
Audit Firm Audit Firm Engagement Independence Coefficient

Independence ¼
Coefficient Audit Engagement Independence Coefficient
AuditPFirm Independence Coefficient Factor

n
½Audit Firm Independence Coefficient
¼ i¼1
Number of Engagements
Assigning the revenue earned from each audit as weight will make it more
meaningful. In this way, the importance level of independence is generated. By
evaluating the survey responses of managers of audit firms regarding the staff
retention data, the table given below is created:
Staff retention rate (%) 25 50 75 90

Opinions: strongly agree and agree (%) 62.50 75.00 70.83 50.53
Opinions: disagree and strongly disagree (%) 20.83 8.33 8.34 8.33
Other opinions: no opinion and partly agree/disagree 16.67 16.67 20.83 41.14
(%)
Relying on the data that is to be provided by audit firms about their staff, the rate
will be easily calculated. The quality of each component of the index is as important
as its quantity. For example, while calculating Training Hours Coefficient, along
with the data about how many hours the training was, the content of the training is
also very significant. Developments and changes in standards and legislation,
current good practices, ethics training, issues related to unfair competition, and the
like are to be covered in these trainings as well. The restriction of the licenses of
auditors who are not able to document the training and/or those who do not attend
required trainings would be another precaution.
Payment Pool
Arrangements regarding the payment of audit fee are among the precautions to
enhance audit quality. The opinion that the audit fee being paid by the company that
is audited hits independence at the very beginning of the work (Turner 2008; Blay
and Geiger 2013; Duflo et al. 2013; Tanç and Uzay 2013) finds advocators from a
broad spectrum—from members of regulating institutions, academics, and the like.
As one of the studies about audit fee and audit quality, the findings of Tanç and
Uzay, supports the opinion that audit fee being paid by the audit client harms audit
quality (2013: 22). A solution would be making audit fee payments from a pool of
funds. This solution can be supported by a system, where audit firms will be
assigned to audit clients randomly. These will enhance audit quality.
Therefore, Payment Pool is suggested here. The Payment Pool will be designed
by answering the question “who benefits from audited financial statements?” There
are a number of stakeholders who make use of financial statements audited by audit
firms; therefore, these parties are to make the payment. Payment of the audit fee by
public authorities is not suggested, and this would be an extra burden on taxpayers.
222 Suggestions
Any contribution of financial statements users to the Payment Pool should be

proportionate to the benefit they get from audited financial statements. A sample
Payment Pool contributors are suggested below:
(1) Domestic and foreign investors, both real persons and corporate bodies, who
invest in and trade financial instruments, like stock exchanges, bonds and the like;
(2) Management of investment funds, which invest in all kinds of financial
instruments;
(3) Individual pension funds that invest in all kinds of financial instruments;
(4) Foreign and domestic creditors lending to audited entities;
(5) Regulatory institutions like BRSA, EMRA, Borsa Istanbul, POA and similar
regulating bodies; and
(6) Audited entities.
Within the frame of the suggestion, the formula for calculating the contributions
would be as stated below:
Audit fee to be determined
Funds to be Collected in the
PoolðFCPÞ ¼ Coefficient of the audit client entity to be
audited
The coefficient of the audit client entity to be audited would be a combination of

difficulty level and the scope of the audit to be performed and the size of the entity
to be audited.
Funds to be collected in Domestic and foreign investors—real persons and corporate 6%

the Pool (FCP) = bodies
Management of investment funds 7%
Individual pension funds 7%
Foreign and domestic creditors 7%
Revenue Administration 7%
(1) BRSA 16%
(2) EMRA
(3) Borsa Istanbul,
(4) POA and the like
*in this group, the payment will be done by the institutions
whichever has interest in the audit
Audit clients 50%
The weights in the table are suggestions only and are open for discussion. The
way how contributions are to be collected is the next thing to be determined.
Especially, collections from the real person investor may be complicated. A fee may
be collected based on their daily trade. Same is to be applied for funds investing in
securities exchanges. The size of their portfolio, or their trade volume, and may be
the frequency of their transactions would serve as good direction for fee collection.
Suggestions 223
The second and very crucial part of Payment Pool suggestion is random auditor
and/or audit firm assignment. The merits of audit firms and auditors, the sector
expertise, their experiences, etc., will all determine to which audit client they will be
assigned. Random assignment and rotation will both enhance audit quality. The
dependence of audit firms on their clients and the stress of performing as the audit
client desires will be terminated. Consequently, the auditors will feel independence
and act independently. The Audit Firms Quality Index (AFQI) will also be used in
the Payment Pool, where public oversight bodies will take the scores listed in the
index into consideration when randomly assigning audit firms to the audit clients.
It is very well understood that audit has a plain and clear effect on business
world. The historical experiences lead the way to quality audits. Contrary to the
abundance of the foreign accounting scandal data, there is no data about Turkish
accounting scandals. Cultural merits of Turkish society are the cause of this lack.
Low financial literacy, callousness to unethical behavior, the weakness of ethical
perception, and several other factors do not let accounting and business scandals to
come on earth. Therefore, I tried to draw attention to some of the universal
accounting scandals that are lived in a specific era—from 1980 to 2014—and tried
to link these to some weaknesses in financial reporting and audit function. Most of
these scandals are from cultures where whistle-blowing mechanisms are effective,
and sanctions against financial crime exist. Starting from this point, I tried to draw
the profile of audit industry in Turkey. What I witnessed is that the audit circles are
like a closed book. Therefore, all analyses are to be done over reports and the data
available on Web sites of related institutions and audit firms. The obstacles are to
overcome. Increased transparency of audit firms will help to detect problematic
issues and to find solutions. The triangle of the audit client, public oversight and
regulators, the audit firms, from now on, has to transform into a rectangular, where
the fourth corner becomes all remaining stakeholders. This is the society in general.
Being an investor or not should not matter. The society as a whole has to demand
high-quality audits.
In this book, I tried to define the quality, which is an abstract attribute of a work
done, over several factors. The outcome is the Index I invented, and the Payment
Pool I suggest. The impact of the Index will be stronger if it is applied together with
the Payment Pool. I hope Audit Firms Quality Index (AFQI) will be useful in the
future and enlighten the path of stakeholders.
Appendix A
Auditing Firms Performing in Turkey (2014)
Registered name Capital Number Share Share Structure Total Partner Partner not Manager Senior Auditor Staff Licensing PCAOB
of of the of the of the board number participating auditor assis- foreign Category
partners biggest second of directorsa of audits tant institution unless
partner biggest auditors registered
partner 2015
(A-B-C-D-E)b
Total: 87 auditing firms (000) 780 % % 2725 410 37 211 212 351 1541 16
A-1 YEMİNLİ MALİ 50 17 59.50 3.75 1+0+4+2 16 6 0 3 7 0 0 –
MÜŞAVİRLİK VE
BAĞIMSIZ DENETİM
A.Ş.
https://doi.org/10.1007/978-981-13-0526-9
© Springer Nature Singapore Pte Ltd. 2019
AAC BAĞIMSIZ 50 8 35.00 8.50 1+1+1+2 8 3 0 4 1 0 0 –
DENETİM
DANIŞMANLIK VE
YEMİNLİ MALİ
MÜŞAVİRLİK A.Ş.
AC İSTANBUL 50 5 49.90 49.90 1+1+1+0 14 3 1 0 3 0 8 Enterprise
ULUSLARARASI Network
BAĞIMSIZ DENETİM Worldwide

VE SMMM A.Ş.

ADALYA 100 11 58.00 12.00 1+1+1+0 13 8 0 0 1 0 4 –
ULUSLARARASI
BAĞIMSIZ DENETİM
SERBEST
MUHASEBECİ MALİ
MÜŞAVİR A.Ş.
ADAY BAĞIMSIZ 50 5 44.00 44.00 1+1+1+0 10 2 0 0 2 3 3 –
DENETİM
VE SERBEST
MUHASEBECİ MALİ
(continued)
225
(continued)
226
partner 2015
(A-B-C-D-E)b
ADM Bağımsız 0
Denetim A.Ş.
AKADEMİK 50 13 43.75 25.75 1+1+1+1 18 8 0 0 0 4 6 –
BAĞIMSIZ DENETİM
DANIŞMANLIK VE
YEMİNLİ MALİ
AKİS BAĞIMSIZ 50 14 25.00 15.00 1+1+1+1 380 13 1 4 9 7 347 KPMG B
DENETİM
VE SERBEST
MUHASEBECİ MALİ
AKT BAĞIMSIZ 50 10 48.02 12.25 1+0+2+1 11 3 0 3 0 4 1 –
DENETİM A.Ş.
AKTAN BAĞIMSIZ 160 8 33.00 31.00 1+1+2+1 10 6 0 1 1 1 1 –
DENETİM VE
YEMİNLİ MALİ
Alternatif Bağımsız 160 5 100.00 0.00 1+1+0+0 5 4 0 1 0 0 0 –
Denetim A.Ş.**
ANIL YEMİNLİ MALİ 270 15 90.00 5.00 1+1+1+0 29 3 0 12 0 10 4 –
MÜŞAVİRLİK VE
BAĞIMSIZ DENETİM
A.Ş.
ARILAR BAĞIMSIZ 400 5 75.00 15.00 1+1+3+0 12 3 0 3 2 2 2 NEXIA
DENETİM VE INTERNA-
YEMİNLİ MALİ TIONAL
(continued)
Appendix A: Auditing Firms Performing in Turkey (2014)
(continued)
partner 2015
(A-B-C-D-E)b
ARKAN ERGİN 175 6 46.29 6.57 1+1+2+0 29 3 0 0 3 3 20 JPA
ULUSLARARASI INTERNA-
BAĞIMSIZ DENETİM TIONAL
VE SMMM A.Ş.
ARTI DEĞER 100 7 73.00 20.00 1+1+1+0 12 4 0 5 2 0 1 JHI
ULUSLARARASI JEFFREYS
BAĞIMSIZ DENETİM HENRY
VE YEMİNLİ MALİ INTERNA-
MÜŞAVİRLİK AŞ TIONAL
AS BAĞIMSIZ 50 7 59.80 39.70 1+1+1+0 49 2 0 3 4 6 34 NEXİA
DENETİM VE YMM A. INTERNA-
Ş. TIONAL
LTD
ATA ULUSLARARASI 310 5 69.50 10.00 1+1+2+0 41 5 0 0 2 3 31 KRESTON
BAĞIMSIZ DENETİM INTERNA-
VE SMMM A.Ş. TIONAL

AVRASYA BAĞIMSIZ 50 5 26.00 25.00 1+1+2+1 13 5 0 1 1 2 4 –
DENETİM VE
YEMİNLİ MALİ
AYK BAĞIMSIZ DIŞ 50 11 32.00 32.00 1+0+2+0 9 2 0 3 2 2 0 –
DENETİM VE
DANIŞMANLIK A.Ş.
BAKIŞ YEMİNLİ 50 11 28.00 23.00 1+1+1+0 15 2 0 1 8 2 2 IPG
MALİ MÜŞAVİRLİK INTERNA-
VE BAĞIMSIZ TIONAL
DENETİM A.Ş.
(continued)
227
(continued)
228
partner 2015
(A-B-C-D-E)b
PRATICE
GROUP
BAN-DEN BAĞIMSIZ 250 13 17.20 17.00 1+1+1+0 11 3 4 0 0 8 0 –
DENETİM
HİZMETLERİ A.Ş.
BAŞARAN NAS 50 29 7.14 7.14 1 + 1 + 13 + 0 410 26 2 8 16 45 315 PRICE D
BAĞIMSIZ DENETİM WATER
VE SERBEST HOUSE
MUHASEBECİ MALİ COOPERS
MÜŞAVİRLİK A.Ş
BATI YEMİNLİ MALİ 138 5 51.00 47.51 1+1+1+0 8 2 0 1 2 3 0 –
MÜŞAVİRLİK VE
BAĞIMSIZ DENETİM
A.Ş.
BD BAĞIMSIZ 100 10 15.95 15.95 1+0+2+0 15 9 0 3 0 2 1 –
DENETİM VE
YEMİNLİ MALİ
BDD BAĞIMSIZ 50 19 51.48 5.00 1+1+1+0 17 8 0 3 3 3 0 –
DENETİM VE
DANIŞMANLIK A.Ş.
BDO DENET 50 14 20.96 20.96 1+1+1+0 21 4 1 1 1 2 13 BDO
YEMİNLİ MALİ TIONAL
BİLGİ BAĞIMSIZ 50 8 91.50 5.50 1+1+1+0 7 2 0 4 1 0 0 –
DENETİM VE
YEMİNLİ MALİ
(continued)
(continued)
partner 2015
(A-B-C-D-E)b
BİLGİLİ BAĞIMSIZ 50 7 60.00 10.00 1 + 1 + 1 + 10 21 3 0 6 4 3 5 AGN D
DENETİM VE YMM A. INTERNA-
Ş. TIONAL
LTD
BİRLEŞİK 250 6 55.25 18.75 1+1+4+0 36 3 2 1 0 3 29 Prime
UZMANLAR YEMİNLİ Global
MALİ MÜŞAVİRLİK
VE BAĞIMSIZ
DENETİM A.Ş.
BİRLEŞİM BAĞIMSIZ 200 5 64.98 32.50 1+1+1+0 8 3 0 0 1 2 2 HAZLEMS
DENETİM VE YMM A. FENTON
Ş.
CONSULTA 50 4 99.60 0.20 1+1+1+0 20 4 0 3 5 7 1 INAA
BAĞIMSIZ DENETİM GROUP
VE YEMİNLİ MALİ
CPA BAĞIMSIZ 50 6 26.00 25.00 1+1+3+0 8 3 0 3 0 1 1 –
DENETİM VE YMM A.
Ş.
Crowe Horwath Olgu 660 20 32.87 29.31 1+1+1+0 25 4 0 6 7 7 1 CROWE
Bağımsız Denetim ve HORWATH
Yeminli Mali Müşavirlik
A.Ş.
ÇAĞDAŞ BAĞIMSIZ 50 5 51.00 41.40 1+1+1+0 8 2 0 0 3 1 2 IAPA
DENETİM SMMM INTERNA-
A.Ş. TIONAL
(continued)
229
(continued)
230
partner 2015
(A-B-C-D-E)b
DEĞER BAĞIMSIZ 112 11 29.25 28.25 1+0+5+0 23 8 0 9 0 1 5 ECOVIS
DENETİM VE EUROPE
YEMİNLİ MALİ
DENGE BAĞIMSIZ 100 13 74.00 12.50 1+1+9+0 48 6 1 3 3 2 34 MAZARS D
DENETİM SERBEST SOCIÉTÉ
MUHASEBECİ MALİ COOPÉRA-
MÜŞAVİRLİK A.Ş. TIVE À
RESPON-
SABILITÉ
LIMITÉE
DETAY BAĞIMSIZ 50 8 55.67 21.67 1+1+1+0 11 6 1 0 5 0 0 INTERNA-
DENETİM VE TIONAL
DANIŞMANLIK A.Ş. EXPERTS
AND
CONSUL-
TANTS
IECnet
DMR Bağımsız Denetim 250 8 50.00 45.60 1+0+0+0 8 4 1 0 0 4 0 Kudos
ve Danışmanlık A.Ş. International
Network
DMF SİSTEM 250 8 95.70 1.00 1+1+5+1 8 2 0 2 2 2 0 RUSSELL
ULUSLARARASI BEDFORD
DANIŞMANLIK TIONAL
VE YMM A.Ş.
DRT BAĞIMSIZ 50 30 48.77 8.40 1+0+6+0 98 25 0 9 29 35 0 DELOITTE A
DENETİM TOUCHE
VE SERBEST TOHMATSU
(continued)
(continued)
partner 2015
(A-B-C-D-E)b
MUHASEBECİ MALİ INTERNA-
MÜŞAVİRLİK A.Ş. TIONAL
EGE YEMİNLİ MALİ 100 15 99.25 0.10 1+1+0+2 14 3 1 1 1 5 4 CH
MÜŞAVİRLİK VE INTERNA-
A.Ş.
ELİT BAĞIMSIZ 50 4 33.33 33.33 1+0+2+0 22 3 0 0 0 4 15 CPA
DENETİM VE ASSOCIATES
YEMİNLİ MALİ INTERNA-
INC.-USA
ENGİN BAĞIMSIZ 100 6 30.40 29.20 1+1+1+0 46 3 0 1 4 3 35 GRANT
DENETİM THORNTON
VE SERBEST
MUHASEBECİLİK
A.Ş.
ERCİYES YEMİNLİ 100 6 50.00 35.00 1+1+1+0 14 2 1 3 4 3 2 – D
VE BAĞIMSIZ
DENETİM A.Ş.
EREN BAĞIMSIZ 50 7 29.51 29.51 1+1+2+0 63 3 0 3 2 9 46 GRANT
DENETİM ve YEMİNLİ THORNTON
A.Ş.
GÜÇBİR BAĞIMSIZ 50 8 56.63 18.69 1+1+1+0 12 8 0 0 2 1 1 IAPA
DENETİM A.Ş. INTERNA-
TIONAL
(continued)
231
(continued)
232
partner 2015
(A-B-C-D-E)b
Güncel Bağımsız 50 5 60.00 20.00 1+1+1+0 13 3 0 0 0 10 0 Groupe
Denetim Danışmanlık ve Laviale
YMM A.Ş. Sohaco
GÜNEY BAĞIMSIZ 90 17 7.14 7.14 1+1+4+0 416 17 0 4 17 4 374 ERNST& D
DENETİM YOUNG
VE SERBEST GLOBAL
MUHASEBECİ MALİ LIMITED
GÜRELİ YEMİNLİ 200 19 62.49 10.50 1+1+3+0 109 9 0 14 14 10 62 BAKER
MALİ MÜŞAVİRLİK TILLY
VE BAĞIMSIZ INTERNA-
DENETİM TIONAL
HİZMETLERİ A.Ş.
HLB SAYGIN 90 7 99.60 0.32 1+1+1+0 15 5 1 3 1 2 4 HLB
MÜŞAVİRLİK VE TIONAL
BAĞIMSIZ DENETİM
A.Ş.
IHY BAĞIMSIZ 1,000 7 76.15 5.00 1+0+2+0 17 5 0 4 1 2 5 Kingston D
DENETİM VE Sorel
YEMİNLİ MALİ International
IŞIK YEMİNLİ MALİ 260 8 25.00 24.81 1+0+2+0 16 7 0 3 1 5 0 BKR D
MÜŞAVİRLİK ve INTERNA-
A.Ş.
İRFAN BAĞIMSIZ 820 6 31.95 31.95 1+1+1+1 18 3 0 3 2 5 5 - D
DENETİM VE
YEMİNLİ MALİ
(continued)
(continued)
partner 2015
(A-B-C-D-E)b
İTİMAT BAĞIMSIZ 100 8 51.00 40.00 1+0+2+0 6 3 0 1 0 2 0 FIDUNION D
DENETİM A.Ş. INTERNA-
TIONAL
KAPİTAL KARDEN 120 11 46.58 46.58 1+1+1+0 18 3 3 0 0 6 9 RSM
VE YEMİNLİ MALİ TIONAL
KARMA BAĞIMSIZ 50 8 37.00 37.00 1+1+1+0 8 2 0 1 2 3 0 PARKER
DENETİM A.Ş. RANDALL
INTERNA-
TIONAL
KAVRAM BAĞIMSIZ 155 6 45.19 45.19 1+0+3+0 16 4 0 3 2 5 2 CROWE
DENETİM VE HORWATH
KÖKER YEMİNLİ 75 6 58.50 20.00 1+1+1+0 16 3 2 1 2 2 8 AGN

VE BAĞIMSIZ TIONAL
DENETİM A.Ş.
LEGAL YÖNET 50 5 91.00 8.00 1+0+2+0 8 2 2 3 2 0 1 LEA Global
BAĞIMSIZ DENETİM
YEMİNLİ MALİ
MBK Bağımsız Denetim 100 5 52.00 45.00 1+1+1+0 29 3 0 2 2 3 19 Moore Stephens
ve Serbest Muhasebeci International
Mali Müşavirlik A.Ş. LTD
(continued)
233
(continued)
234
partner 2015
(A-B-C-D-E)b
MED YEMİNLİ MALİ 100 5 93.00 3.00 1+0+2+1 9 4 0 1 0 4 RG D
MÜŞAVİRLİK VE TREUHAND
BAĞIMSIZ DENETİM MÜTH
A.Ş. AND
PARTNER
GMBH
Mega Global Uluslar 50 11 47.50 47.50 1+1+1+0 11 2 0 5 2 1 1 Jeffreys Henry
Arası Bağımsız Denetim International
Anonim Şirketi
MERCEK BAĞIMSIZ 400 18 15.50 15.50 1+1+2+0 21 7 0 3 0 6 5 – D
DENETİM VE
YEMİNLİ MALİ
Meridyen Kurumsal 0
Çözüm ve Bağımsız
Denetim Anonim Şirketi
MGI BAĞIMSIZ 50 10 61.80 31.00 1+1+8+0 19 6 0 8 1 2 2 MGI Business
DENETİM VE Solutions
YEMİNLİ MALİ Worldwide
MOD BAĞIMSIZ 250 8 90.00 4.00 1+1+1+1 12 3 0 1 0 4 4 –
DENETİM SERBEST
MUHASEBECİ MALİ
OLUŞUM BAĞIMSIZ 50 8 41.62 24.90 1+0+3+0 10 4 0 1 1 4 0 NEXIA
DIŞ DENETİM VE INTERNA-
DANIŞMANLIK A.Ş. TIONAL
(continued)
(continued)
partner 2015
(A-B-C-D-E)b
ÖNDER BAĞIMSIZ 50 5 51.00 42.00 1+0+2+0 15 3 0 0 0 8 4 –
DENETİM VE
DANIŞMANLIK A.Ş.
PÜR BAĞIMSIZ 50 5 59.80 30.00 1+1+1+0 10 2 0 2 0 3 3 –
DENETİM YEMİNLİ
A.Ş.
RANDIMAN 70 5 99.86 0.40 1+0+1+0 13 3 0 3 1 1 5 –
DENETİM YEMİNLİ
VE BAĞIMSIZ
DENETİM A.Ş.
RASYONEL 50 6 47.00 46.50 1+1+2+0 15 2 0 7 1 1 4 EURAUDIT INT
BAĞIMSIZ DENETİM
VE YEMİNLİ MALİ
Referans Bağımsız 50 6 41.00 12.25 1+0+3+0 13 7 0 0 2 2 2 –
Denetim ve Danışmanlık
A.Ş.
REHBER BAĞIMSIZ 100 8 49.60 48.02 1+1+1+0 11 3 3 2 1 2 3 ANTEA Alliance
DENETİM VE of Independent
YEMİNLİ MALİ Firms
(continued)
235
(continued)
236
partner 2015
(A-B-C-D-E)b
REPORT BAĞIMSIZ 50 14 35.00 18.00 1+1+2+0 13 3 0 4 0 0 6 –
DENETİM
VE SERBEST
MUHASEBECİ MALİ
SAMDEN SAMSUN 120 10 84.17 2.50 1+0+0+1 14 3 0 5 0 6 0 – D
BAĞIMSIZ DIŞ
DENETİM VE SMMM
A.Ş.
SER-BERKER 500 9 44.00 43.88 1+1+1+0 22 5 4 0 3 9 5 DFK
VE YEMİNLİ MALİ TIONAL
SUN BAĞIMSIZ DIŞ 62 8 48.43 48.43 1+1+2+0 28 8 0 5 1 8 6 PKF
DENETİM YEMİNLİ WORLD
MALİ MÜŞAVİRLİK WIDE
A.Ş.
TAM BAĞIMSIZ 50 11 30.00 21.00 1+1+1+0 7 3 0 2 0 2 0 -
DENETİM VE
DANIŞMANLIK A.Ş.
TÜRKERLER 50 5 57.25 30.15 1+1+1+0 11 5 0 1 1 2 2 Premier
BAĞIMSIZ DENETİM International
YEMİNLİ MALİ Associates
(continued)
(continued)
partner 2015
(A-B-C-D-E)b
TÜRKMEN BAĞIMSIZ 50 7 94.75 5.00 1+0+2+0 13 2 0 0 4 4 3 International A
DENETİM VE Practice
YEMİNLİ MALİ Group
ULUSAL BAĞIMSIZ 100 14 15.40 11.72 1+0+2+7 15 7 6 0 3 0 5 The International D
DENETİM VE Accounting
YEMİNLİ MALİ Group
UZMAN YEMİNLİ 50 6 79.91 19.97 1+1+1+0 11 2 0 3 1 2 3 UHY
MALİ MÜŞAVİRLİK URBACH
VE BAĞIMSIZ HACKER
DENETİM A.Ş. YOUNG
INTERNA-
TIONAL LTD.
YEDİTEPE BAĞIMSIZ 60 14 18.00 15.00 1+1+3+0 15 8 0 0 0 7 0 Praxity-Global
DENETİM A.Ş. Alliance Ltd.

YILDIZLAR 60 6 30.00 28.33 1+1+1+1 7 4 0 0 0 3 0 – D
BAĞIMSIZ DENETİM
VE YEMİNLİ MALİ
YKY BAĞIMSIZ 50 6 74.69 24.90 1+1+0+0 8 3 0 1 1 3 0 –
DENETİM VE
YEMİNLİ MALİ
YORUM YEMİNLİ 65 6 57.99 42.00 1+1+1+0 7 2 0 1 0 4 0 –
VE BAĞIMSIZ
DENETİM A.Ş.
(continued)
237
(continued)
238
partner 2015
(A-B-C-D-E)b
YÖNTEM YEMİNLİ 60 8 99.48 0.10 1+0+0+0 14 6 0 0 0 3 5 NEXIA
ve BAĞIMSIZ TIONAL
DENETİM A.Ş.
a
Board Chairman + Vice Board Chairman + Number of Board Members + Number of auditors assigned according to Turkish Code of Commerce
b
Category: A Audit report for at least one issuer, B No audit reports for issuers but played a substantial role in the audit of at least one issuer, C Audit reports for at least one broker-dealer, D No audit reports for
broker-dealers, but substantial role in audit of at least one broker-dealer, E None of the above, F No Form 2 filed
Source
(1) Public Company Accounting Oversight Board (PCOAB). Registration & Reporting. Registered Firms. http://pcaobus.org/Registration/Firms/Pages/RegisteredFirms.aspx. Accessed 06 May 2012
(2) BRSA. Bankacılık Düzenleme ve Denetleme Kurumu (BDDK). Kuruluşlar, Bağımsız Denetim kuruluşları. http://www.bddk.org.tr/WebSitesi/turkce/Kuruluslar/Bagimsiz_Denetim_Kuruluslari/Finansal_Denetim/
Finansal_Denetim.aspx. Accessed 03 May 2012
(3) EMRA. EPDK, T.C.. Bağımsız Denetim. Bağımsız Denetim Kuruluşları. http://www2.epdk.org.tr/denetim/bagimsiz/kurulus/adresbilgisi.asp. Accessed 13 May 2012
(4) CMB. Sermaye Piyasası Kurulu. Kurumlar. Bağımsız Denetim Kuruluşları. Bağımsız Denetimle Yetkili Kuruluşlarhttp://www.spk.gov.tr/apps/msd/iletisim.aspx?submenuheader=9. Accessed 24 Apr 2012
(5) Treasury. Hazine Müsteşarlığı, T.C. Başbakanlık. Sigortacılık ve Özel Emeklilik. Kurumlar. Bağımsız Denetim Kuruluşları. http://www.hazine.gov.tr/irj/portal/anonymous?NavigationTarget=navurl://
4d00dc5ed3455e78d888a06d22227f9a. Accessed 13 May 2012
(6) Public Oversight—Accounting and Auditing Standards Authority. Kamu Gözetimi Kurumu. http://www.kgk.gov.tr/dk/index.aspx. Accessed 03 May 2014
Appendix B
Sarbanes–Oxley Act Frame Plan
CHAPTER 98 PUBLIC COMPANY ACCOUNTING REFORM AND CORPORATE

RESPONSIBILITY
SHORT TITLE SARBANES–OXLEY ACT OF 2002
SUBCHAPTER I—PUBLIC COMPANY ACCOUNTING
OVERSIGHT BOARD
SUBCHAPTER II—AUDITOR INDEPENDENCE
SUBCHAPTER III—CORPORATE RESPONSIBILITY
SUBCHAPTER IV—ENHANCED FINANCIAL DISCLOSURES
SEC. 7201. DEFINITIONS
(1) APPROPRIATE STATE REGULATORY AUTHORITY
(2) AUDIT
(3) AUDIT COMMITTEE
(4) AUDIT REPORT
(5) BOARD
(6) COMMISSION
(7) ISSUER
(8) NON-AUDIT SERVICES
(9) PERSON ASSOCIATED WITH A PUBLIC ACCOUNTING FIRM
(10) PROFESSIONAL STANDARDS
(11) PUBLIC ACCOUNTING FIRM
(12) REGISTERED PUBLIC ACCOUNTING FIRM
(13) RULES OF THE BOARD
(14) SECURITY
(15) SECURITIES LAWS
(16) STATE
(continued)

https://doi.org/10.1007/978-981-13-0526-9
240 Appendix B: Sarbanes–Oxley Act Frame Plan
(continued)
RESPONSIBILITY
(17) FOREIGN AUDITOR OVERSIGHT AUTHORITY
SEC. 7202. COMMISSION RULES AND ENFORCEMENT
SUBCHAPTER I PUBLIC COMPANY ACCOUNTING OVERSIGHT BOARD
SEC. 101 ESTABLISHMENT; ADMINISTRATIVE PROVISIONS
(A) ESTABLISHMENT OF BOARD
(B) STATUS
(C) DUTIES OF THE BOARD
(D) COMMISSION DETERMINATION
(E) BOARD MEMBERSHIP
(F) POWERS OF THE BOARD
(G) RULES OF THE BOARD
(H) ANNUAL REPORT TO THE COMMISSION
SEC. 102 REGISTRATION WITH THE BOARD
(A) MANDATORY REGISTRATION
(B) APPLICATIONS FOR REGISTRATION
(C) ACTION ON APPLICATIONS
(D) PERIODIC REPORTS
(E) PUBLIC AVAILABILITY
(F) REGISTRATION AND ANNUAL FEES
SEC. 103 AUDITING, QUALITY CONTROL, AND INDEPENDENCE
STANDARDS AND RULES
(A) AUDITING, QUALITY CONTROL, AND ETHICS STANDARDS
(B) INDEPENDENCE STANDARDS AND RULES
(C) COOPERATION WITH DESIGNATED PROFESSIONAL
GROUPS OF ACCOUNTANTS AND ADVISORY GROUPS
(D) EVALUATION OF STANDARD SETTING PROCESS
SEC. 104 INSPECTIONS OF REGISTERED PUBLIC ACCOUNTING FIRMS
(A) IN GENERAL
(B) INSPECTION FREQUENCY
(C) PROCEDURES
(D) CONDUCT OF INSPECTIONS
(E) RECORD RETENTION
(F) PROCEDURES FOR REVIEW
(G) REPORT
(H) INTERIM COMMISSION REVIEW
SEC. 105 INVESTIGATIONS AND DISCIPLINARY PROCEEDINGS
(A) IN GENERAL
(B) INVESTIGATIONS
(C) DISCIPLINARY PROCEDURES
(continued)
Appendix B: Sarbanes–Oxley Act Frame Plan 241
(continued)
RESPONSIBILITY
(D) REPORTING OF SANCTIONS
(E) STAY OF SANCTIONS
SEC. 106 FOREIGN PUBLIC ACCOUNTING FIRMS
(A) APPLICABILITY TO CERTAIN FOREIGN FIRMS
(B) PRODUCTION OF DOCUMENTS
(C) EXEMPTION AUTHORITY
(D) SERVICE OF REQUESTS OR PROCESS
(E) SANCTIONS
(F) OTHER MEANS OF SATISFYING PRODUCTION OBLIGATIONS
(G) DEFINITION
SEC. 107 COMMISSION OVERSIGHT OF THE BOARD
(A) GENERAL OVERSIGHT RESPONSIBILITY
(B) RULES OF THE BOARD
(C) COMMISSION REVIEW OF DISCIPLINARY ACTION TAKEN BY
THE BOARD
(D) CENSURE OF THE BOARD; OTHER SANCTIONS
SEC. 108 ACCOUNTING STANDARDS
(A) OMITTED
(B) COMMISSION AUTHORITY
(C) NO EFFECT ON COMMISSION POWERS
(D) STUDY AND REPORT ON ADOPTING PRINCIPLES-BASED
ACCOUNTING
SEC. 109 FUNDING
(A) IN GENERAL
(B) ANNUAL BUDGETS
(C) SOURCES AND USES OF FUNDS
(D) ANNUAL ACCOUNTING SUPPORT FEE FOR THE BOARD
(E) ANNUAL ACCOUNTING SUPPORT FEE FOR STANDARD
SETTING BODY
(F) LIMITATION ON FEE
(G) ALLOCATION OF ACCOUNTING SUPPORT FEES AMONG
ISSUERS
(H) ALLOCATION OF ACCOUNTING SUPPORT FEES AMONG
BROKERS AND DEALERS
(I) OMITTED
(J) RULE OF CONSTRUCTION
(K) START-UP EXPENSES OF THE BOARD
SEC. 7220. DEFINITIONS
(1) AUDIT
(2) AUDIT REPORT
(continued)
(continued)
RESPONSIBILITY
(3) BROKER
(4) DEALER
(5) PROFESSIONAL STANDARDS
(6) SELF-REGULATORY ORGANIZATION
SUBCHAPTER II AUDITOR INDEPENDENCE
SEC. 201 SERVICES OUTSIDE THE SCOPE OF PRACTICE OF AUDITORS
(A) PROHIBITED ACTIVITIES
(B) EXEMPTION AUTHORITY
SEC. 202 PREAPPROVAL REQUIREMENTS
(A) IN GENERAL
(B) DISCLOSURE TO INVESTORS
(C) DELEGATION AUTHORITY
(D) APPROVAL OF AUDIT SERVICES FOR OTHER PURPOSES
SEC. 203 AUDIT PARTNER ROTATION
SEC. 204 AUDITOR REPORTS TO AUDIT COMMITTEES
SEC. 205 CONFORMING AMENDMENTS
(A) DEFINITIONS
(B) AUDITOR REQUIREMENTS
(C) OTHER REFERENCES
(D) CONFORMING AMENDMENT
SEC. 206 CONFLICTS OF INTEREST
SEC. 207 STUDY OF MANDATORY ROTATION OF REGISTERED PUBLIC
ACCOUNTING FIRMS
(A) STUDY AND REVIEW REQUIRED
(B) REPORT REQUIRED
(C) DEFINITION
SEC. 208 COMMISSION AUTHORITY
(A) COMMISSION REGULATIONS
(B) AUDITOR INDEPENDENCE
SEC. 209 CONSIDERATIONS BY APPROPRIATE STATE REGULATORY
AUTHORITIES
SUBCHAPTER III CORPORATE RESPONSIBILITY
SEC. 301 PUBLIC COMPANY AUDIT COMMITTEES
(A) COMMISSION RULES
(B) RESPONSIBILITIES RELATING TO REGISTERED
PUBLIC ACCOUNTING FIRMS
(C) INDEPENDENCE
(D) COMPLAINTS
(E) AUTHORITY TO ENGAGE ADVISERS
(F) FUNDING
(continued)
(continued)
RESPONSIBILITY
SEC. 302 CORPORATE RESPONSIBILITY FOR FINANCIAL REPORTS
(A) REGULATIONS REQUIRED
(B) FOREIGN REINCORPORATIONS HAVE NO EFFECT
(C) DEADLINE
SEC. 303 IMPROPER INFLUENCE ON CONDUCT OF AUDITS
(A) RULES TO PROHIBIT
(B) ENFORCEMENT
(C) NO PREEMPTION OF OTHER LAW
(D) DEADLINE FOR RULEMAKING
SEC. 304 FORFEITURE OF CERTAIN BONUSES AND PROFITS
(A) ADDITIONAL COMPENSATION PRIOR TO
NONCOMPLIANCE WITH COMMISSION
FINANCIAL REPORTING REQUIREMENTS
(B) COMMISSION EXEMPTION AUTHORITY
SEC. 305 OFFICER AND DIRECTOR BARS AND PENALTIES
(A) UNFITNESS STANDARD
(B) EQUITABLE RELIEF
SEC. 306 INSIDER TRADES DURING PENSION FUND BLACKOUT
PERIODS
(A) PROHIBITION OF INSIDER TRADING DURING PENSION FUND
BLACKOUT PERIODS
(B) NOTICE REQUIREMENTS TO PARTICIPANTS
AND BENEFICIARIES UNDER ERISA EMPLOYEE RETIREMENT
INCOME SECURITY ACT
(C) EFFECTIVE DATE
SEC. 307 RULES OF PROFESSIONAL RESPONSIBILITY FOR
ATTORNEYS
SEC. 308 FAIR FUNDS FOR INVESTORS
(A) CIVIL PENALTIES ADDED TO DISGORGEMENT FUNDS FOR
THE RELIEF OF VICTIMS
(B) ACCEPTANCE OF ADDITIONAL DONATIONS
(C) STUDY REQUIRED
SUBCHAPTER IV ENHANCED FINANCIAL DISCLOSURES
SEC. 401 DISCLOSURES IN PERIODIC REPORTS
(A) DISCLOSURES REQUIRED
(B) COMMISSION RULES ON PRO FORMA FIGURES
(C) STUDY AND REPORT ON SPECIAL PURPOSE ENTITIES
SEC. 402 ENHANCED CONFLICT OF INTEREST PROVISIONS
(A) PROHIBITION ON PERSONAL LOANS TO EXECUTIVES
SEC. 403 DISCLOSURES OF TRANSACTIONS INVOLVING
MANAGEMENT AND PRINCIPAL STOCKHOLDERS
(continued)
(continued)
RESPONSIBILITY
SEC. 404 MANAGEMENT ASSESSMENT OF INTERNAL CONTROLS
(A) RULES REQUIRED
(B) INTERNAL CONTROL EVALUATION AND REPORTING
SEC. 405 EXEMPTION
SEC. 406 CODE OF ETHICS FOR SENIOR FINANCIAL OFFICERS
(A) CODE OF ETHICS DISCLOSURE
(B) CHANGES IN CODES OF ETHICS
(C) DEFINITION
(D) DEADLINE FOR RULEMAKING
SEC. 407 DISCLOSURE OF AUDIT COMMITTEE FINANCIAL EXPERT
(A) RULES DEFINING ‘‘FINANCIAL EXPERT’’
(B) CONSIDERATIONS
(C) DEADLINE FOR RULEMAKING.
SEC. 408 ENHANCED REVIEW OF PERIODIC DISCLOSURES BY
ISSUERS
(A) REGULAR AND SYSTEMATIC REVIEW
(B) REVIEW CRITERIA
(C) MINIMUM REVIEW PERIOD
SEC. 409 REAL TIME ISSUER DISCLOSURES
SUBCHAPTER V ANALYST CONFLICTS OF INTEREST
SEC. 501 TREATMENT OF SECURITIES ANALYSTS BY REGISTERED
SECURITIES ASSOCIATIONS AND NATIONAL SECURITIES
EXCHANGES
(A) RULES REGARDING SECURITIES ANALYSTS.
(B) DISCLOSURE
(C) COMMISSION AUTHORITY
SUBCHAPTER VI COMMISSION RESOURCES AND AUTHORITY
SEC. 601 AUTHORIZATION OF APPROPRIATIONS
SEC. 602 APPEARANCE AND PRACTICE BEFORE THE COMMISSION
(A) AUTHORITY TO CENSURE
(B) DEFINITION
SEC. 603 FEDERAL COURT AUTHORITY TO IMPOSE PENNY STOCK
BARS
(A) SECURITIES EXCHANGE ACT OF 1934 - AUTHORITY OF A
COURT TO PROHIBIT PERSONS FROM PARTICIPATING IN AN
OFFERING OF PENNY STOCK
(B) SECURITIES ACT OF 1933 - AUTHORITY OF A COURT TO
PROHIBIT PERSONS FROM PARTICIPATING IN AN OFFERING
OF PENNY STOCK
(continued)
(continued)
RESPONSIBILITY
SEC. 604 QUALIFICATIONS OF ASSOCIATED PERSONS OF BROKERS
AND DEALERS
(A) BROKERS AND DEALERS
(B) INVESTMENT ADVISERS
(C) CONFORMING AMENDMENTS
TITLE VII STUDIES AND REPORTS
SEC. 701 GAO STUDY AND REPORT REGARDING CONSOLIDATION OF
PUBLIC ACCOUNTING FIRMS
(A) STUDY REQUIRED
(B) CONSULTATION
(C) REPORT REQUIRED
SEC. 702 COMMISSION STUDY AND REPORT REGARDING CREDIT
RATING AGENCIES
(A) STUDY REQUIRED
(B) REPORT REQUIRED
SEC. 703 STUDY AND REPORT ON VIOLATORS AND VIOLATIONS
(A) STUDY REQUIRED
(B) REPORT REQUIRED
SEC. 704 STUDY OF ENFORCEMENT ACTIONS
(A) STUDY REQUIRED
(B) REPORT REQUIRED
SEC. 705 STUDY OF INVESTMENT BANKS
(A) GAO STUDY
(B) REPORT
TITLE VIII CORPORATE AND CRIMINAL FRAUD ACCOUNTABILITY
SEC. 801 SHORT TITLE
SEC. 802 CRIMINAL PENALTIES FOR ALTERING DOCUMENTS
(A) DESTRUCTION, ALTERATION, OR FALSIFICATION OF
RECORDS IN FEDERAL INVESTIGATIONS AND BANKRUPTCY
(B) DESTRUCTION OF CORPORATE AUDIT RECORDS
SEC. 803 DEBTS NONDISCHARGEABLE IF INCURRED IN VIOLATION
OF SECURITIES FRAUD LAWS
SEC. 804 STATUTE OF LIMITATIONS FOR SECURITIES FRAUD
SEC. 805 REVIEW OF FEDERAL SENTENCING GUIDELINES FOR
OBSTRUCTION OF JUSTICE AND EXTENSIVE CRIMINAL
FRAUD
SEC. 806 PROTECTION FOR EMPLOYEES OF PUBLICLY TRADED
COMPANIES WHO PROVIDE EVIDENCE OF FRAUD
SEC. 807 CRIMINAL PENALTIES FOR DEFRAUDING
SHAREHOLDERS OF PUBLICLY TRADED COMPANIES
(continued)
(continued)
RESPONSIBILITY
TITLE IX WHITE-COLLAR CRIME PENALTY ENHANCEMENTS
SEC. 901 SHORT TITLE
SEC. 902 ATTEMPTS AND CONSPIRACIES TO COMMIT CRIMINAL
FRAUD OFFENSES
SEC. 903 CRIMINAL PENALTIES FOR MAIL AND WIRE FRAUD
SEC. 904 CRIMINAL PENALTIES FOR VIOLATIONS OF THE EMPLOYEE
RETIREMENT INCOME SECURITY ACT OF 1974
SEC. 905 AMENDMENT TO SENTENCING GUIDELINES RELATING TO
CERTAIN WHITE-COLLAR OFFENSES
SEC. 906 CORPORATE RESPONSIBILITY FOR FINANCIAL REPORTS
(A) FAILURE OF CORPORATE OFFICERS TO CERTIFY FINANCIAL
REPORTS
TITLE X CORPORATE TAX RETURNS
TITLE XI CORPORATE FRAUD ACCOUNTABILITY
Appendix C
Independent Audit By-Law
Wednesday, December 26th, 2012 Official Gazette Number: 28509
English version of the Independent Audit By-Law is meant purely as a

documentation tool. In the case of any disputes regarding the imple-
mentation and interpretation, the original Turkish version will prevail
and the POA does not assume any liability for their contents.
REGULATIONS
From Public Oversight, Accounting, and Auditing Standards Authority:
INDEPENDENT AUDIT BY-LAW
PART ONE
Purpose, Scope, Grounds, and Definitions
Purpose
ARTICLE 1—(1) The purpose of this By-law is to regulate the procedures and
principles in relation to statutory auditors, audit firms, and statutory audit that will
be conducted within the framework of Turkish Commercial Code dated 13/1/2011
and numbered 6102 and Statutory Decree dated 26/9/2011 and numbered 660 on
the Organization and Duties of Public Oversight, Accounting, and Auditing
Standards Authority.
Scope
ARTICLE 2—(1) This By-law covers the statutory audit that will be conducted
within the framework of the Law 6102 and of the Statutory Decree 660, the
authorization of audit firms and statutory auditors, keeping of their register entries,
their obligations and responsibilities, examination and inspection of the latter by the
Authority, and administrative sanctions applicable to them.

https://doi.org/10.1007/978-981-13-0526-9
248 Appendix C: Independent Audit By-Law
Grounds
ARTICLE 3—(1) This By-law has been issued on the basis of Articles 9, 25,
and 27 to the Statutory Decree dated 26/9/2011 and numbered 660 on the
Organization and Duties of Public Oversight, Accounting, and Auditing Standards
Authority.
Definitions
ARTICLE 4—(1) In this By-law,
(a) “Statutory auditor” means the natural persons authorized by the Authority to
perform statutory audit among members of the profession, who acquired
certified public accountant or sworn-in certified public accountant license in
accordance with the Law dated 1/6/1989 and Numbered 3568 on Certified
Public Accountancy and Sworn-in Certified Public Accountancy;
(b) “Statutory audit” means the auditing of financial statements and other financial
details on books, records, and documents by applying required statutory audit
techniques specified in the auditing standards with the aim of obtaining suf-
ficient and appropriate statutory audit evidences, which would ensure a rea-
sonable assurance with regard to their compliance with financial reporting
standards and accuracy, then evaluating and reporting them;
(c) “Audit team” means a team consisting of a key audit partner and statutory
auditors that conduct their duties under the responsibility of the key audit
partner to perform a certain statutory audit duty on behalf of an audit firm;
(d) “Audit firm” means an equity capital company that is authorized by the
Authority to carry out statutory audits and the partners of which are the
members of the profession, who acquired certified public accountant or
sworn-in certified public accountant license;
(e) “Statutory audit public register (Register)” means the public register that is
kept electronically by the Authority and where the records of audit firms and
statutory auditors are monitored;
(f) “Audit network” means a structure for cooperation that aims at profit or cost
sharing or shares common ownership, control or management, common
quality control policies and procedures, a common business strategy, the use
of a common brand or trade name or a significant part of professional
resources regardless of the fact that if there is a legal connection between audit
firms or statutory auditors;
(g) “Audited entity” means an entity that has entered into a contract with an audit
firm or a statutory auditor for the purpose of having a statutory audit
conducted;
(h) “Financial statements” mean the financial statements that is required to be
issued according to Turkish Accounting Standards;
(i) “Related audit firm and other entities” mean other audit firms and other entities
that directly or indirectly control the audit firm or that are directly or indirectly
controlled by the same;
(j) “Quality assurance system” means the system organized by the Authority to
ensure that the statutory audits of the statutory auditors and audit firms would
Appendix C: Independent Audit By-Law 249
be performed in compliance with specified standards and principles with the

aim of ensuring quality in the statutory audit and confidence of public opinion
toward the statutory audits being performed;
(k) “Quality control system” means the system organized by audit firms within
their organizations in accordance with the Authority’s arrangements to achieve
the required quality in audits;
(l) “Public institutions” mean the institutions included in the lists annexed to the Law
5018 dated 10/12/2003 on Public Financial Management and Control Law;
(m) “Public interest entities (PIE)” mean publicly-held companies, banks, insur-
ance, reassurance and pension companies, factoring companies, financing
companies, financial lease companies, asset management companies, pension
funds, issuers as defined by the Capital Markets Law dated 28/7/1981 and
numbered 2499 and the entities, which are evaluated in this scope by the
Authority since they significantly concern the public interest regarding their
fields of activity, trading volumes, number of personnel they employ;
(n) “Key management personnel” mean the persons, including the members of
managing body, that directly or indirectly have the authority and responsibility
for planning, managing, and controlling the firm’s activities;
(o) “The Board” means the Public Oversight, Accounting and Auditing Standards
Board;
(p) “The Authority” means the Public Oversight, Accounting and Auditing
Standards Authority;
(q) “Member of the profession” means Certified Public Accountants and Sworn-in
Certified Public Accountants that have obtained their licenses in scope of the
Law 3568;
(r) “Partner” means the shareholders of joint-stock companies and the partners of
limited companies and commandite companies;
(s) “Equity capital company” means the companies classified as equity capital
companies under Turkish Commercial Code dated 13/1/2011 and numbered
6102;
(t) “Exam” means statutory auditor exam;
(u) “Responsible auditor” means the statutory auditor that an audit firm holds
responsible for carrying out a certain statutory audit activity and authorizes to
sign on behalf of the audit firm the report relevant to that audit;
(v) “Turkish Auditing Standards” mean including the statutory audit of infor-
mation systems, education, ethics, quality control, and auditing standards
within the field of statutory audit together with other arrangements in con-
nection with this field, which comply with international standards, approved
by the Board and issued with the name of the Turkish Auditing Standard in
compliance with the Statutory Decree numbered 660;
(w) “Turkish Accounting Standards” mean accounting standards approved by the
Board in compliance with the Statutory Decree numbered 660 and issued with
the name of the Turkish Accounting Standards and Turkish Financial
Reporting Standards together with other arrangements in connection with this
field;
(x) “Certificate of authorization” means the Audit Firm Certificate or Statutory

Auditor Certificate that is granted by the Authority to audit firms and statutory
auditors in relation to their approval where the conditions prescribed in this
By-law are met;
(y) “Annual report” means the report prepared by the management bodies of
equity companies or by the parent company’s managing body in case of a
group of companies in compliance with Article 516 and 518 to the Law 6102
and the relevant legislation; and
(z) “Managing body” means the board of directors in case of joint-stock com-
panies, the manager or managers in case of partnership companies, the capital
of which is divided into shares, and the director or directors in case of limited
companies.
(2) Definitions used in this By-law have such meanings attributed to them in
Turkish Accounting Standards and Turkish Auditing Standards, and in this By-law,
audit means statutory audit, auditor means statutory auditor, and audit firm means
independent audit firms.
PART TWO
Principles of Audit
Purpose and scope of statutory audit
ARTICLE 5—(1) An audit is carried out for the purpose of forming an opinion
that will provide users assurance within the framework of Turkish Auditing
Standards whether the issues, including financial statements and other financial
information, subject to the audit comply with the predefined criteria or not.
(2) Audit provides the users with reasonable or limited assurance relating to the
compliance of the audit subject with the audit criterion. Where it is not explicitly
expressed in the relevant legislation or audit engagement that it will provide limited
assurance, the audit will be carried out to give a reasonable assurance. The audit
scope required by a reasonable and limited assurance level will be defined within
the framework of Turkish Auditing Standards.
(3) An audit covers obtaining sufficient and appropriate audit evidence about the
statutory audit subject within the framework of Turkish Auditing Standards through
abiding by the principles of professional ethics with a professional skepticism and
forming and reporting an opinion on the basis of this evidence.
(4) Elements of an audit are made up of the audit subject, parties, criterion,
evidence, and audit report.
Audit subject
ARTICLE 6—(1) An audit should be carried out about the matters that are
subject to statutory audit according to the provisions of the Law numbered 6102,
Statutory Decree numbered 660, and other legislation.
(2) An audit should cover the financial statements, annual activity reports, and
systems for the early detection and management of risks that are subject to statutory
audit under the provisions of the Law numbered 6102 and other matters that need to
be directly or indirectly audited, reviewed, or assessed by audit firms and statutory
auditors in accordance with the other legislation.
Parties of an audit
ARTICLE (7)—(1) The audited entity, auditor, and the intended users as
defined by the relevant legislation are the parties of an audit.
Audit criterion
ARTICLE 8—(1) An audit should be based on predefined criteria whereby the
audit subject’s compliance is assessed. Turkish Accounting Standards should
constitute the audit criterion in terms of financial statements, while provisions of the
Law 6102 and the relevant legislation on audit criterion in terms of early risk
detection and management, and arrangements about audit criterion or the rules
referred to by the same in terms of the audit subjects that fall within the scope of the
other legislation.
(2) In the cases where the other legislation envisages the fulfillment of a direct or
indirect audit by audit firms and auditors, but does not express the criteria that the
audit subjects should comply with, the Authority will define the audit criterion. In
the audits carried out on a voluntary basis, those requesting the audit will define it.
Audit evidence
ARTICLE 9—(1) Audit evidence consists of the information, documents, and
representations that are sufficient and appropriate for the predefined assurance level
and obtained by the auditor for the purpose of expressing an opinion in order to
give assurance about whether there are material non-compliances about the audit
within the framework of audit criterion. This evidence is obtained and documented
by planning and carrying out the audit within the framework of Turkish Auditing
Standards and with professional skepticism.
(2) An audit should be planned and carried out with professional skepticism
considering that the conditions resulting in material audit non-compliances may
exist. When materiality is assessed within the framework of the existing conditions,
it depends on the size or nature of the non-compliance or both between the audit
subject and audit criterion.
Audit report
ARTICLE (10)—(1) Audit report is a document, which is prepared in line with
the Authority’s arrangements for the purpose of forming the audit opinion and other
noteworthy matters, if any, that are formed according to the predefined assurance
level as a result of assessing the audit evidence within the framework of Turkish
Auditing Standards available to users and the responsibility of which is assumed by
the undersigned audit firm or the statutory auditor.
PART THREE
Authorization
Those authorized to carry out an audit
ARTICLE 11—(1) Audit should only be carried out by audit firms or auditors
that are authorized by the Authority within the framework of their respective
authorities.
(2) Audit firms and statutory auditors start exercising their authorities following
the announcement of authorization by the Authority.
(3) The audit of PIEs and the entities, which are included in this scope by the
Authority in terms of their fields of activity, trading volumes, number of personnel
they employ, and similar criteria, should only be carried out by audit firms, while
the audit of others is carried out by audit firms or auditors.
Certificates of Authorization
ARTICLE 12—(1) Audit Firm Certificate is granted to equity capital companies,
and Statutory Auditor Certificate is granted to the members of profession, the
applications of which are accepted by the Authority within the frame of this By-law.
Authorization of audit firms
ARTICLE 13—(1) Save for the conditions set out in the Law 3568 and the
relevant legislation, a firm that files an application for audit activities must:
(a) be an equity capital company;
(b) have registered shares certificates;
(c) have a field of activity exclusively for statutory audit or the professional field
falling within the scope of the Law 3568;
(d) have the phrase of statutory audit in its trade name;
(e) have the articles of association that do not contain such matters that are
contrary to the provisions of audit legislation;
(f) have a capital and voting rights owned by auditors by more than half and all
the partners of which must be the members of profession;
(g) have such auditors that bear Statutory Auditor Certificates within the
framework of Article 14;
(h) employ auditors on a full-time basis and for one reporting period as a
minimum;
(i) have at least two responsible auditors that meet the conditions set out in
Article 28;
(j) have audit staff of such quality and width that can, as a minimum, constitute
the audit teams as defined in Article 27;
(k) have the members of managing body entirely composed of the members of
profession and majority of them must be the auditors permanently employed
by it, provided that it does not exceed seventy-five percent;
(l) not employ the auditors, partners, and key management personnel that act as
the partners, key management personnel, or auditors at another audit firm or
another real or natural entity carrying out statutory audit activities or that
carry out statutory audit activities on their behalf;
(m) have written policies and procedures of quality control system, the principles
of which are set out by the Authority, including audit guides;
(n) have such organization, office, technical equipment, document, and recording
facilities at a level to be accepted by the Authority in order to carry out the
audit activities efficiently;
(o) not have the approval that was withdrawn by the Authority previously; and
(p) not have the legal entity and partners that have disrepute and the partners
must not be in a position that compromises the reputation required by audit
profession.
(2) Firms that want to carry out audit activities file applications with the
Authority together with the information and documents evidencing that they meet
the conditions prescribed by paragraph one. The firms that are approved by the
Authority with regard to the required conditions following onsite examinations,
where necessary, will be recorded in the register and announced provided that they
pay the required charges and fees and file a registration application with the
Authority within ninety days at the latest. Audit Firm Certificates will be granted to
these firms following the registration procedure.
(3) Without prejudice to the other legislation provisions, the transfer, demerger,
merger, and type modification procedures of audit firms are subject to the
Authority’s permission.
(4) By obtaining the opinions of such authorities, boards, or organizations that
are responsible for the regulation and audit of certain areas, the Authority may
define additional requirements for the audit firms that will carry out audit in these
areas and it will separately announce the audit firms that meet these requirements in
lists. Apart from these, new audit firm lists can be made under such requirements
determined by the Authority for auditing the entities that will be identified on the
basis of trading volume, fields of activity, the nature of respective regulations, and
similar matters governing the entity to be audited.
(5) The Authority can grant approval to the firms that have such trade names
without the phrase of statutory audit, provided that they modify their trade names
within three months, and such modification is announced in the Turkish Trade
Registry Gazette. The approval of those that fail to modify their trade name within
this period is canceled.
(6) Audit firms exercise the auditing authority through and under the responsi-
bility of responsible auditors that have the qualifications set out in Article 28 and
that are authorized to sign the audit report on behalf of the firm. This responsibility
does not relieve the audit firm and its key management personnel from
responsibility.
Authorization of statutory auditors
ARTICLE 14—(1) Those who want to carry out statutory audit activities must:
(a) have a bachelor’s degree as a minimum obtained from faculties and graduate
schools or from foreign higher education institutions, the equivalency of
which are accepted by Council of Higher Education, that give education in the
branches of law, economics, public finance, business administration,
accounting, banking, public administration, and political sciences, or where
they graduated from other education branches, have a master’s degree as a
minimum obtained from the disciplines set out in this paragraph;
(b) be the member of profession;
(c) be domiciled in Turkey;
(d) be competent to exercise their civil rights;
(e) have completed the applied practical training set out in Article 15;
(f) have passed the statutory auditor exam set out in Article 16;
(g) not have been convicted for the crimes against the national security, the crimes
against the constitutional order and the functioning of this order, the crimes
against the national defense, the crimes against the state secrets and espionage,
crimes of embezzlement, corruption, bribery, theft, fraud, forgery, abuse of
confidence, fraudulent bankruptcy, bid rigging, conspiracy to avoid contrac-
tual obligations, laundering of illegally obtained assets, or smuggling even if
the periods set out in Article 53 to the Turkish Penal Code dated 26/9/2004
and numbered 5237 are expired and sentenced to imprisonment for one year
and more as a result of a malicious crime or benefited from amnesty or the
announcement of judgment is deferred;
(h) not have the approval that was withdrawn by the Authority previously; and
(i) not have disrepute and be in a position that compromises the reputation
required by statutory audit profession.
(2) The members of profession that want to become auditors file applications to
the Authority together with the information and documents evidencing that they
meet the conditions prescribed by paragraph one. Applications are filed personally
or through the audit firms where they are employed. The applicants that are
approved by the Authority with regard to the required conditions will be recorded in
the register and announced provided that they pay the required charges and fees and
file a registration application with the Authority. Statutory Auditor Certificates,
auditor identification card, and auditor seal will be granted to these persons fol-
lowing the registration procedure.
are responsible for the regulation and audit of certain areas, the Authority can define
additional requirements for the auditors that will carry out statutory audit in these
areas.
Practical Training
ARTICLE 15—(1) Persons who want to become auditors must have received
practical training on professional subjects including auditing of financial statements,
for a minimum period of 3 years at an audit firm or from a statutory auditor. Periods
spent in ratification and tax audit services within the framework of the Law 3568
and periods spent by those having the audit authorization at the public institutions
and agencies falling within the scope of paragraph two of Article 6 to the same Law
at such public institutions and agencies will be included in the practical training
period.
(2) Those having a minimum professional experience of fifteen years are not
subject to the requirement of practical training.
(3) In implementing this By-law, professional experience means the period
actually spent in statutory audit. However, the periods spent in professional
activities falling within the scope of the Law 3568 or in apprenticeship and services
accepted as apprenticeship are also taken into account in calculating this period.
The periods of undergraduate and graduate studies in the disciplines set out in
subparagraph (a) of paragraph one Article 14 are included in this period with the
limitation of 4 years. The calculation of this period is based on the activity
commencement date and, with the exception of periods spent in public institutions
and agencies, the periods of discontinuation in these activities for more than one
year are excluded.
(4) Those receiving applied practical training have the title of assistant auditors
during the practical training period, and they participate in audit activities in
company with auditors. In this period, those employing assistant auditors with them
take all kinds of measures to ensure that assistant deputies gain the required pro-
fessional competence for the purpose of putting theoretical knowledge into
implementation. Auditors are authorized and obliged in the issues such as giving
assignment in audits to assistant auditors, making them to attend the interviews held
with the audited entities, overseeing their activities, and reviewing the working
papers prepared by them.
(5) Practical training starts with the delivery of information and documents
evidencing the satisfaction of required conditions to the Authority by the relevant
audit firm, statutory auditor, or assistant auditor within the period of notification to
the Social Security Institution.
(6) The Authority regulates the issues relating to the practical training, auditors
that can give practical training and trainees, and their follow-up.
Statutory auditor exam
ARTICLE 16—(1) The Authority conducts the statutory auditor exam for the
purpose measuring the theoretical and practical knowledge of examinees in the
areas relevant to statutory audit.
(2) The graduation condition set out in subparagraph (a) of paragraph one of
Article 14 is sought for taking the exam.
(3) Statutory auditor exam covers the following main subjects:
(a) Accounting (General accounting, cost and management accounting);
(b) Accounting Standards (Turkish Accounting Standards, and regulations and
standards included in the legislation for preparing the annual and consolidated
financial statements);
(c) Corporate Governance Principles and Financial Management;
(d) Audit (Turkish Auditing Standards, and other legislation regarding profes-
sional ethics, independence, risk management, and internal control and audit);
(e) General Legal Legislation (Commercial Law, Law of Obligations, Execution
and Bankruptcy Law, Civil Law, Tax Law, Social Security Legislation,
Administrative Law); and
(f) Legislation on capital market, banking, insurance, and individual retirement,
(4) Certified Public Accountants are subject to an exam for the subjects set out in
subparagraphs (b), (c), (d), and (f) and Sworn-in Certified Public Accountants
in (b), (d), and (f).
(5) Those that will not carry out statutory audit activities in the fields of capital
market, banking, insurance, and individual retirement are not subject to an exam for
the subjects set out in subparagraph (f) of paragraph three of this Article.
(6) Exam results are valid for two years. The Authority decides on the unification
and separation of the exam by subjects, content of subjects, announcement,
application method, place, time, form, duration, announcement of results, fee,

conditions for passing the exam, exam committee, and other issues relating to the
exam.
PART FOUR
Statutory Audit Public Register
Registration and announcement
ARTICLE 17—(1) Authorization, warning, and approval’s suspension, with-
drawal, and cessation procedures in relation to auditors and audit firms are recorded
in a register kept by the Authority electronically and these are announced publicly
in an up-to-date manner. Authorization enters into force upon registration and
announcement.
(2) The Authority grants a number to each audit firm and auditor.
(3) Those unregistered cannot carry out audit activities.
Register Information
ARTICLE 18—(1) In the register kept by the Authority, the following infor-
mation on the audit firms is recorded followed up:
(a) Trade name and trade register number;
(b) Register number granted by the Authority;
(c) Address of head office and addresses of branch offices (the audit network, if
any, that they are included and this network’s legal and structural nature, their
related audit firms and other entities and these firms’ legal and structural
nature);
(d) Web site address;
(e) Partners’ names and surnames, Turkish identification numbers, and shares in
the corporate capital together with share percentages and amounts;
(f) Addresses and other contact details of partners;
(g) Turkish identification numbers of those charged in the managing body and
their duties, if any, in other companies;
(h) List and register numbers of statutory auditors;
(i) Information on their registrations, if any, by the competent authorities of other
countries; and
(j) Other information considered necessary by the Authority.
(2) In the register kept by the Authority, the following information on the
statutory auditors is recorded followed up:
(a) Name, surname, and Turkish identification number;
(b) Trade name and trade register number, if any;
(c) Register number granted by the Authority;
(d) Contact details;
(e) Web site address, if any;
(f) Information on the Statutory Auditor Certificate;
(g) The trade name, trade register number, Web site address, if any, and contact
details of the audit firm of which she or he is a partner or employee;
(h) Information on their registrations, if any, by the competent authorities of other

countries; and
(i) Other information considered necessary by the Authority.
(3) Certain information on auditors or audit firms recorded in the register may
not be announced publicly as decided by the Authority.
PART FIVE
Obligations of Audit Firms and Statutory Auditors
Ensuring the quality and reliability in statutory audits
ARTICLE 19—(1) Audit firms and auditors conduct their activities in such a
manner that enables them to carry out reliable and high-quality audits.
(2) Audit activities of audit firms and auditors cover the other actions and
processes that aim at ensuring the continuity, quality, and reliability of audits in
addition to the audit process.
(3) An audit process commences with the entity’s audit offer for each accounting
period; it is planned, scheduled, and implemented in accordance with Turkish
Auditing Standards and ends with the reporting of the audit result. Provisions on the
obligations after the delivery of report are reserved. Audit process is documented
within the framework of Turkish Auditing Standards.
(4) For the purpose of ensuring the continuity, quality, and reliability of audits,
the provisions of this part are observed, mainly those relating to the professional
ethics and quality control system, both during statutory audit processes and outside
the audit processes.
Establishing a quality control system
ARTICLE 20—(1) Audit firms must carry out their activities within the
framework of a quality control system, the minimum conditions of which are
defined by the Authority. In implementing this system, the written policies and
procedures that are established according to the Authority’s arrangements and
notified to the Authority are observed. The policies and processes are updated and
implemented in line with the Authority’s arrangements.
(2) Where there is a difference between the written policies and procedures of the
audit firm’s quality control system and the Authority’s arrangements, on which
these are based, or in case an application outside the audit firm’s written policies
and procedures is more advisable due to the specific reasons of the current con-
ditions, it is possible to deviate from the written policies and processes in question.
This situation and reason thereof must be submitted by the statutory auditor to the
audit firm in writing for archiving.
Compliance with professional ethics
ARTICLE 21—(1) Audit firms and statutory auditors must comply with the
professional ethics, the following details of which will be identified by the Authority:
(a) Integrity: to be fair, frank, honest, and reliable in all of their professional and
business relations;
(b) Objectivity: to prevent prejudices, biases, conflicts of interest, and others that
fraud on their powers from affecting their professional of business judgments
or decisions;
(c) Professional competence and due care: to maintain the professional knowledge
and skills at such a level that ensures the audited entities to receive sufficient
statutory audit services and to act in due care and in accordance with Turkish
Auditing Standards in the light of the current developments in legislation and
statutory audit techniques;
(d) Confidentiality: to observe the confidentiality of information obtained when
carrying out a statutory audit; to refrain from disclosing this information to
third parties and from using the same for the benefits of themselves or third
parties, without prejudice to any legal or professional right or duty to disclose
the information in question; and
(e) Professional behavior: to comply with the relevant legislation and to avoid
from such actions and behaviors that damage the statutory audit profession’s
reputation.
(2) Audit firms will, prior to each audit and once a year as a minimum in any
case, obtain a written promise from auditors and those participating in audits to the
extent that they act and will act in compliance with firm’s policies and processes in
relation to independence, objectivity, and confidentiality. Auditors and those par-
ticipating in audits should inform in writing the audit firm about the matters that
may arise following the commencement of an audit and that can negatively impact
the matters listed in subparagraph one.
Independence and maintenance of independence
ARTICLE 22—(1) Audit firms and auditors carry out audits in independent of
mind and independent in appearance.
(a) Independence of mind is the expressing of an opinion by the statutory auditor
free from the influences that can impact her/his professional judgment in order
to ensure acting within the framework of integrity, objectivity, and profes-
sional skepticism.
(b) Independence in appearance is the avoidance of situations and behaviors that
can make an impression for the third persons, who assess the entire circum-
stances and conditions of the subject, that the audit firm, auditor, or the
member of an audit team makes concessions of integrity, objectivity, and
professional skepticism.
(2) Audit firms and auditors must be objective and independent from the audited
entity when carrying out an audit, and they can by no means take part in the
decision-making mechanisms of the audited entities. Additionally, audit firms and
auditors must not be subject to such special conditions that can eliminate their
independence.
(3) Independence is deemed to have been eliminated where audit firms or
auditors are of the opinion that the independence has been impaired. Some of the
conditions that impair or eliminate the independence are as follows:
(a) Direct or indirect borrowing and lending relationship other than ordinary
economic relations between statutory auditors and the audit firm’s partners,
key management personnel, statutory auditors and their spouses, even if
divorced, and relatives by blood and marriage up to (and including) third

degree or the entity audited by the audit firm of those being in relation with the
audited entity;
(b) Failure by the audited entity to pay an audit fee for the previous periods
without a valid reason;
(c) Making the audit fee conditional on audit results and resulting of this condi-
tion in uncertainties about the audit quality and setting of this fee on the basis
of other services provided to the audited entity outside the scope of the audit;
and
(d) Emergence of other conditions that impair independence.
(4) Where factors compromising the independence arise, measures should be
taken to protect the independence. Where it is understood that the measures taken
are insufficient to eliminate the threats, the independence will be deemed to have
been impaired. Audit firms and auditors must record the threats emerging against
the independence and measures taken in response to them when carrying out an
audit in writing and maintain these records. Conditions where the independence is
impaired or eliminated are notified to the Authority, and the relevant audit
engagement is terminated by obtaining the Authority’s approval.
(5) Audit firms and auditors cannot render any service to the audited entity other
than ratification, tax consultancy, and tax audit and carry out them through related
audit firms and other firms included in the audit network. Services rendered by the
natural entity partners of the audit firm, its auditors, and key management personnel
also fall within this scope.
Advertisement ban
ARTICLE 23—(1) Audit firms and auditors cannot advertise directly or indi-
rectly and involve in such activities that fall within the scope of advertisement.
They cannot use any title other than their professional and academic titles in their
trade names, signboards, or printed papers.
(2) However, audit firms and auditors can prepare and distribute brochures that
contain corporate introductory information, place advertisements for seeking per-
sonnel for them or for audited entities, prints scientific works on the professional
subjects, and organize meetings such as seminars and conferences and give edu-
cation in relation to the professional subjects.
(3) When conducting the activities referred in subparagraph two, it is required
(a) To refrain from making a promise and commitment in relation to the result of
the work;
(b) To observe the seriousness and prudence required by the work;
(c) To refrain from including exaggerative emotional expressions, images, and
information that are wrong, mislead and delude the public opinion, and misuse
the lack of experience such as concealing the information that must be
announced for taking healthy decisions, and leaving such an impression;
(d) To refrain from creating expectations that do not have a concrete background
for the works and services that can be done; and
(e) To refrain from comparing the audit firm or the auditor with another audit firm
or the auditor.
Unfair competition ban

ARTICLE 24—(1) The audit firms and the auditors cannot act in such a manner
that it may in any way negatively impact the quality of audit activity or harm their
colleagues, without prejudice to the unfair competition conditions included in other
arrangements.
(2) Audit firms and auditors cannot accept the audit service request of an audited
entity for the same period when its audit service relation with another audit firm or
auditor continues, except for the conditions permitted by the Authority.
Continuing education
ARTICLE 25—(1) Auditors are educated on a continuous basis for the purpose
of keeping their theoretical knowledge and professional skills at a sufficient level,
complying with professional ethics, following up changes in the professional field,
and ensuring their professional development.
(2) Continuing education obligation starts as from the registration of auditors and
implemented as defined by the Authority.
(3) Following their registration, auditors must meet the continuing education
requirements once in five years.
(4) Audit firms should take the measures required for enabling the auditors to
complete their continuing education programs.
(5) The Authority regulates the matters relating to continuing education by
obtaining the relevant organizations’ opinions, where necessary.
(6) For the purpose of ensuring the audit objectivity and independence and
improving the reliance in and the quality of audit, the Authority takes required measures
for educating auditors and the members of profession or improving their level of
education within the framework of this By-law in addition to continuing education.
Limitations on the audit activity
ARTICLE 26—(1) Audit firms and auditors cannot undertake the following
audits:
(a) The audits that they cannot undertake under the Law 6102;
(b) The audits that will impair independence;
(c) The audits where the number, quality, or experience of audit staff is insuffi-
cient in relation to the audited entity’s characteristics;
(d) Audits for the entities that were carried out for seven years within the last
decade for audit firms and five years within the last seven years for auditors,
including the ones employed at an audit firm, unless a three-year period passes;
(e) The audits that are contrary to the arrangements made by the Authority in
relation to the contract acceptance process; and
(f) The audits that cannot be carried out healthily as a result of the workload of
audit firms or auditors.
(2) In calculating the period in subparagraph (d) of paragraph one, the periods
spent for audits carried out by the firms and related audit firms included in the same
audit network are considered altogether. The periods spent by a statutory auditor in
the same audited entity will be considered together, regardless of the audit firm
where the auditor was employed.
(3) Auditors cannot take charge of the key management personnel position at
such entities and their subsidiaries for which they carried out audits during the last
two years, unless a two-year period passes.
(4) Auditors can carry out audits only at one audit firm. Unless their relations
with the audit firm that employs them terminate, they cannot carry out audit
activities at another audit firm or on their own.
Audit teams
ARTICLE 27—(1) The audits that must only be carried out by audit firms
within the framework of the legislation are carried out by such audit teams that
consist of the auditors in the number and qualification required by the audit. Audit
teams are comprised of the auditors in sufficient number and with such authority,
knowledge, experience, and skills to carry out the audit in compliance with the
Authority’s arrangements considering the audited entity’s trading volume, activi-
ties, and the regulations relevant to that entity. However, audit teams consist of
three statutory auditors as a minimum. At least one substitute auditor will be
assigned for each of the responsible auditor position and certain positions in audit
teams. The substitute statutory auditors must have such qualifications that enable
them to undertake the responsibilities of those they replace. The Authority may
define different minimum numbers of auditors and substitute auditors depending on
the characteristics of audited entities.
are responsible for the regulation and audit of certain areas, the Authority can define
additional conditions for those that will carry out audit in these areas. All of the
auditors included in the audit team should meet the additional conditions prescribed
by the Authority according to the characteristics of audited entities.
(3) Auditors that are not authorized in relation to the audit in question and
assistant statutory auditors, experts that will provide technical information including
the audit of information systems, and other persons that assist the audit can also
take part in audit teams, provided that they are not assigned as statutory auditors.
Auditors or experts that meet the conditions prescribed by the Authority on the
subject of information systems’ audit should be made available in sufficient num-
bers for the audit of banks as defined in Banking Law dated 19/10/2005 and
numbered 5411 and other entities set out by the Authority. These persons should
work under the responsibility, supervision, and control of auditors, but they cannot
take a decision-making position at any stage of the audit. These persons are not
taken into account in calculating the minimum number of auditors and held
responsible for the audit without prejudice to general provisions and their obliga-
tions of independence, objectivity, and secrecy.
(4) Audit teams should carry out statutory audits under the supervision and
administration of the responsible auditor.
(5) Audit firms can give the titles of auditor, senior statutory auditor, and to
statutory auditors. Senior statutory title should not be given to those that have not
served in auditing for six year and chief auditor title to those that have not served in
auditing for ten years.
Conditions for becoming a responsible auditor

ARTICLE 28—(1) Responsible auditors are authorized to sign audit reports on
behalf of audit firms, and they are assigned by the managing body of audit firms
among the auditors that meet the following conditions:
(a) For audits to be carried out at PIEs, having fifteen-year professional experi-
ence and having carried out audits actually for two years as a minimum during
this period in the areas envisaged by legislation with title of auditor, senior
statutory auditor, or chief statutory auditor;
(b) For other audits, having minimum ten-year professional experience and hav-
ing carried out audits actually for one year as a minimum during this period
with title of auditor, senior statutory auditor, or chief statutory auditor; and
(c) Having been authorized to sign audit reports on behalf of the audit firm.
(2) Information and documents evidencing that the auditors meet the conditions
prescribed in paragraph one should be delivered to the Authority for approval by
the audit firm with the decision of the managing body.
Audit engagement
ARTICLE 29—(1) The audit engagement that is drawn in writing up between
the audit firm or statutory auditor and the audited entity must contain the following
matters as a minimum:
(a) The date and number of the general assembly decision or court order that
forms a basis for the engagement;
(b) Purpose, scope, period, and special reasons, if any, of the audit;
(c) Subject and criterion of the statutory audit;
(d) Responsibilities of the parties;
(e) A provision to the extent that the audit will be carried out and completed
according to Turkish Auditing Standards and relevant legislation;
(f) A provision to the extent that an unlimited access will be provided for all of
the records, documents, and other information requested in connection with
the audit;
(g) Names and titles and envisaged working periods of auditors, including their
substitutes, assigned in the audit team together with the detailed breakdown of
fees for each of them and total audit fee;
(h) A provision to the extent that the responsible auditor and his/her substitute are
authorized to sign the audit report on behalf of the audit firm;
(i) Commencement and ending dates of the audit and report delivery date;
(j) A provision to the extent that professional liability insurance policy will be
bought;
(k) Audited entity’s obligation to inform the auditor about the events that occur
after the report date, but prior to the announcement of financial statements or
annual report and that will affect them; and
(l) A provision to the extent that the engagement can only be canceled in
accordance with the legislation.
(2) No service can be envisaged in the engagement other than the audit service,
and the payment of audit fee can only be made conditional on the audit service.
(3) The audit engagement will be concluded for the accounting period for which
the audit firm or the auditor is selected under the Law 6102;
(4) The auditor can only be removed from the audit function where another
statutory auditor is appointed and as prescribed in subparagraph four of Article 39
to the Law 6102. The auditor can only cancel the audit engagement where there is a
valid reason or where a removal action is filed against him/her. Audit firms and
auditors can terminate the engagements where there are reasons justifiable by the
Authority.
Obligation to issue an audit reportand express an opinion
ARTICLE 30—(1) As a result of the statutory audit activity, an audit report is
issued according to the form and principles defined by the Authority.
(2) This report should contain the following under the title of opinion:
(a) An unqualified opinion where there is not any non-compliances or misstate-
ments on the statutory audit subject that can be considered material according
to audit criterion separately and collectively;
(b) A qualified opinion where there are separately or collectively material
non-compliances or misstatements on the audit subject or where sufficient
appropriate audit evidence cannot be obtained, but this does not affect the
audit subject in general;
(c) An adverse opinion where, after obtaining the sufficient appropriate audit
evidence, the non-compliances or misstatements detected are separately or
collectively material and affect the audit subject in general; and
(d) A disclaimer of opinion where sufficient appropriate audit evidence cannot be
obtained that will constitute the basis of the audit opinion for the material
matters that affect the audit subject in general or where uncertainties, which
impede forming an opinion although sufficient evidence is obtained, arise
subsequently.
Subsequent events
ARTICLE 31—(1) The audit firm and statutory auditor have the obligation of
including in their report the events that occur after the balance sheet date, but prior
to the audit report date and that require restatement or explanation in the financial
statements or annual activity report within the framework of Turkish Auditing
Standards and relevant legislation.
(2) Where the audit firm and auditor become aware of the events that occur after
the audit report date, but prior to the announcement date of financial statements or
annual activity report and that will affect these, they will assess the requirement of
restatement or explanation in financial statements or annual activity report and carry
out the required procedures in line with Turkish Auditing Standards and relevant
legislation.
(3) Where the audit firm and auditor become aware of the events that occur after
the period of announcement of the financial statements and annual report and that
will affect these, they will assess the requirement of restatement or explanation in
financial statements or annual report and carry out the required procedures in line
with Turkish Auditing Standards and relevant legislation.
Fee Tariff
ARTICLE 32—(1) Audit fee is determined in such a manner that it ensures the
audit independence, objectivity, and quality. Where the services permitted in line
with the legislation are rendered in connection with the audited entity, this does not
affect the audit fee.
(2) The Authority can determine the fee tariffs for audit service in relation with
the relevant period.
(3) In the years where the fee tariff is not determined, the amounts that are
calculated through increasing fee amounts applied in the previous period by the
revaluation percentages set and announced for that year by the Ministry of Finance
will apply.
Professional liability insurance
ARTICLE 33—(1) Audit firms and auditors must buy professional liability
insurance policies that will cover all of the audits starting from the first audit work
that they undertake.
(2) Matters relating to the professional liability insurance are regulated by the
Authority after obtaining the opinion of the Undersecretariat of Treasury.
Notifications
ARTICLE 34—(1) Audit firms and auditors will notify the following to the
Authority:
(a) Modifications to any information that has been previously notified to the
Authority, including register information, within following 10 days at the
latest;
(b) Information to be requested by the Authority in connection with the audit
engagements and contracts for other services within 10 days at the latest
following the signing date;
(c) Procedures relating to engagement cancelation and withdrawal under Article
39 to the Law 6102 within 10 days at the latest following the procedure date;
(d) Professional liability insurance drawing date and modifications to the policy
and insurance company within 10 days at the latest following the date of
modifications;
(e) Their revenues for the last calendar year until the end of the fifteenth day of
May in line with the form set out by the Authority; and
(f) Other notifications and other information to be requested by the Authority
within the period set out by the legislation or the Authority.
Obligation of retention and submission
ARTICLE 35—(1) Audit firms have the obligation of retention of their com-
mercial books, audit reports, and all types of documents regarding the audit
activities and quality control system, including the ones kept electronically,
mechanically, and in other environments, for a period of ten years together with
their appendices. This provision also applies to the persons carrying out audit on
their own.
(2) Audit firms and auditors have the obligation of presenting all information and
documents together with the ones that must be kept under subparagraph one that are
requested by the persons assigned by the Authority and of delivering a copy thereof to
the assigned persons and making available an environment for their review.
(3) All of the documents and appendices thereof, including the ones that are kept
electronically, mechanically, and in other environments in connection with each
audit activity, must be filed. Audit files should be created during the audit.
Preparation and publication of transparency reports
ARTICLE 36—(1) The audit firm that carried out the audit of PIEs in a calendar
year should notify the Authority the transparency report and publish the same on
their Web sites within three months of the end of each calendar year.
(2) The chairman of the audit firm’s managing body will sign this report, and it
will contain the following information as a minimum on the audit firm:
(a) A description of its legal structure and partners;
(b) A description of its key management personnel and responsible auditors;
(c) A description of the legal and structural attributes of the audit network that it
belongs to;
(d) A description of the related audit firms and other entities and of the nature of
these relations;
(e) A description of its organizational structure;
(f) An indication of when the last quality assurance review took place;
(g) The list of PIEs for which the audit firm has carried out statutory audits during
the preceding year;
(h) A statement on the policy followed by the audit firm concerning the contin-
uing education of statutory auditors;
(i) In relation to the independence practices, a statement confirming that the
compliance with the principles of independence has been reviewed;
(j) Financial information indicating the weight of audit activities such as the
distribution of total revenues by the audit of financial statements, other audits,
and non-audit services;
(k) Information concerning the basis of the responsible auditors’ remuneration;
(l) An introduction of the quality control system and the declaration of the audit
firm to the extent that this system functions efficiently; and
(m) Other information requested by the Authority.
(3) Where there is an imminent significant threat to the personal safety and there
is such a request, information on the audited entity may not be included in the
explanation given in connection with subparagraph (g) of paragraph two by
obtaining the Authority’s approval.
(4) The audit firms that have not carried out a PIE audit within a calendar year
although they were included in the lists for PIE audits will explain this in their Web
site’s section for transparency reports.
(5) Where the report is updated through a transparency report, the original and
updated versions of the report will separately be made available to public opinion
for five years.
Obligations arising out of Turkish Commercial Code

ARTICLE 37—(1) Audit firms and auditors should also fulfil the following
obligations during statutory audits that they carry out under the Law 6102:
(a) To report and present the statutory audit results in compliance with the Law
6102 and this By-law and to make statements to the general assembly about
statutory audit activities and results thereof;
(b) To propose the establishment of a committee for the early detection and
management of risks where necessary under Article 378 to the Law 6102 and,
in case such a system exists, to draw up a separate report explaining its
structure and practices and present the same to the board of directors together
with the audit report;
(c) To abide by the provisions regarding the assignment and removal of statutory
auditors, and cancellation of engagements referred in Article 399 to the Law
6102;
(d) Where the audit engagement is canceled, to draw up a report about the results
obtained until the cancellation date according Article 402 to the Law 6102 and
to present the same to the general assembly; and
(e) In connection with the statutory audit, to perform the other obligations
envisaged in the Law 6102 and relevant legislation other than the arrange-
ments of the Statutory Decree numbered 660 and secondary legislation.
PART SIX
Examination, Inspection, and Administrative Sanctions to be Imposed by
the Authority
Examinations and inspections
ARTICLE 38—(1) The Authority examines and inspects the audit firms and
statutory auditors within the framework of selected statutory audit files sufficient
number and other information, notifications, documents under the quality assurance
system to be established by it. Examination and inspection activities are carried out
within the scope of an annual examination and inspection plan that is prepared
annually by the Authority by obtaining the opinions of relevant institutes.
Examination results are declared to public every year with a report.
(2) Examinations and inspections conducted at audit firms cover the assessments
in relation to the inspection of statutory audit activities, which were carried out by
audit firms, under the legislation, and audit of these firms’ activities in relation to
their compliance with the legislation, and qualifications and quantities of resources
spent, audit fees received, and the audit firm’s internal control system.
(3) Minimum triennial examination and inspection will be conducted for the
audit firms that audit PIEs, while the examination and inspection of others will be
conducted per six years and statutory auditors will be subject to such inspection and
audit when deemed necessary by the Authority.
(4) In addition to the planned examination and inspections, the Authority con-
ducts examinations and inspections in case of denouncements, complaints, and
notifications and in other cases deemed necessary.
(5) The Authority may carry out the examinations and inspections through either
its own personnel or the relevant inspection units of the institutions and boards
specified in Article 25 to the Statutory Decree numbered 660.
(6) Examinations and inspections are carried out in compliance with the pro-
cedures and methods set out by the Authority.
(7) Administrative sanctions will apply against those that violate the legislation
as a result of the examinations and inspections conducted. Audit firms and statutory
auditors must take the required measures in relation to the matters detected as a
result of examinations and inspections.
(8) Where the Authority requests a competent justice of peace with a letter
containing the grounds in case of a failure to present or deliver the reports, books,
documents, working papers, and all of the records, including the ones kept elec-
tronically, magnetically, and in similar environments, and the means that contain
similar information to be requested by those appointed for examination under
paragraph seven of Article 25 to the Statutory Decree 660 or in other necessary
cases, a search can be made before the concerned entities if the justice of peace
adjudges in favor of making a search at requested sites.
Administrative sanctions
ARTICLE 39—(1) Depending on the violations detected, the following sanc-
tions will be applicable against those that act in violation of the statutory audit
provisions and Authority’s arrangements in their statutory audit activities following
the examinations and inspections, denouncements and complaints, and notifications
of other institutes and agencies:
(a) Warning;
(b) Suspension of approval; and
(c) Withdrawal of approval.
Warning
ARTICLE 40—(1) The warning sanction will be imposed against audit firms or
statutory audits in case of
(a) Carrying out statutory audit activities in violation of Turkish Auditing
Standards in such a manner that it does not involve a heavier sanction
depending on the committed act’s aggravation;
(b) Failing to take required measures in relation to the matters that compromise
independence and to record the assessments thereon;
(c) Failing to establish the quality control system set out in Article 20;
(d) Failing to make the commitment referred in subparagraph two of Article 21;
(e) Failing to comply with the advertisement ban set out in Article 23;
(f) Violating the provisions of Article 24;
(g) Failing to ensure participation in the continuing education programs set out in
Article 25 or to complete the education programs by the end of the envisaged
period;
(h) Assigning responsible auditors other than those approved within the frame-
work of Article 28;
(i) Acting in violation of the provisions of Article 29;

(j) Failing to buy the professional liability insurance policy referred in Article 33;
(k) Failing to make the required notifications to the Authority timely, completely,
and correctly;
(l) Acting in violation of the provisions of Article 35;
(m) Failing in preparing, notifying to the Authority in due time, or publishing the
transparency report as set out in Article 36;
(n) Failing to comply with the fee tariff set by the Authority;
(o) Failing to complete the statutory audit reports in due time or duly sending the
prepared reports to the relevant recipients under the legislation;
(p) Acting in violation of the provisions of Article 37; and
(q) Detection of other similar matters that involve warning sanction according to
the other relevant legislation, although not included in this By-law.
Suspension of approval
ARTICLE 41—(1) Where the following violations are detected, the approvals
of audit firms and statutory auditors will be suspended for a period to be determined
by the Board, provided that this period does not exceed two years on the basis of the
committed act’s aggravation:
(a) Continuance of an act that involves the warning sanction in spite of a warning
or recurrence thereof within two years following the finalization of sanction or
commitment, within this period, of different acts that involve the warning
sanction for the third time;
(b) Misstatements without required professional competence and due care within
the framework of Turkish Auditing Standards;
(c) During the statutory audit activities carried out, failure to comply with
integrity, objectivity, independence, professional competence and due care,
confidentiality, professional behavior, and other ethical principles and to carry
out reliable and high quality statutory audits;
(d) Rendering services for the audited entity in violation of paragraph five of
Article 22;
(e) Failure to comply with the limitations set out in Article 26;
(f) Acting in violation of the conditions sought for audit teams under Article 27 in
case of the statutory audits that must only be carried out by the audit firms
according to the legislation; and
(g) Detection of other matters that involve the suspension of their approvals
according to the legislation.
Withdrawal of approval
ARTICLE 42—(1) Where the following violations are detected, the approvals
of audit firms or statutory auditors will be suspended in perpetuity:
(a) Recurrence of an act that involves the suspension of approval within two years
following the finalization of sanction or commitment, within this period, of
different acts that involve the suspension of approval for the third time;
(b) Obtaining the certificate of authorization by making incorrect or misleading

statements deliberately or by other illegal ways;
(c) Subsequently understating that they do not meet the authorization conditions
or subsequent loss of these conditions by them;
(d) In the letters of opinion to be released under Article 30, to deliberately release
an adverse opinion, where it was required to release an unmodified opinion, an
unmodified opinion where it was required to release an adverse opinion, and an
unmodified opinion where it was required to release a disclaimer of opinion;
(e) Loss of independence and objectivity in such a manner that it impairs the
reliance in the statutory audit or invalidates the statutory audit; and
(f) Detection of other matters that involve the withdrawal of their approvals
according to the legislation.
(2) Audit firms and statutory auditors cannot file an application of re-approval
for withdrawn approvals.
(3) Audit firms and statutory auditors, the approvals of whom are withdrawn,
will return their seals, certificates of authorization, and identification card within the
period set out by the Authority. Any act in violation of this provision will be
denounced to the Public Prosecutor’s Office.
Other provisions on the administrative sanctions
ARTICLE 43—(1) As a result of the examinations and inspections carried out
by the Authority and where it is possible to remedy, the Authority may grant a
separate period for remedying the violations and deficiencies detected prior to
taking a decision for sanction. Where it is detected that the violations and defi-
ciencies are not remedied by the end of the period so granted, the corresponding
administrative sanctions will apply.
(2) A minimum period of ten days will be granted to the persons concerned for a
defense. Those failing to defend within the granted period will be deemed to have
renounced their right of defense.
(3) The Authority is entitled to impose a sanction heavier by one degree with the
reasons thereof considering the act’s aggravation.
(4) The decisions taken by the Board after the required assessments are notified
to the concerned persons. The Board decisions are final and unobjectionable with a
right to resort to the jurisdiction. The Board decisions are recorded in the register of
the concerned persons.
(5) Imposing sanctions on the statutory auditors employed by reason of the
violations detected at audit firms does not relieve the audit firms from legal and
criminal liabilities.
(6) Where the violation is not attributable to audit firms and auditors, the
Authority will conduct the required procedures.
(7) The sanction and injunction decisions taken against audit firms and auditors
under this Article will also be notified to the other institutes as deemed necessary by
the Authority.
(8) Those against whom a suspension of approval decision has been taken
cannot enter into new engagements during this period, while those against whom a
withdrawal of approval decision has been taken cannot enter into any new
engagement following the decision of withdrawal. However, the Board may take a
decision favoring the continuance of their activities limited with the completion of
their ongoing audit works.
(9) The Board can cease the statutory audit activities of an audit firm or statutory
auditor in the following cases:
(a) Loss of the auditor’s juridical capacity as a result of disappearance, mental
loss, disability, and similar reasons or termination of the audit firm’s activities
actually or in registration or subsequent impossibility to carry out the audit
activities as a result of an injunction adjudged by the court against it; and
(b) Where there is a possibility that the continuance of the audit firm or auditor its
activities will result in irreparable losses by reason of a situation that involves
suspension or withdrawal of the approval following the first assessments made
within the framework of the annual inspection plan or in connection with the
denouncements and complaints or notification from other institutes.
PART SEVEN
Miscellaneous Provisions
Responsibility in statutory audits
ARTICLE 44—(1) Audit firms and statutory auditors are severally liable for
losses that may arise in connection with the non-compliance of audit reports with
Turkish Auditing Standards and incorrect, deficient, and misleading information
and opinions contained in these reports.
(2) Administrative sanctions are applicable against the audit firms and statutory
auditors for whom the violations of legislation have been detected. In the cases
deemed necessary by the Authority, sanctions will also be applicable against such
auditors that are assigned in audit teams and that bring about the violation of
legislation as a result of their acts and operations.
(3) The responsibility for the violations of legislation brought about by such
persons included in audit teams for assistance purposes other than the ones assigned
in the capacity of auditors will reside with the audit firms and auditors, under the
surveillance of whom they work, in terms of administrative sanctions. The
responsibility of those participating in audits for assistance purposes arising out of
their obligations of independence, objectivity, and secrecy is reserved.
Force majeure
ARTICLE 45—(1) The periods referred hereunder do not count between the
occurrence and termination dates of a force majeure case.
(2) The cases that can be accepted as force majeure to preclude the fulfillment of
an obligation are as follows:
(a) Disasters such as fire, earthquake, and flood;
(b) Strikes;
(c) Severe accidents, severe illnesses, and imprisonment;
(d) Disappearance within the meaning of Article 4721 and involuntary loss of
books and documents; and
(e) Other similar cases that can be accepted by the Authority.

(3) A force majeure case is notified to the Authority within twenty days fol-
lowing the date of occurrence. Where it is impossible to make the notification, this
period will start counting as from the actual termination date of the impossibility.
(4) The force majeure case must not stem from a fault attributable to the audit
firm or auditor, it must be impossible for the audit firm or auditor to eliminate this
impediment, and the force majeure case must be notified to the Authority with the
documents evidencing its occurrence. For the force majeure cases that are widely
known, no notification and evidencing document will be sought.
Notifications
ARTICLE 46—(1) Notifications to be hereunder are subject to the provisions of
the Notification Law dated 11/2/1959 and numbered 7201.
Form of notifications to be served with the Authority
ARTICLE 47—(1) Notifications to be served with the Authority hereunder are
made electronically in the form requested by the Authority according to the Law on
Electronic Signature dated 15/1/2004 and numbered 5070, unless otherwise
provided.
Remuneration for the Authority’s services
ARTICLE 48—(1) The Authority is entitled to determine a fee for the services
of training, exam, authorization, registering, and other services to be rendered
hereunder.
Authorization
ARTICLE 49—(1) The Authority is authorized to regulate the matters in
relation to the implementation of this By-law.
PART EIGHT
Provisional and Final Provisions
Transitional provisions relating to the statutory auditors
TEMPORARY ARTICLE 1—(1) Without prejudice to the other conditions
prescribed for becoming a statutory auditor, the exam condition as set out in Article
16 will not be sought for
(a) Those that have been entitled to obtain the statutory audit license from public
institutions under the relevant legislation prior to the publication of this
By-law as a result of an exam or benefit from an exemption granted by the
legislation in relation to the exam; and
(b) Those that have been entitled to obtain the license as a result of the statutory
auditor exams announced by public institutions prior to the date of 2/11/2011,
when the Statutory Decree numbered 660 was published and the comple-
mentary exams to be organized in connection therewith until 31/12/2012
should they file an application until 31/12/2014 and except for the exam
subjects on insurance and individual retirement legislation.
(2) In order to have the possibility to carry out audits in the fields of insurance
and individual pensions, those falling within the scope of paragraph one must meet
the conditions sought for carrying out audits in this field under the Insurance Law
dated 3/6/2007 and numbered 5684 and relevant legislation or must pass the exam
to be conducted in this field by the Authority, or must have completed the training
to be organized by the Authority. The training to be organized within the scope of
this paragraph may also be carried out in cooperation with public entities or
universities.
(3) The scores obtained by those taking the statutory audit exams organized by
the public institutions prior to 1/1/2013 for the subjects that they passed in these
exams will be considered in the exam to be organized for them here under or in the
exam to be conducted for those falling within the scope of paragraph four within the
validity period set out in the relevant legislation and upon their requests.
(4) If they file applications together with their licenses until 31/12/2014, those
entitled to become Sworn-in Certified Public Accountants and those having a
15-year professional experience and entitled to become Certified Public
Accountants as of the publication date hereof will
(a) Be deemed to have met the exam condition set out in Article 14 regarding the
subjects that they passed, provided that they meet the conditions sought under
Article 14 to become statutory auditors, except for the condition of exam, and
they successfully complete the training programs envisaged by the Authority
in respect of exam subjects set out in Article 16.
(b) Those rendered the services qualified as apprenticeship under the Law 3568
and having a 15-year professional experience as of the publication date hereof
will fall within the scope of this paragraph, should they become the members
of profession until 31/12/2014.
(c) The members of profession that fall within the scope of this paragraph can also
take the exams organized by the Authority instead of participating in the
training program set out in subparagraph (a). They will not be subject to a
separate training for the exam subject that they have passed.
(d) The members of profession that fall within the scope of this paragraph are not
subject to the conditions set out in subparagraph (b) of paragraph one or
Article 28 until 31/12/2015 and in Article 15.
(e) Training to be organized under subparagraph (a) will be organized in con-
nection with the exam subjects specified for the members of profession in
paragraph four of Article 16. This training can also be carried out in coop-
eration with public entities or universities.
(5) In the authorizations to be made until 31/12/2015, those having 10-year
professional experience as of the publication date hereof should spend at least 1
year of applied practical training with an auditor or at an audit firm, while others
should spend at least 2 years.
(6) In connection with the accounting period ending before 1/1/2014, the
members of profession that fall within the scope of paragraph four can carry out
audits within the framework of the provisions hereof with the Authority’s approval,
provided that these audits are limited to their taxpayers that entered into an
engagement with them under the Law 3568 for the accounting period of 2012 and
without prejudice to the limitations set out in Article 26 hereof and in the Law 6102.
Statutory Auditor Certificate, identification card, and seal will not be granted to
them. This provision does not constitute an acquired right after the accounting
period in question.
(7) Training activities envisaged by the Authority under this Article will be
completed until 31/12/2015.
Transitional provisions relating to the existing audit firms
TEMPORARY ARTICLE 2—(1) The audit firms that obtained authorization
from public institutions for the purpose of carrying out audit activities have the
authority to carry out audit activities for accounting periods starting prior to
1/1/2014, provided that they file an application with the Authority together with the
certificates evidencing their authorization within one month following the publi-
cation date hereof. These firms must adapt the provisions hereof until 1/1/2014, and
they will be authorized and registered by the Authority as of their adaptation date;
otherwise, no approval will be granted to them. The members of profession that act
as auditors at these firms without the statutory audit certificate as of the publication
date hereof cannot be assigned in the capacity of auditors at audits for accounting
periods starting on and after 1/1/2014 without the statutory audit certificate.
Transitional provisions relating to the existing audit firms authorized for
the first time
TEMPORARY ARTICLE 3—(1) The condition for establishing the quality
control system referred in subparagraph (m) of paragraph one of Article 13 in the
audit firm that file an application for authorization between the publication date of
the Statutory Law 660 and 31/12/2013 is not sought provided that audit guides have
been created as a component of the quality control system. These firms will
establish the quality control system within 6 months following the authorization
date. In case of a failure to establish the quality control system within this period,
the required administrative sanctions will apply. The audit guides whereby the audit
processes to be followed and methods to be implemented are set out in detail are
established within the framework of the accounting and auditing legislation in force
and international practices. Those falling within the scope of this Article are not
entitled to carry out PIE audits.
Implementing the existing regulations
TEMPORARY ARTICLE 4—(1) The implementation of existing regulations
will continue until the standards and regulations to be published by the Authority in
line with the Statutory Law 660 enter into force for audits.
(2) The condition of seventy-five percent set out in subparagraph (k) of para-
graph one of Article 13 will not be applied until the end of the year when full
membership to the EU is achieved.
Renewal of the existing audit engagements
TEMPORARY ARTICLE 5—(1) The engagements that were signed prior to
the publication date hereof and that cover the periods starting after 31/12/2012 will
be restructured within the framework of this By-law in line with the provisions of
the Law 6102 on the assignment of auditors. (2) In calculating the periods referred
in subparagraph (d) of paragraph one of Article 26, the periods spent in audits
carried out under the relevant legislation before 1/1/2013.
Entry into force

ARTICLE 50—(1) This By-law enters into force on its publication date.
Implementation
ARTICLE 51—(1) The provisions of this By-law will be implemented by the
Chairman of the Authority.
Appendix D
International Standard on Quality
Control 1
INTERNATIONAL STANDARD ON QUALITY CONTROL 1

QUALITY CONTROL FOR FIRMS THAT PERFORM AUDITS AND
REVIEWS OF FINANCIAL STATEMENTS, AND OTHER ASSURANCE
AND RELATED SERVICES ENGAGEMENTS
(Effective as of December 15, 2009)
CONTENTS
Paragraph
Introduction
Scope of this ISQC 1−3
Authority of this ISQC 4−9
Effective Date 10
Objective 11
Definitions 12
Requirements
Applying, and Complying with, Relevant Requirements 13−15
Elements of a System of Quality Control 16−17
Leadership Responsibilities for Quality within the Firm 18−19
Relevant Ethical Requirements 20−25
Acceptance and Continuance of Client Relationships and Specific Engagements 26−28
Human Resources 29−31
Engagement Performance 32−47
Monitoring 48−56
Documentation of the System of Quality Control 57–59
Application and Other Explanatory Material
Applying, and Complying with, Relevant Requirements A1
(continued)

https://doi.org/10.1007/978-981-13-0526-9
276 Appendix D: International Standard on Quality Control 1
(continued)
CONTENTS
Elements of a System of Quality Control A2−A3
Leadership Responsibilities for Quality within the Firm A4−A6
Relevant Ethical Requirements A7−A17
Acceptance and Continuance of Client Relationships and Specific Engagements A18
−A23
Human Resources A24
−A31
Engagement Performance A32
−A63
Monitoring A64
−A72
Documentation of the System of Quality Control A73
−A75
International Standard on Quality Control (ISQC) 1, Quality Control for

Firms that Perform Audits and Reviews of Financial Statements, and Other
Assurance and Related Services Engagements, should be read in conjunction
with ISA 200, Overall Objectives of the Independent Auditor and the
Conduct of an Audit in Accordance with International Standards on Auditing.
Introduction
Scope of this ISQC
1. This International Standard on Quality Control (ISQC) deals with a firm’s
responsibilities for its system of quality control for audits and reviews of
financial statements, and other assurance and related services engagements.
This ISQC is to be read in conjunction with relevant ethical requirements.
2. Other pronouncements of the International Auditing and Assurance Standards
Board (IAASB) set out additional standards and guidance on the responsibilities
of firm personnel regarding quality control procedures for specific types of
engagements. ISA 220, for example, deals with quality control procedures for
audits of financial statements.
3. A system of quality control consists of policies designed to achieve the objective
set out in paragraph 11 and the procedures necessary to implement and monitor
compliance with those policies.
Appendix D: International Standard on Quality Control 1 277
Authority of this ISQC

4. This ISQC applies to all firms of professional accountants in respect of audits
and reviews of financial statements, and other assurance and related services
engagements. The nature and extent of the policies and procedures developed by
an individual firm to comply with this ISQC will depend on various factors such
as the size and operating characteristics of the firm, and whether it is part of a
network.
5. This ISQC contains the objective of the firm in following the ISQC, and
requirements designed to enable the firm to meet that stated objective. In
addition, it contains related guidance in the form of application and other
explanatory material, as discussed further in paragraph 8, and introductory
material that provides context relevant to a proper understanding of the ISQC,
and definitions.
6. The objective provides the context in which the requirements of this ISQC are
set, and is intended to assist the firm in:
• Understanding what needs to be accomplished; and
• Deciding whether more needs to be done to achieve the objective.
7. The requirements of this ISQC are expressed using “shall.”
8. Where necessary, the application and other explanatory material provides fur-
ther explanation of the requirements and guidance for carrying them out. In
particular, it may:
• Explain more precisely what a requirement means or is intended to cover; and
• Include examples of policies and procedures that may be appropriate in the
circumstances.
While such guidance does not in itself impose a requirement, it is relevant to the
proper application of the requirements. The application and other explanatory
material may also provide background information on matters addressed in this
ISQC. Where appropriate, additional considerations specific to public sector
audit organizations or smaller firms are included within the application and other
explanatory material. These additional considerations assist in the application of
the requirements in this ISQC. They do not, however, limit or reduce the
responsibility of the firm to apply and comply with the requirements in this ISQC.
9. This ISQC includes, under the heading “Definitions,” a description of the
meanings attributed to certain terms for purposes of this ISQC. These are pro-
vided to assist in the consistent application and interpretation of this ISQC, and
are not intended to override definitions that may be established for other pur-
poses, whether in law, regulation, or otherwise. The Glossary of Terms relating
to International Standards issued by the IAASB in the Handbook of
International Quality Control, Auditing, Review, Other Assurance, and Related
Services Pronouncements published by IFAC includes the terms defined in this
ISQC. It also includes descriptions of other terms found in this ISQC to assist in
common and consistent interpretation and translation.
Effective Date
10. Systems of quality control in compliance with this ISQC are required to be
established by December 15, 2009.
Objective
11. The objective of the firm is to establish and maintain a system of quality control
to provide it with reasonable assurance that:
(a) The firm and its personnel comply with professional standards and appli-
cable legal and regulatory requirements; and
(b) Reports issued by the firm or engagement partners are appropriate in the
circumstances.
Definitions
12. In this ISQC, the following terms have the meanings attributed below:
(a) Date of report—The date selected by the practitioner to date the report.
(b) Engagement documentation—The record of work performed, results
obtained, and conclusions the practitioner reached (terms such as
“working papers” or “workpapers” are sometimes used).
(c) Engagement partner—The partner or other person in the firm who is
responsible for the engagement and its performance, and for the report that
is issued on behalf of the firm, and who, where required, has the appro-
priate authority from a professional, legal, or regulatory body.
(d) Engagement quality control review—A process designed to provide an
objective evaluation, on or before the date of the report, of the significant
judgments the engagement team made and the conclusions it reached in
formulating the report. The engagement quality control review process is
for audits of financial statements of listed entities, and those other
engagements, if any, for which the firm has determined an engagement
quality control review is required.
(e) Engagement quality control reviewer—A partner, other person in the firm,
suitably qualified external person, or a team made up of such individuals,
none of whom is part of the engagement team, with sufficient and
appropriate experience and authority to objectively evaluate the significant
judgments the engagement team made and the conclusions it reached in
formulating the report.
(f) Engagement team—All partners and staff performing the engagement, and
any individuals engaged by the firm or a network firm who perform
procedures on the engagement. This excludes external experts engaged by
the firm or a network firm.
(g) Firm—A sole practitioner, partnership or corporation or other entity of
professional accountants.
(h) Inspection—In relation to completed engagements, procedures designed

to provide evidence of compliance by engagement teams with the firm’s
quality control policies and procedures.
(i) Listed entity—An entity whose shares, stock, or debt are quoted or listed
on a recognized stock exchange, or are marketed under the regulations of a
recognized stock exchange or other equivalent body.
(j) Monitoring—A process comprising an ongoing consideration and evalu-
ation of the firm’s system of quality control, including a periodic
inspection of a selection of completed engagements, designed to provide
the firm with reasonable assurance that its system of quality control is
operating effectively.
(k) Network firm—A firm or entity that belongs to a network.
(l) Network—A larger structure:
(i) That is aimed at cooperation, and
(ii) That is clearly aimed at profit or cost-sharing or shares common
ownership, control or management, common quality control policies
and procedures, common business strategy, the use of a common
brand name, or a significant part of professional resources.
(m) Partner—Any individual with authority to bind the firm with respect to the
performance of a professional services engagement.
(n) Personnel—Partners and staff.
(o) Professional standards—IAASB Engagement Standards, as defined in the
IAASB’s Preface to the International Standards on Quality Control,
Auditing, Review, Other Assurance and Related Services, and relevant
ethical requirements.
(p) Reasonable assurance—In the context of this ISQC, a high, but not
absolute, level of assurance.
(q) Relevant ethical requirements—Ethical requirements to which the
engagement team and engagement quality control reviewer are subject,
which ordinarily comprise Parts A and B of the International Ethics
Standards Board for Accountants’ Code of Ethics for Professional
Accountants (IESBA Code) together with national requirements that are
more restrictive.
(r) Staff—Professionals, other than partners, including any experts the firm
employs.
(s) Suitably qualified external person—An individual outside the firm with
the competence and capabilities to act as an engagement partner, for
example, a partner of another firm, or an employee (with appropriate
experience) of either a professional accountancy body whose members
may perform audits and reviews of historical financial information, or
other assurance or related services engagements, or of an organization that
provides relevant quality control services.
Requirements
Applying, and Complying with, Relevant Requirements
13. Personnel within the firm responsible for establishing and maintaining the
firm’s system of quality control shall have an understanding of the entire text of
this ISQC, including its application and other explanatory material, to under-
stand its objective and to apply its requirements properly.
14. The firm shall comply with each requirement of this ISQC unless, in the cir-
cumstances of the firm, the requirement is not relevant to the services provided
in respect of audits and reviews of financial statements, and other assurance and
related services engagements. (Ref: Para. A1)
15. The requirements are designed to enable the firm to achieve the objective stated
in this ISQC. The proper application of the requirements is therefore expected
to provide a sufficient basis for the achievement of the objective. However,
because circumstances vary widely and all such circumstances cannot be
anticipated, the firm shall consider whether there are particular matters or cir-
cumstances that require the firm to establish policies and procedures in addition
to those required by this ISQC to meet the stated objective.
Elements of a System of Quality Control
16. The firm shall establish and maintain a system of quality control that includes
policies and procedures that address each of the following elements:
(a) Leadership responsibilities for quality within the firm.
(b) Relevant ethical requirements.
(c) Acceptance and continuance of client relationships and specific
engagements.
(d) Human resources.
(e) Engagement performance.
(f) Monitoring.
17. The firm shall document its policies and procedures and communicate them to
the firm’s personnel. (Ref: Para. A2–A3)
Leadership Responsibilities for Quality within the Firm
18. The firm shall establish policies and procedures designed to promote an internal
culture recognizing that quality is essential in performing engagements. Such
policies and procedures shall require the firm’s chief executive officer (or
equivalent) or, if appropriate, the firm’s managing board of partners (or
equivalent) to assume ultimate responsibility for the firm’s system of quality
control. (Ref: Para. A4–A5)
19. The firm shall establish policies and procedures such that any person or persons
assigned operational responsibility for the firm’s system of quality control by
the firm’s chief executive officer or managing board of partners has sufficient
and appropriate experience and ability, and the necessary authority, to assume
that responsibility. (Ref: Para. A6)
Relevant Ethical Requirements

20. The firm shall establish policies and procedures designed to provide it with
reasonable assurance that the firm and its personnel comply with relevant
ethical requirements. (Ref: Para. A7–A10)
Independence
reasonable assurance that the firm, its personnel and, where applicable, others
subject to independence requirements (including network firm personnel)
maintain independence where required by relevant ethical requirements. Such
policies and procedures shall enable the firm to: (Ref: Para. A10)
(a) Communicate its independence requirements to its personnel and, where
applicable, others subject to them; and
(b) Identify and evaluate circumstances and relationships that create threats to
independence, and to take appropriate action to eliminate those threats or
reduce them to an acceptable level by applying safeguards, or, if con-
sidered appropriate, to withdraw from the engagement, where withdrawal
is possible under applicable law or regulation.
22. Such policies and procedures shall require: (Ref: Para. A10)
(a) Engagement partners to provide the firm with relevant information about
client engagements, including the scope of services, to enable the firm to
evaluate the overall impact, if any, on independence requirements;
(b) Personnel to promptly notify the firm of circumstances and relationships
that create a threat to independence so that appropriate action can be
taken; and
(c) The accumulation and communication of relevant information to appro-
priate personnel so that:
(i) The firm and its personnel can readily determine whether they
satisfy independence requirements;
(ii) The firm can maintain and update its records relating to indepen-
dence; and
(iii) The firm can take appropriate action regarding identified threats to
independence that are not at an acceptable level.
reasonable assurance that it is notified of breaches of independence require-
ments and to enable it to take appropriate actions to resolve such situations. The
policies and procedures shall include requirements for: (Ref: Para. A10)
(a) Personnel to promptly notify the firm of independence breaches of which
they become aware;
(b) The firm to promptly communicate identified breaches of these policies

and procedures to:
(i) The engagement partner who, with the firm, needs to address the
breach; and
(ii) Other relevant personnel in the firm and, where appropriate, the
network, and those subject to the independence requirements who
need to take appropriate action; and
(c) Prompt communication to the firm, if necessary, by the engagement
partner and the other individuals referred to in subparagraph 23(b)(ii) of
the actions taken to resolve the matter, so that the firm can determine
whether it should take further action.
24. At least annually, the firm shall obtain written confirmation of compliance with
its policies and procedures on independence from all firm personnel required to
be independent by relevant ethical requirements. (Ref: Para. A10–A11)
25. The firm shall establish policies and procedures: (Ref: Para. A10)
(a) Setting out criteria for determining the need for safeguards to reduce the
familiarity threat to an acceptable level when using the same senior per-
sonnel on an assurance engagement over a long period of time; and
(b) Requiring, for audits of financial statements of listed entities, the rotation
of the engagement partner and the individuals responsible for engagement
quality control review, and, where applicable, others subject to rotation
requirements, after a specified period in compliance with relevant ethical
requirements. (Ref: Para. A12–A17)
Acceptance and Continuance of Client Relationships and Specific
Engagements
26. The firm shall establish policies and procedures for the acceptance and con-
tinuance of client relationships and specific engagements, designed to provide
the firm with reasonable assurance that it will only undertake or continue
relationships and engagements where the firm:
(a) Is competent to perform the engagement and has the capabilities,
including time and resources, to do so; (Ref: Para. A18, A23)
(b) Can comply with relevant ethical requirements; and
(c) Has considered the integrity of the client, and does not have information
that would lead it to conclude that the client lacks integrity. (Ref: Para.
A19–A20, A23)
27. Such policies and procedures shall require:
(a) The firm to obtain such information as it considers necessary in the cir-
cumstances before accepting an engagement with a new client, when
deciding whether to continue an existing engagement, and when consid-
ering acceptance of a new engagement with an existing client. (Ref: Para.
A21, A23)
(b) If a potential conflict of interest is identified in accepting an engagement

from a new or an existing client, the firm to determine whether it is
appropriate to accept the engagement; and
(c) If issues have been identified, and the firm decides to accept or continue
the client relationship or a specific engagement, the firm to document how
the issues were resolved.
28. The firm shall establish policies and procedures on continuing an engagement
and the client relationship, addressing the circumstances where the firm obtains
information that would have caused it to decline the engagement had that
information been available earlier. Such policies and procedures shall include
consideration of:
(a) The professional and legal responsibilities that apply to the circumstances,
including whether there is a requirement for the firm to report to the
person or persons who made the appointment or, in some cases, to reg-
ulatory authorities; and
(b) The possibility of withdrawing from the engagement or from both the
engagement and the client relationship. (Ref: Para. A22–A23)
Human Resources
reasonable assurance that it has sufficient personnel with the competence,
capabilities, and commitment to ethical principles necessary to:
(a) Perform engagements in accordance with professional standards and
applicable legal and regulatory requirements; and
(b) Enable the firm or engagement partners to issue reports that are appro-
priate in the circumstances. (Ref: Para. A24–A29)
Assignment of Engagement Teams
30. The firm shall assign responsibility for each engagement to an engagement
partner and shall establish policies and procedures requiring that:
(a) The identity and role of the engagement partner are communicated to key
members of client management and those charged with governance.
(b) The engagement partner has the appropriate competence, capabilities, and
authority to perform the role; and
(c) The responsibilities of the engagement partner are clearly defined and
communicated to that partner. (Ref: Para. A30)
31. The firm shall also establish policies and procedures to assign appropriate
personnel with the necessary competence, and capabilities to:
(a) Perform engagements in accordance with professional standards and
applicable legal and regulatory requirements; and
(b) Enable the firm or engagement partners to issue reports that are appro-
priate in the circumstances. (Ref: Para. A31)
Engagement Performance
reasonable assurance that engagements are performed in accordance with
professional standards and applicable legal and regulatory requirements, and
that the firm or the engagement partner issue reports that are appropriate in the
circumstances. Such policies and procedures shall include:
(a) Matters relevant to promoting consistency in the quality of engagement
performance; (Ref: Para. A32–A33)
(b) Supervision responsibilities; and (Ref: Para. A34)
(c) Review responsibilities. (Ref: Para. A35)
33. The firm’s review responsibility policies and procedures shall be determined on
the basis that work of less-experienced team members is reviewed by more
experienced engagement team members.
Consultation
reasonable assurance that:
(a) Appropriate consultation takes place on difficult or contentious matters.
(b) Sufficient resources are available to enable appropriate consultation to
take place.
(c) The nature and scope of, and conclusions resulting from, such consulta-
tions are documented and are agreed by both the individual seeking
consultation and the individual consulted; and
(d) Conclusions resulting from consultations are implemented. (Ref: Para.
A36–A40)
Engagement Quality Control Review
35. The firm shall establish policies and procedures requiring, for appropriate
engagements, an engagement quality control review that provides an objective
evaluation of the significant judgments made by the engagement team and the
conclusions reached in formulating the report. Such policies and procedures
shall:
(a) Require an engagement quality control review for all audits of financial
statements of listed entities;
(b) Set out criteria against which all other audits and reviews of historical
financial information and other assurance and related services engage-
ments shall be evaluated to determine whether an engagement quality
control review should be performed; and (Ref: Para. A41)
(c) Require an engagement quality control review for all engagements, if any,
meeting the criteria established in compliance with subparagraph 35(b).
36. The firm shall establish policies and procedures setting out the nature, timing,
and extent of an engagement quality control review. Such policies and
procedures shall require that the engagement report not be dated until the
completion of the engagement quality control review. (Ref: Para. A42–A43)
37. The firm shall establish policies and procedures to require the engagement
quality control review to include:
(a) Discussion of significant matters with the engagement partner;
(b) Review of the financial statements or other subject matter information and
the proposed report;
(c) Review of selected engagement documentation relating to significant
judgments the engagement team made and the conclusions it reached; and
(d) Evaluation of the conclusions reached in formulating the report and
consideration of whether the proposed report is appropriate. (Ref: Para.
A44)
38. For audits of financial statements of listed entities, the firm shall establish
policies and procedures to require the engagement quality control review to also
include consideration of the following:
(a) The engagement team’s evaluation of the firm’s independence in relation
to the specific engagement;
(b) Whether appropriate consultation has taken place on matters involving
differences of opinion or other difficult or contentious matters, and the
conclusions arising from those consultations; and
(c) Whether documentation selected for review reflects the work performed in
relation to the significant judgments and supports the conclusions reached.
(Ref: Para. A45–A46)
Criteria for the Eligibility of Engagement Quality Control Reviewers
39. The firm shall establish policies and procedures to address the appointment of
engagement quality control reviewers and establish their eligibility through:
(a) The technical qualifications required to perform the role, including the
necessary experience and authority; and (Ref: Para. A47)
(b) The degree to which an engagement quality control reviewer can be
consulted on the engagement without compromising the reviewer’s
objectivity. (Ref: Para. A48)
40. The firm shall establish policies and procedures designed to maintain the
objectivity of the engagement quality control reviewer. (Ref: Para. A49–A51)
41. The firm’s policies and procedures shall provide for the replacement of the
engagement quality control reviewer where the reviewer’s ability to perform an
objective review may be impaired.
Documentation of the Engagement Quality Control Review
42. The firm shall establish policies and procedures on documentation of the
engagement quality control review which require documentation that:
(a) The procedures required by the firm’s policies on engagement quality
control review have been performed;
(b) The engagement quality control review has been completed on or before
the date of the report; and
(c) The reviewer is not aware of any unresolved matters that would cause the
reviewer to believe that the significant judgments the engagement team
made and the conclusions it reached were not appropriate.
Differences of Opinion
43. The firm shall establish policies and procedures for dealing with and resolving
differences of opinion within the engagement team, with those consulted and,
where applicable, between the engagement partner and the engagement quality
control reviewer. (Ref: Para. A52–A53)
44. Such policies and procedures shall require that:
(a) Conclusions reached be documented and implemented; and
(b) The report not be dated until the matter is resolved.
Engagement Documentation
Completion of the assembly of final engagement files
45. The firm shall establish policies and procedures for engagement teams to
complete the assembly of final engagement files on a timely basis after the
engagement reports have been finalized. (Ref: Para. A54–A55)
Confidentiality, safe custody, integrity, accessibility, and retrievability of
engagement documentation
46. The firm shall establish policies and procedures designed to maintain the
confidentiality, safe custody, integrity, accessibility and retrievability of
engagement documentation. (Ref: Para. A56–A59)
Retention of engagement documentation
47. The firm shall establish policies and procedures for the retention of engagement
documentation for a period sufficient to meet the needs of the firm or as
required by law or regulation. (Ref: Para. A60–A63)
Monitoring
Monitoring the firm’s quality control policies and procedures
48. The firm shall establish a monitoring process designed to provide it with rea-
sonable assurance that the policies and procedures relating to the system of
quality control are relevant, adequate, and operating effectively. This process
shall:
(a) Include an ongoing consideration and evaluation of the firm’s system of
quality control including, on a cyclical basis, inspection of at least one
completed engagement for each engagement partner;
(b) Require responsibility for the monitoring process to be assigned to a
partner or partners or other persons with sufficient and appropriate expe-
rience and authority in the firm to assume that responsibility; and
(c) Require that those performing the engagement or the engagement quality
control review are not involved in inspecting the engagement. (Ref: Para.
A64–A68)
Evaluating, Communicating and Remedying Identified Deficiencies
49. The firm shall evaluate the effect of deficiencies noted as a result of the
monitoring process and determine whether they are either:
(a) Instances that do not necessarily indicate that the firm’s system of quality
control is insufficient to provide it with reasonable assurance that it
complies with professional standards and applicable legal and regulatory
requirements, and that the reports issued by the firm or engagement
partners are appropriate in the circumstances; or
(b) Systemic, repetitive, or other significant deficiencies that require prompt
corrective action.
50. The firm shall communicate to relevant engagement partners and other
appropriate personnel deficiencies noted as a result of the monitoring process
and recommendations for appropriate remedial action. (Ref: Para. A69)
51. Recommendations for appropriate remedial actions for deficiencies noted shall
include one or more of the following:
(a) Taking appropriate remedial action in relation to an individual engage-
ment or member of personnel;
(b) The communication of the findings to those responsible for training and
professional development;
(c) Changes to the quality control policies and procedures; and
(d) Disciplinary action against those who fail to comply with the policies and
procedures of the firm, especially those who do so repeatedly.
52. The firm shall establish policies and procedures to address cases where the
results of the monitoring procedures indicate that a report may be inappropriate
or that procedures were omitted during the performance of the engagement.
Such policies and procedures shall require the firm to determine what further
action is appropriate to comply with relevant professional standards and
applicable legal and regulatory requirements and to consider whether to obtain
legal advice.
53. The firm shall communicate at least annually the results of the monitoring of its
system of quality control to engagement partners and other appropriate indi-
viduals within the firm, including the firm’s chief executive officer or, if
appropriate, its managing board of partners. This communication shall be
sufficient to enable the firm and these individuals to take prompt and appro-
priate action where necessary in accordance with their defined roles and
responsibilities. Information communicated shall include the following:
(a) A description of the monitoring procedures performed.
(b) The conclusions drawn from the monitoring procedures.
(c) Where relevant, a description of systemic, repetitive, or other significant
deficiencies and of the actions taken to resolve or amend those
deficiencies.
54. Some firms operate as part of a network and, for consistency, may implement
some of their monitoring procedures on a network basis. Where firms within a
network operate under common monitoring policies and procedures designed to
comply with this ISQC, and these firms place reliance on such a monitoring
system, the firm’s policies and procedures shall require that:
(a) At least annually, the network communicate the overall scope, extent, and
results of the monitoring process to appropriate individuals within the
network firms; and
(b) The network communicate promptly any identified deficiencies in the
system of quality control to appropriate individuals within the relevant
network firm or firms so that the necessary action can be taken, in order
that engagement partners in the network firms can rely on the results of the
monitoring process implemented within the network, unless the firms or
the network advise otherwise.
Complaints and Allegations
reasonable assurance that it deals appropriately with:
(a) Complaints and allegations that the work performed by the firm fails to
comply with professional standards and applicable legal and regulatory
requirements; and
(b) Allegations of non-compliance with the firm’s system of quality control.
As part of this process, the firm shall establish clearly defined channels for
firm personnel to raise any concerns in a manner that enables them to
come forward without fear of reprisals. (Ref: Para. A70)
56. If during the investigations into complaints and allegations, deficiencies in the
design or operation of the firm’s quality control policies and procedures or
non-compliance with the firm’s system of quality control by an individual or
individuals are identified, the firm shall take appropriate actions as set out in
paragraph 51. (Ref: Para. A71–A72)
Documentation of the System of Quality Control
57. The firm shall establish policies and procedures requiring appropriate docu-
mentation to provide evidence of the operation of each element of its system of
quality control. (Ref: Para. A73–A75)
58. The firm shall establish policies and procedures that require retention of doc-
umentation for a period of time sufficient to permit those performing moni-
toring procedures to evaluate the firm’s compliance with its system of quality
control, or for a longer period if required by law or regulation.
59. The firm shall establish policies and procedures requiring documentation of
complaints and allegations and the responses to them.
Application and Other Explanatory Material
Applying, and Complying with, Relevant Requirements
Considerations Specific to Smaller Firms (Ref: Para. 14)
A1. This ISQC does not call for compliance with requirements that are not
relevant, for example, in the circumstances of a sole practitioner with no staff.
Requirements in this ISQC such as those for policies and procedures for the
assignment of appropriate personnel to the engagement team (see paragraph 31), for
review responsibilities (see paragraph 33), and for the annual communication of the
results of monitoring to engagement partners within the firm (see paragraph 53), are
not relevant in the absence of staff.
Elements of a System of Quality Control (Ref: Para. 17)
A2. In general, communication of quality control policies and procedures to firm
personnel includes a description of the quality control policies and procedures and
the objectives they are designed to achieve, and the message that each individual
has a personal responsibility for quality and is expected to comply with these
policies and procedures. Encouraging firm personnel to communicate their views or
concerns on quality control matters recognizes the importance of obtaining feed-
back on the firm’s system of quality control.
Considerations Specific to Smaller Firms
A3. Documentation and communication of policies and procedures for smaller
firms may be less formal and extensive than for larger firms.
Leadership Responsibilities for Quality within the Firm
Promoting an Internal Culture of Quality (Ref: Para. 18)
A4. The firm’s leadership and the examples it sets significantly influence the
internal culture of the firm. The promotion of a quality-oriented internal culture
depends on clear, consistent, and frequent actions and messages from all levels of
the firm’s management that emphasize the firm’s quality control policies and pro-
cedures, and the requirement to:
(a) perform work that complies with professional standards and applicable legal
and regulatory requirements; and
(b) issue reports that are appropriate in the circumstances. Such actions and
messages encourage a culture that recognizes and rewards high quality work.
These actions and messages may be communicated by, but are not limited to,
training seminars, meetings, formal or informal dialogue, mission statements,
newsletters, or briefing memoranda. They may be incorporated in the firm’s
internal documentation and training materials, and in partner and staff
appraisal procedures such that they will support and reinforce the firm’s view
on the importance of quality and how, practically, it is to be achieved.
A5. Of particular importance in promoting an internal culture based on quality is

the need for the firm’s leadership to recognize that the firm’s business strategy is
subject to the overriding requirement for the firm to achieve quality in all the
engagements that the firm performs. Promoting such an internal culture includes:
(a) Establishment of policies and procedures that address performance evaluation,
compensation, and promotion (including incentive systems) with regard to its
personnel, in order to demonstrate the firm’s overriding commitment to
quality;
(b) Assignment of management responsibilities so that commercial considerations
do not override the quality of work performed; and
(c) Provision of sufficient resources for the development, documentation, and
support of its quality control policies and procedures.
Assigning Operational Responsibility for the Firm’s System of Quality Control
(Ref: Para. 19)
A6. Sufficient and appropriate experience and ability enables the person or
persons responsible for the firm’s system of quality control to identify and
understand quality control issues and to develop appropriate policies and proce-
dures. Necessary authority enables the person or persons to implement those
policies and procedures.
Relevant Ethical Requirements
Compliance with Relevant Ethical Requirements (Ref: Para. 20)
A7. The IESBA Code establishes the fundamental principles of professional
ethics, which include:
(a) Integrity;
(b) Objectivity;
(c) Professional competence and due care;
(d) Confidentiality; and
(e) Professional behavior.
A8. Part B of the IESBA Code illustrates how the conceptual framework is to be
applied in specific situations. It provides examples of safeguards that may be
appropriate to address threats to compliance with the fundamental principles and
also provides examples of situations where safeguards are not available to address
the threats.
A9. The fundamental principles are reinforced in particular by:
• The leadership of the firm;
• Education and training;
• Monitoring; and
• A process for dealing with non-compliance.
Definition of “Firm,” “Network,” and “Network Firm” (Ref: Para. 20–25)
A10. The definitions of “firm,” network,” or “network firm” in relevant ethical
requirements may differ from those set out in this ISQC. For example, the IESBA
Code defines the “firm” as:
(a) A sole practitioner, partnership or corporation of professional accountants;

(b) An entity that controls such parties through ownership, management, or other
means; and
(c) An entity controlled by such parties through ownership, management, or other
means.
The IESBA Code also provides guidance in relation to the terms “network” and
“network firm.”
In complying with the requirements in paragraphs 20–25, the definitions used in
the relevant ethical requirements apply in so far as is necessary to interpret those
ethical requirements.
Written Confirmation (Ref: Para. 24)
A11. Written confirmation may be in paper or electronic form. By obtaining
confirmation and taking appropriate action on information indicating noncompli-
ance, the firm demonstrates the importance that it attaches to independence and
makes the issue current for, and visible to, its personnel.
Familiarity Threat (Ref: Para. 25)
A12. The IESBA Code discusses the familiarity threat that may be created by
using the same senior personnel on an assurance engagement over a long period of
time and the safeguards that might be appropriate to address such threats.
A13. Determining appropriate criteria to address familiarity threat may include
matters such as:
• The nature of the engagement, including the extent to which it involves a matter
of public interest; and
• The length of service of the senior personnel on the engagement.
Examples of safeguards include rotating the senior personnel or requiring an
engagement quality control review.
A14. The IESBA Code recognizes that the familiarity threat is particularly rel-
evant in the context of financial statement audits of listed entities. For these audits,
the IESBA Code requires the rotation of the key audit partner after a predefined
period, normally no more than seven years, and provides related standards and
guidance. National requirements may establish shorter rotation periods.
Considerations specific to public sector audit organizations
A15. Statutory measures may provide safeguards for the independence of public
sector auditors. However, threats to independence may still exist regardless of any
statutory measures designed to protect it. Therefore, in establishing the policies and
procedures required by paragraphs 20–25, the public sector auditor may have
regard to the public sector mandate and address any threats to independence in that
context.
A16. Listed entities as referred to in paragraphs 25 and A14 are not common in
the public sector. However, there may be other public sector entities that are sig-
nificant due to size, complexity, or public interest aspects, and which consequently
have a wide range of stakeholders. Therefore, there may be instances when a firm
determines, based on its quality control policies and procedures, that a public sector
entity is significant for the purposes of expanded quality control procedures.
A17. In the public sector, legislation may establish the appointments and terms
of office of the auditor with engagement partner responsibility. As a result, it may
not be possible to comply strictly with the engagement partner rotation require-
ments envisaged for listed entities. Nonetheless, for public sector entities consid-
ered significant, as noted in paragraph A16, it may be in the public interest for
public sector audit organizations to establish policies and procedures to promote
compliance with the spirit of rotation of engagement partner responsibility.
Acceptance and Continuance of Client Relationships and Specific
Engagements
Competence, Capabilities, and Resources (Ref: Para. 26(a))
A18. Consideration of whether the firm has the competence, capabilities, and
resources to undertake a new engagement from a new or an existing client involves
reviewing the specific requirements of the engagement and the existing partner and
staff profiles at all relevant levels, and including whether:
• Firm personnel have knowledge of relevant industries or subject matters.
• Firm personnel have experience with relevant regulatory or reporting require-
ments, or the ability to gain the necessary skills and knowledge effectively;
• The firm has sufficient personnel with the necessary competence and
capabilities;
• Experts are available, if needed;
• Individuals meeting the criteria and eligibility requirements to perform
engagement quality control review are available, where applicable; and
• The firm is able to complete the engagement within the reporting deadline.
Integrity of Client (Ref: Para. 26(c))
A19. With regard to the integrity of a client, matters to consider include, for
example:
• The identity and business reputation of the client’s principal owners, key
management, and those charged with its governance.
• The nature of the client’s operations, including its business practices.
• Information concerning the attitude of the client’s principal owners, key man-
agement and those charged with its governance toward such matters as
aggressive interpretation of accounting standards and the internal control
environment.
• Whether the client is aggressively concerned with maintaining the firm’s fees as
low as possible.
• Indications of an inappropriate limitation in the scope of work.
• Indications that the client might be involved in money laundering or other
criminal activities.
• The reasons for the proposed appointment of the firm and non-reappointment of
the previous firm.
• The identity and business reputation of related parties.
The extent of knowledge a firm will have regarding the integrity of a client will
generally grow within the context of an ongoing relationship with that client.
A20. Sources of information on such matters obtained by the firm may include
the following:
• Communications with existing or previous providers of professional accoun-
tancy services to the client in accordance with relevant ethical requirements, and
discussions with other third parties.
• Inquiry of other firm personnel or third parties such as bankers, legal counsel
and industry peers.
• Background searches of relevant databases.
Continuance of Client Relationship (Ref: Para. 27(a))
A21. Deciding whether to continue a client relationship includes consideration
of significant matters that have arisen during the current or previous engagements,
and their implications for continuing the relationship. For example, a client may
have started to expand its business operations into an area where the firm does not
possess the necessary expertise.
Withdrawal (Ref: Para. 28)
A22. Policies and procedures on withdrawal from an engagement or from both
the engagement and the client relationship address issues that include the following:
• Discussing with the appropriate level of the client’s management and those
charged with its governance the appropriate action that the firm might take based
on the relevant facts and circumstances.
• If the firm determines that it is appropriate to withdraw, discussing with the
appropriate level of the client’s management and those charged with its gov-
ernance withdrawal from the engagement or from both the engagement and the
client relationship, and the reasons for the withdrawal.
• Considering whether there is a professional, legal, or regulatory requirement for
the firm to remain in place, or for the firm to report the withdrawal from the
engagement, or from both the engagement and the client relationship, together
with the reasons for the withdrawal, to regulatory authorities.
• Documenting significant matters, consultations, conclusions, and the basis for
the conclusions.
Considerations Specific to Public Sector Audit Organizations (Ref: Para. 26–28)
A23. In the public sector, auditors may be appointed in accordance with statu-
tory procedures. Accordingly, certain of the requirements and considerations
regarding the acceptance and continuance of client relationships and specific
engagements as set out paragraphs 26–28 and A18–A22 may not be relevant.
Nonetheless, establishing policies and procedures as described may provide valu-
able information to public sector auditors in performing risk assessments and in
carrying out reporting responsibilities.
Human Resources (Ref: Para. 29)

A24. Personnel issues relevant to the firm’s policies and procedures related to
human resources include, for example:
• Recruitment.
• Performance evaluation.
• Capabilities, including time to perform assignments.
• Competence.
• Career development.
• Promotion.
• Compensation.
• The estimation of personnel needs.
Effective recruitment processes and procedures help the firm select individuals of
integrity who have the capacity to develop the competence and capabilities nec-
essary to perform the firm’s work and possess the appropriate characteristics to
enable them to perform competently.
A25. Competence can be developed through a variety of methods, including the
following:
• Professional education.
• Continuing professional development, including training.
• Work experience.
• Coaching by more experienced staff, for example, other members of the
engagement team.
• Independence education for personnel who are required to be independent.
A26. The continuing competence of the firm’s personnel depends to a significant
extent on an appropriate level of continuing professional development so that
personnel maintain their knowledge and capabilities. Effective policies and proce-
dures emphasize the need for continuing training for all levels of firm personnel,
and provide the necessary training resources and assistance to enable personnel to
develop and maintain the required competence and capabilities.
A27. The firm may use a suitably qualified external person, for example, when
internal technical and training resources are unavailable.
A28. Performance evaluation, compensation, and promotion procedures give
due recognition and reward to the development and maintenance of competence and
commitment to ethical principles. Steps a firm may take in developing and main-
taining competence and commitment to ethical principles include:
• Making personnel aware of the firm’s expectations regarding performance and
ethical principles;
• Providing personnel with evaluation of, and counseling on, performance, pro-
gress and career development; and
• Helping personnel understand that advancement to positions of greater

responsibility depends, among other things, upon performance quality and
adherence to ethical principles and that failure to comply with the firm’s policies
and procedures may result in disciplinary action.
A29. The size and circumstances of the firm will influence the structure of the
firm’s performance evaluation process. Smaller firms, in particular, may employ
less formal methods of evaluating the performance of their personnel.
Assignment of Engagement Teams
Engagement Partners (Ref: Para. 30)
A30. Policies and procedures may include systems to monitor the workload and
availability of engagement partners so as to enable these individuals to have suf-
ficient time to adequately discharge their responsibilities.
Engagement Teams (Ref: Para. 31)
A31. The firm’s assignment of engagement teams and the determination of the
level of supervision required include, for example, consideration of the engagement
team’s:
• Understanding of, and practical experience with, engagements of a similar
nature and complexity through appropriate training and participation;
• Understanding of professional standards and applicable legal and regulatory
requirements;
• Technical knowledge and expertise, including knowledge of relevant informa-
tion technology;
• Knowledge of relevant industries in which the clients operate;
• Ability to apply professional judgment; and
• Understanding of the firm’s quality control policies and procedures.
Engagement Performance
Consistency in the Quality of Engagement Performance (Ref: Para. 32(a))
A32. The firm promotes consistency in the quality of engagement performance
through its policies and procedures. This is often accomplished through written or
electronic manuals, software tools or other forms of standardized documentation,
and industry or subject matter-specific guidance materials.
Matters addressed may include:
• How engagement teams are briefed on the engagement to obtain an under-
standing of the objectives of their work.
• Processes for complying with applicable engagement standards.
• Processes of engagement supervision, staff training and coaching.
• Methods of reviewing the work performed, the significant judgments made, and
the form of report being issued.
• Appropriate documentation of the work performed and of the timing and extent
of the review.
• Processes to keep all policies and procedures current.
A33. Appropriate teamwork and training assist less-experienced members of the
engagement team to clearly understand the objectives of the assigned work.
Supervision (Ref: Para. 32(b))
A34. Engagement supervision includes the following:
• Tracking the progress of the engagement;
• Considering the competence and capabilities of individual members of the
engagement team, whether they have sufficient time to carry out their work,
whether they understand their instructions, and whether the work is being car-
ried out in accordance with the planned approach to the engagement;
• Addressing significant matters arising during the engagement, considering their
significance and modifying the planned approach appropriately; and
• Identifying matters for consultation or consideration by more experienced
engagement team members during the engagement.
Review (Ref: Para. 32(c))
A35. A review consists of consideration of whether:
• The work has been performed in accordance with professional standards and
applicable legal and regulatory requirements;
• Significant matters have been raised for further consideration;
• Appropriate consultations have taken place, and the resulting conclusions have
been documented and implemented;
• There is a need to revise the nature, timing, and extent of work performed;
• The work performed supports the conclusions reached and is appropriately
documented;
• The evidence obtained is sufficient and appropriate to support the report; and
• The objectives of the engagement procedures have been achieved.
Consultation (Ref: Para. 34)
A36. Consultation includes discussion at the appropriate professional level, with
individuals within or outside the firm who have specialized expertise.
A37. Consultation uses appropriate research resources as well as the collective
experience and technical expertise of the firm. Consultation helps to promote
quality and improves the application of professional judgment.
Appropriate recognition of consultation in the firm’s policies and procedures
helps to promote a culture in which consultation is recognized as a strength and
encourages personnel to consult on difficult or contentious matters.
A38. Effective consultation on significant technical, ethical, and other matters

within the firm or, where applicable, outside the firm can be achieved when those
consulted:
• Are given all the relevant facts that will enable them to provide informed advice;
and
• Have appropriate knowledge, seniority, and experience, and when conclusions
resulting from consultations are appropriately documented and implemented.
A39. Documentation of consultations with other professionals that involve dif-
ficult or contentious matters that is sufficiently complete and detailed contributes to
an understanding of:
• The issue on which consultation was sought; and
• The results of the consultation, including any decisions taken, the basis for those
decisions and how they were implemented.
A40. A firm needing to consult externally, for example, a firm without appro-
priate internal resources, may take advantage of advisory services provided by:
• Other firms;
• Professional and regulatory bodies; or
• Commercial organizations that provide relevant quality control services.
Before contracting for such services, consideration of the competence and
capabilities of the external provider helps the firm to determine whether the external
provider is suitably qualified for that purpose.
Engagement Quality Control Review
Criteria for an Engagement Quality Control Review (Ref: Para. 35(b))
A41. Criteria for determining which engagements, other than audits of financial
statements of listed entities, are to be subject to an engagement quality control
review may include, for example:
• The nature of the engagement, including the extent to which it involves a matter
of public interest.
• The identification of unusual circumstances or risks in an engagement or class of
engagements.
• Whether laws or regulations require an engagement quality control review.
Nature, Timing, and Extent of the Engagement Quality Control Review (Ref:
Para. 36–37)
A42. The engagement report is not dated until the completion of the engagement
quality control review. However, documentation of the engagement quality control
review may be completed after the date of the report.
A43. Conducting the engagement quality control review in a timely manner at
appropriate stages during the engagement allows significant matters to be promptly
resolved to the engagement quality control reviewer’s satisfaction on or before the

date of the report.
A44. The extent of the engagement quality control review may depend, among
other things, on the complexity of the engagement, whether the entity is a listed
entity, and the risk that the report might not be appropriate in the circumstances.
The performance of an engagement quality control review does not reduce the
responsibilities of the engagement partner.
Engagement Quality Control Review of a Listed Entity (Ref: Para. 38)
A45. Other matters relevant to evaluating the significant judgments made by the
engagement team that may be considered in an engagement quality control review
of an audit of financial statements of a listed entity include:
• Significant risks identified during the engagement and the responses to those
risks.
• Judgments made, particularly with respect to materiality and significant risks.
• The significance and disposition of corrected and uncorrected misstatements
identified during the engagement.
• The matters to be communicated to management and those charged with gov-
ernance and, where applicable, other parties such as regulatory bodies.
These other matters, depending on the circumstances, may also be applicable for
engagement quality control reviews for audits of the financial statements of other
entities as well as reviews of financial statements and other assurance and related
services engagements.
A46. Although not referred to as listed entities, as described in paragraph A16,
certain public sector entities may be of sufficient significance to warrant perfor-
mance of an engagement quality control review.
Criteria for the Eligibility of Engagement Quality Control Reviewers
Sufficient and Appropriate Technical Expertise, Experience and Authority (Ref:
Para. 39(a))
A47. What constitutes sufficient and appropriate technical expertise, experience
and authority depend on the circumstances of the engagement. For example, the
engagement quality control reviewer for an audit of the financial statements of a
listed entity is likely to be an individual with sufficient and appropriate experience
and authority to act as an audit engagement partner on audits of financial statements
of listed entities.
Consultation with the Engagement Quality Control Reviewer (Ref: Para. 39(b))
A48. The engagement partner may consult the engagement quality control
reviewer during the engagement, for example, to establish that a judgment made by
the engagement partner will be acceptable to the engagement quality control
reviewer. Such consultation avoids identification of differences of opinion at a late
stage of the engagement and need not compromise the engagement quality control
reviewer’s eligibility to perform the role. Where the nature and extent of the
consultations become significant, the reviewer’s objectivity may be compromised

unless care is taken by both the engagement team and the reviewer to maintain the
reviewer’s objectivity. Where this is not possible, another individual within the firm
or a suitably qualified external person may be appointed to take on the role of either
the engagement quality control reviewer or the person to be consulted on the
engagement.
Objectivity of the Engagement Quality Control Reviewer (Ref: Para. 40)
A49. The firm is required to establish policies and procedures designed to
maintain objectivity of the engagement quality control reviewer. Accordingly, such
policies and procedures provide that the engagement quality control reviewer:
• Where practicable, is not selected by the engagement partner;
• Does not otherwise participate in the engagement during the period of review;
• Does not make decisions for the engagement team; and
• Is not subject to other considerations that would threaten the reviewer’s
objectivity.
Considerations specific to smaller firms
A50. It may not be practicable, in the case of firms with few partners, for the
engagement partner not to be involved in selecting the engagement quality control
reviewer. Suitably qualified external persons may be contracted where sole prac-
titioners or small firms identify engagements requiring engagement quality control
reviews. Alternatively, some sole practitioners or small firms may wish to use other
firms to facilitate engagement quality control reviews.
Where the firm contracts suitably qualified external persons, the requirements in
paragraphs 39–41 and guidance in paragraphs A47–A48 apply.
A51. In the public sector, a statutorily appointed auditor (for example, an
Auditor General, or other suitably qualified person appointed on behalf of the
Auditor General) may act in a role equivalent to that of engagement partner with
overall responsibility for public sector audits. In such circumstances, where
applicable, the selection of the engagement quality control reviewer includes
consideration of the need for independence from the audited entity and the ability of
the engagement quality control reviewer to provide an objective evaluation.
Differences of Opinion (Ref: Para. 43)
A52. Effective procedures encourage identification of differences of opinion at
an early stage, provide clear guidelines as to the successive steps to be taken
thereafter, and require documentation regarding the resolution of the differences and
the implementation of the conclusions reached.
A53. Procedures to resolve such differences may include consulting with another
practitioner or firm, or a professional or regulatory body.
Engagement Documentation
Completion of the Assembly of Final Engagement Files (Ref: Para. 45)
A54. Law or regulation may prescribe the time limits by which the assembly of
final engagement files for specific types of engagement is to be completed. Where
no such time limits are prescribed in law or regulation, paragraph 45 requires the
firm to establish time limits that reflect the need to complete the assembly of final
engagement files on a timely basis. In the case of an audit, for example, such a time
limit would ordinarily not be more than 60 days after the date of the auditor’s
report.
A55. Where two or more different reports are issued in respect of the same
subject matter information of an entity, the firm’s policies and procedures relating
to time limits for the assembly of final engagement files address each report as if it
were for a separate engagement. This may, for example, be the case when the firm
issues an auditor’s report on a component’s financial information for group con-
solidation purposes and, at a subsequent date, an auditor’s report on the same
financial information for statutory purposes.
Confidentiality, Safe Custody, Integrity, Accessibility and Retrievability of
Engagement Documentation (Ref: Para. 46)
A56. Relevant ethical requirements establish an obligation for the firm’s per-
sonnel to observe at all times the confidentiality of information contained in
engagement documentation, unless specific client authority has been given to dis-
close information, or there is a legal or professional duty to do so. Specific laws or
regulations may impose additional obligations on the firm’s personnel to maintain
client confidentiality, particularly where data of a personal nature are concerned.
A57. Whether engagement documentation is in paper, electronic, or other media,
the integrity, accessibility, or retrievability of the underlying data may be com-
promised if the documentation could be altered, added to or deleted without the
firm’s knowledge, or if it could be permanently lost or damaged. Accordingly,
controls that the firm designs and implements to avoid unauthorized alteration or
loss of engagement documentation may include those that:
• Enable the determination of when and by whom engagement documentation
was created, changed, or reviewed;
• Protect the integrity of the information at all stages of the engagement, espe-
cially when the information is shared within the engagement team or transmitted
to other parties via the Internet;
• Prevent unauthorized changes to the engagement documentation; and
• Allow access to the engagement documentation by the engagement team and
other authorized parties as necessary to properly discharge their responsibilities.
A58. Controls that the firm designs and implements to maintain the confiden-
tiality, safe custody, integrity, accessibility, and retrievability of engagement doc-
umentation may include the following:
• The use of a password among engagement team members to restrict access to

electronic engagement documentation to authorized users.
• Appropriate backup routines for electronic engagement documentation at
appropriate stages during the engagement.
• Procedures for properly distributing engagement documentation to the team
members at the start of the engagement, processing it during engagement, and
collating it at the end of engagement.
• Procedures for restricting access to, and enabling proper distribution and con-
fidential storage of, hardcopy engagement documentation.
A59. For practical reasons, original paper documentation may be electronically
scanned for inclusion in engagement files. In such cases, the firm’s procedures
designed to maintain the integrity, accessibility, and retrievability of the docu-
mentation may include requiring the engagement teams to:
• Generate scanned copies that reflect the entire content of the original paper
documentation, including manual signatures, cross-references, and annotations;
• Integrate the scanned copies into the engagement files, including indexing and
signing off on the scanned copies as necessary; and
• Enable the scanned copies to be retrieved and printed as necessary. There may
be legal, regulatory, or other reasons for a firm to retain original paper docu-
mentation that has been scanned.
Retention of Engagement Documentation (Ref: Para. 47)
A60. The needs of the firm for retention of engagement documentation, and the
period of such retention, will vary with the nature of the engagement and the firm’s
circumstances, for example, whether the engagement documentation is needed to
provide a record of matters of continuing significance to future engagements. The
retention period may also depend on other factors, such as whether local law or
regulation prescribes specific retention periods for certain types of engagements, or
whether there are generally accepted retention periods in the jurisdiction in the
absence of specific legal or regulatory requirements.
A61. In the specific case of audit engagements, the retention period would
ordinarily be no shorter than five years from the date of the auditor’s report, or, if
later, the date of the group auditor’s report.
A62. Procedures that the firm adopts for retention of engagement documentation
include those that enable the requirements of paragraph 47 to be met during the
retention period, for example, to:
• Enable the retrieval of, and access to, the engagement documentation during the
retention period, particularly in the case of electronic documentation since the
underlying technology may be upgraded or changed over time;
• Provide, where necessary, a record of changes made to engagement documen-
tation after the engagement files have been completed; and
• Enable authorized external parties to access and review specific engagement

documentation for quality control or other purposes.
Ownership of engagement documentation
A63. Unless otherwise specified by law or regulation, engagement documenta-
tion is the property of the firm. The firm may, at its discretion, make portions of, or
extracts from, engagement documentation available to clients, provided such dis-
closure does not undermine the validity of the work performed, or, in the case of
assurance engagements, the independence of the firm or its personnel.
Monitoring
Monitoring the Firm’s Quality Control Policies and Procedures (Ref: Para. 48)
A64. The purpose of monitoring compliance with quality control policies and
procedures is to provide an evaluation of:
• Adherence to professional standards and applicable legal and regulatory
requirements;
• Whether the system of quality control has been appropriately designed and
effectively implemented; and
• Whether the firm’s quality control policies and procedures have been appro-
priately applied, so that reports that are issued by the firm or engagement
partners are appropriate in the circumstances.
A65. Ongoing consideration and evaluation of the system of quality control
include matters such as the following:
• Analysis of:
– New developments in professional standards and applicable legal and reg-
ulatory requirements, and how they are reflected in the firm’s policies and
procedures where appropriate;
– Written confirmation of compliance with policies and procedures on
independence;
– Continuing professional development, including training; and
– Decisions related to acceptance and continuance of client relationships and
specific engagements.
• Determination of corrective actions to be taken and improvements to be made in
the system, including the provision of feedback into the firm’s policies and
procedures relating to education and training.
• Communication to appropriate firm personnel of weaknesses identified in the
system, in the level of understanding of the system, or compliance with it.
• Follow-up by appropriate firm personnel so that necessary modifications are
promptly made to the quality control policies and procedures.
A66. Inspection cycle policies and procedures may, for example, specify a cycle
that spans three years. The manner in which the inspection cycle is organized,
including the timing of selection of individual engagements, depends on many

factors, such as the following:
• The size of the firm.
• The number and geographic location of offices.
• The results of previous monitoring procedures.
• The degree of authority both personnel and offices have (for example, whether
individual offices are authorized to conduct their own inspections or whether
only the head office may conduct them).
• The nature and complexity of the firm’s practice and organization.
• The risks associated with the firm’s clients and specific engagements.
A67. The inspection process includes the selection of individual engagements,
some of which may be selected without prior notification to the engagement team.
In determining the scope of the inspections, the firm may take into account the
scope or conclusions of an independent external inspection program. However, an
independent external inspection program does not act as a substitute for the firm’s
own internal monitoring program.
A68. In the case of small firms, monitoring procedures may need to be per-
formed by individuals who are responsible for design and implementation of the
firm’s quality control policies and procedures, or who may be involved in per-
forming the engagement quality control review. A firm with a limited number of
persons may choose to use a suitably qualified external person or another firm to
carry out engagement inspections and other monitoring procedures. Alternatively,
the firm may establish arrangements to share resources with other appropriate
organizations to facilitate monitoring activities.
Communicating Deficiencies (Ref: Para. 50)
A69. The reporting of identified deficiencies to individuals other than the rele-
vant engagement partners need not include an identification of the specific
engagements concerned, although there may be cases where such identification may
be necessary for the proper discharge of the responsibilities of the individuals other
than the engagement partners.
Complaints and Allegations
Source of Complaints and Allegations (Ref: Para. 55)
A70. Complaints and allegations (which do not include those that are clearly
frivolous) may originate from within or outside the firm. They may be made by firm
personnel, clients, or other third parties. They may be received by engagement team
members or other firm personnel.
Investigation Policies and Procedures (Ref: Para. 56)
A71. Policies and procedures established for the investigation of complaints and
allegations may include, for example, that the partner supervising the investigation:
• Has sufficient and appropriate experience;

• Has authority within the firm; and
• Is otherwise not involved in the engagement.
The partner supervising the investigation may involve legal counsel as
necessary.
Considerations specific to smaller firms
A72. It may not be practicable, in the case of firms with few partners, for the
partner supervising the investigation not to be involved in the engagement.
These small firms and sole practitioners may use the services of a suitably
qualified external person or another firm to carry out the investigation into com-
plaints and allegations.
Documentation of the System of Quality Control (Ref: Para. 57)
A73. The form and content of documentation evidencing the operation of each
of the elements of the system of quality control is a matter of judgment and depends
on a number of factors, including the following:
• The size of the firm and the number of offices.
• The nature and complexity of the firm’s practice and organization.
For example, large firms may use electronic databases to document matters such
as independence confirmations, performance evaluations, and the results of moni-
toring inspections.
A74. Appropriate documentation relating to monitoring includes, for example:
• Monitoring procedures, including the procedure for selecting completed
engagements to be inspected.
• A record of the evaluation of:
– Adherence to professional standards and applicable legal and regulatory
requirements;
– Whether the system of quality control has been appropriately designed and
effectively implemented; and
– Whether the firm’s quality control policies and procedures have been
appropriately applied, so that reports that are issued by the firm or engage-
ment partners are appropriate in the circumstances.
• Identification of the deficiencies noted, an evaluation of their effect, and the
basis for determining whether and what further action is necessary.
A75. Smaller firms may use more informal methods in the documentation of
their systems of quality control such as manual notes, checklists, and forms.
http://www.ifac.org/sites/default/files/downloads/a007-2010-iaasb-handbook-
isqc-1.pdf, 25.02.2012.
Curriculum Vitae
She was born in Üsküdar Istanbul, attended elementary school at Babaeski

Cumhuriyet Primary School, secondary school and high school at Istanbul Erkek
Lisesi. Following the English Preparation School of Boğaziçi University, with
honors degree she first graduated from Vocational School of Management and got
her B.A. from Business Administration.
Within the “10 Young Executive Candidates” program of Türkiye Tütüncüler
Bankası (Turkish Tobacco Producers’ Bank) and Irving Trust Bank, which were
partners at the time, she got training at all departments of the Bank in Izmir and
assigned as assistant manager and became the assistant to the CEO Dr. Antonio
Puja. Following the break of the partnership of two banks, she worked as assistant
personnel manager until leaving the bank, which moved the headquarters to
Istanbul, and started working at Raks Holding as Assistant Manager of Budgeting
and Planning Department. Following the radical management changes at the
company, she decided to work as freelancer and assisted budgeting processes of
BMC OMPAŞ A.Ş., Rapak Ambalaj, etc., until becoming the partner and manager
of Bilda Bilgisayar Sistemleri Ltd. Şti., a software company. Ownership of a trading
company and trade life followed.
After two decades of private sector experience, she started lecturing at vocational
schools. In the meantime, she got her MBA from Business Administration at
Trakya University and enrolled with PhD program at the same university, which is
completed successfully in 2015. She is affiliated to Kırklareli University,
Lüleburgaz Vocational School as Head of Accounting and Taxation Program and
lectures at Lüleburgaz Vocational School. She speaks German and English as
foreign languages.

https://doi.org/10.1007/978-981-13-0526-9
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Index
A Aufsichtsrat, 54
Abma, R., 23, 55, 126 Azham, Md. A., 11
ACAP, 80, 126, 130, 156
Accounting and Auditing Enforcement B
Releases (AAERs), 166 Bailey, R. L., 150
Adamson, G., 52 Baillot, V., 50
Advocacy threat, 135 Ball, R., 17
Aggressive accounting, 25 Banker, R. D., 51, 140, 144
Agoglia, C. P., 105 Barth, M. E., 20
Akmeşe, H., 14 Basic ethical principles, 110
Akmeşe, K. A., 14 Basic inputs, 144
Aktien Gesellschaft, 54 Başoğlu, U., 16
Altıntaş, T., 160 Beasley, M. S., 5, 105, 114, 123, 153, 166
American Association of Public Accountants Beck, P. J., 147
(AAPA), 24 Bierstaker, J. L., 160
American Institute of Accountants, 24 Big Depression, 24
Arens, A. A., 5, 105, 114, 123, 153, 166 Big Four, 32, 45, 47, 49, 165
Ashbaugh, H., 18 Big Four affiliates, 171
Association limited by shares, 55 Binham, C., 32
Association of Certified Fraud Examiners Birkett, B. S., 25
(ACFE), 15, 21 Black box, 40
Audit, 2 Blay, A. D., 131, 221
Audit area, 104 Block, C. C., 140, 159
Audit firm, 75 Bouton, D., 50
Audit, frequency of, 3 Bozkurt, N., 4
Audit, purposes of, 3 Brazel, J. F., 105, 160
Audit firm independence coefficient, 219 British East India Company, 21
Audit Firms Quality Index (AFQI), 212 Brown, A., 138
Audit industry, 127 Brown, R. G., 10, 11, 14
Auditing firm, 76
Audit network, 76 C
Auditor overconfidence, 145 Calderon, T. G., 22, 30
Audit Quality Pyramid, 144 Çalıyurt, K. T.
Audit report, 4, 41, 55, 83, 84, 112, 124, 125, Cameran, M., 20, 143
250, 253, 262, 263, 266 Campa, D., 20

https://doi.org/10.1007/978-981-13-0526-9
324 Index
Capital Market Law, 75, 76 E

Capital Markets Law (CML) Law No. 2499, 97 Earnings management, 18, 20
Carr, E., 36 Earnings quality, 20
Cause of audit, 3 Easley, R. F., 52, 64, 153
Cazes, C., 156 Economic audit, 8
Certified Fraud Examiner (CFE), 21 Economic information system, 12
Ceylan, A., 16 Elder, R. J., 5, 105, 114, 123, 153, 166
CFO, 156 Elephant in the room, 130
Chang, H., 51, 140, 144 Enron, 25, 28, 213
Chargeable Hours per Audit Staff, 217 Erciyes, M., 74
Choi, J-H, 160 Erickson, M., 34
Choy, A. K., 132 Ethical Conduct for Independent Auditors, 4
Christensen, H. B., 18 Eumedion, 55, 125
Clawback provisions, 20 European contact group, 151
Clikeman, P. M., 24, 25 External audit, 1, 2, 4, 75
Code of ethics for professional accountants,
130 F
Coffee, J., 21, 22 Fédération des Experts comptables Européens
Cohen, J. R., 34, 105 (FEE), 55
Colby, E. E., 21 Felix Jr., W. L., 34
Communiqué, 142 Fields, T., 132
Compliance audit, 3, 6 Financial Accounting Foundation (FAF), 91
Concentration;, 52 Financial Accounting Standards Advisory
Consultation Report, 140 Council (FASAC), 92
Conway, R., 66, 144, 145, 154, 217 Financial Accounting Standards
Cook, M., 19 Board (FASB), 91
Cook, T. M., 16 Financial audit, 4
Cookie jar accounting, 30 2007–2008 financial crises, 19
Cook the books, 31 Financial Governmental Accounting Standards
Corporate governance, 159 Board (GASB), 92
Corporate governance structure, 56 Financial Reporting Council (FRC), 55, 135,
Cox, J., 52 137, 157, 167
Creative-accounting, 25 Financial shenanigans, 31
Crenshaw, 21 Financial statement fraud, 21
Cunningham, R., 51, 140, 144 Fitzpatrick, L., 10
Fortitude, 144
D Four eyes rule, 50
Damme, H. van, 142, 143 Francis, J. R., 36, 40, 42, 44, 47, 57, 80, 127,
Dang, L., 20 138
Dassen, R., 113, 124, 130, 151 Fraser, J., 5
DeAngelo, L. E., 153 Fraser, N. P., 140, 141
DeFond, M. L., 36 Full-Time Equivalent (FTE), 155
Degree of centralization, 44 Fundamental analysis, 16
Dehaan, E., 20
Delespaul, J-C., 113 G
Deltas, G., 52, 64, 65, 153 Gaetano, C., 131
Dickins, D., 150 Garside, J., 32
Dicksee, L. R., 11 Geiger, M. A., 131, 221
8th Directive, 46, 87, 132 General corporation, 44
Disclaim, 85 Generally Accepted Accounting Principles
Doogar, R., 52, 64, 153 (GAAPs), 18, 91
Duflo, E., 131, 221 Generally Accepted Auditing Standards
Durukan, B. M., 127 (GAAS), 113
Duty frame, 132 General partnership, 44, 54
Index 325
Gentner, S., 126 IOSCO consultation report, 23, 51, 132, 135,
Gentry, J. A., 12 141
Glover, S. M., 160 Ivar Kreuger, 23
Göğer, T., 160
Going concern modified audit opinion, 131 J
Gönen, S., 66, 67 Jennings, J., 151
Governmental Accounting Standards Advisory Johnson, G. L., 12
Council (GASAC), 92 Johnstone, K. M., 129
Gramling, A. A., 129 Jones, A., 32
Grant Thornton, 54
Great Depression, 24 K
Green, P. B., 22, 30 Karaian, J., 52
Greenstone, M., 131, 221 Karaibrahimoglu, Y. Z., 20
Gücenme, Arsoy, 74 Kausar, A., 19, 53, 101
Gülen, F., 4, 8, 9 Kaval, H., 4
Güner, M. F., 130, 131 Kawa, L., 31
Kaymaz, Ö., 20
H Key Audit Matters (KAM), 126
Haddrill, S., 55 KHK 660, 86
Hanson, J. D., 91, 161 King, R. R., 132
Harris, S. B., 12, 14, 35, 147, 211 Kinney Jr., W. R., 52, 64, 129, 153
Hayes, R., 113, 124, 130, 151 Kishali, Y., 130, 131
Hegarty, 14 Knechel, W. R., 2, 101, 112, 113, 127, 150
High leverage, 153 Koçel, T., 57
Historically Black Colleges and Universities” Kommanditgesellschaften, 54, 55
HBCUs, 156 Kreuger & Toll, 23
Hodge, F., 20 Krishnamoorthy, G., 34, 105
House of Commons—UK, 19 Krishnan, G. V., 2, 112, 113, 127, 150
Human capital, 152
Humphrey, C., 19, 53, 101 L
Hung, M., 36 Land, N., 125
Hunton, J. E., 145 Landsman, W. R., 20
Lang, M., 20
I Learning effect, 147
Ikiz, A. K., 127 Lee, E., 18
Independence, 129 Lee, T-H., 11
Independent audit, 4 Leutz, Verrecchia, 18
Independent Audit By-Law (IAbL), 2, 247 Level of auditor independence, 130
Information asymmetry, 19 Leverage, 52, 64, 153, 216
Innovative accounting, 25 Limited Liability Company (LLC), 54
Integrated audit, 122 Limited Liability Partnership (LLP), 54
Internal audit, 5, 6, 192 Limited partnership, 54
International Auditing and Assurance Lindsay, H., 5
Standards Board (IAASB), 92, 126 Loebbecke & Willingham, 22
International Auditing Practices Committee Loft, A., 19, 53, 101
(IAPC), 92 Löhlein, L., 162, 163
International Standard on Auditing (ISA) 220, London & General Bank, 11
163 Low leverage, 153
International Standard on Quality Control 1
(ISQC 1), 163, 275 M
Investor Advisory Committee (IAC), 92 Macías, M., 19
Investor Advisory Group (IAG), 87, 91 MacKenzie, A., 54
IOSCO, 23, 50, 51, 55, 102, 125, 132, 135, Maersk Group, 23
141, 154 Management science, 16
326 Index
Management structure, 56 Professional partnership, 54

Market forces, 17 Proprietorship, 44
Martiniere, De La, G., 148 Psaros, J., 20
Mayhew, B. W., 34 Public audit, 6
McKenna, F., 33 Public interest entities, 58
McKesson & Robbins, 23, 24 Public limited company, 54
Mexico Declaration on Independence, 6 Public Oversight—Accounting and auditing
Michael Oxley, 35 standards authority (POA), 1
Michas, P. N., 47 Pump and dump, 30
Mid-size, 48
Montgomery, R. H., 11 Q
Muiño, F., 19 Qualified report, 85
Myers, L. A., 160 Quality assurance system, 78
Quality control department, 200
N
NAO England, 5 R
NAO Finland, 8 Redmayne, N. B., 127
New York stock exchange, 25 Reece, D., 27
Norris, F., 26, 33 Regularity audit, 4, 7
Not-for-Profit Advisory Committee (NAC), 92 Reisch, J. T., 150
Notification of independence, 219 Report to the nations on occupational fraud and
abuse, 22
O Rezaee, Z., 21, 36
Offene Handelsgesellschaften, 54 Rezaee ve Jain, 36
Okur, M., 162, 171 Riley, R., 21, 36
Operations research, 16 Rittenberg, L. E., 129
OR/MS, 16 Robin, A., 17
Other Matter Paragraph, 121 Russell, R. A., 16
Ownership structure, 54 Ryan, N., 131, 221
Oxera Report, 54–56, 144, 152
Özyurt, A., 152 S
Sarbanes-Oxley Act, 1, 192
P Sarbanes-Oxley frame plan, 35, 239
Pacini, C. J., 196 Savings loan crisis, 21
Pande, P., 131, 221 Schilder, A., 113, 124, 130, 151
Parasız, I., 16 Score, 219
Parlakkaya, R., 14 Seavey, S. E., 47
Partnerschaft Gesellschaften, 54 Securities and Exchange Commission (SEC),
Paul Sarbanes, 35 1, 25, 88, 93, 95
Payment Pool, 221 Self–review threat, 134
PCAOB, 41, 89, 90 Senior auditor, 76
Peer review, 112 Serpa, L. B., 23
Pehlivanlı, D., 130, 131 Shefchik, L. B., 2, 112, 113, 127, 150
Performance audit, 4, 7 Shevlin, T., 20
Pettinicchio, A., 20 Signaling effect, 36
Pevzner, M., 2, 112, 113, 127, 150 Simnett, R., 143
Philip Musica/F. Donald Coster, 24 Sino-Forest Corporation, 26
Pirgaip, B., 67 Skills and tools, 144
401(k) plan, 12 Skinner, D. J., 140, 148
Platt, E., 31 Small Business Advisory Committee (SBAC),
Ponzi Scheme, 24 92
Practice–monitoring, 146 Société Anonyme, 54
Prada, M., 50 Société Anonyme Simplifiée, 54
Prencipe, A., 143 Société a Responsabilité Limitée, 54
Index 327
Société en Commandite Simple, 54 United States Treasury Department’s Advisory

Société Générale, 50 Committee on the Auditing
Soo Young, K., 143 Profession (ACAP), 80, 126
SOX, 35 Unqualified report, 84
Special Purpose Vehicles (SPV), 31 Unqualified report with an explanatory
Spolka komandytowa, 55 paragraph, 85
Srinivasan, S., 140, 148 Unqualified report with reservation, 84
Staff retention rate, 218 Usta, Ö., 17
Standard Advisory Group (SAG), 87, 91 Uzay, Ş., 6, 66, 67, 74, 104, 221
Statutory audit, 2, 3, 9
Statutory auditor, 76 V
Subcommittee on firm structure and finances, Velury, U. K., 2, 112, 113, 127, 150
80 Vorstand, 54
Supervisory board, 74
Supreme audit, 6 W
Suseno, N. S., 127 Walker, M., 18
Sworn-in Certified Public Accountant (SiCPA), Wallage, P., 113, 124, 130, 151
82 Wellink, N., 23
Weston, F. T., 4, 5
T Williams, C., 20
Tanç, A., 74 Woods, M., 19, 53, 101
Tanç, Ş. G., 104, 221 Workload coefficient, 218
Taşkın, K., 158 Wright, A., 34, 105
Thrift Savings Plan (TSP), 14 Wright, A. M., 145
Tobashi, 30 Wright, S., 145
Tomasic, R., 21 Wu, J. S., 17
Tone at the top, 113 Wu, M. G. H., 147
Training hours coefficient, 218
Treasury committee, 19 Y
Trombetta, M., 143 Yılancı, M., 193
Trotman, K. T., 20 Yıldız, B., 193
True and fair view, 4, 19 Youngdeok, L., 143
Türker, M., 74
Turkish Code of Commerce (TCC), 1 Z
Turner, L. E., 130, 221 Zhang, J., 36
U
Ultimatum game, 132

Summary and Discussion

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Summary and Discussion

© Springer Nature Singapore Pte Ltd. 2019 207

Factors Related to the Auditing Firm

(1) Organizational structure—network, local ofﬁce/partner, Web design;

Factors Related to the Auditor

(1) Independence of the auditor

Factors Related to the Audit Client

(1) Characteristics of the board of directors;

(2) Characteristics of the audit committee;

Factors Related to the Public Authority

Audit Firms Quality Index (AFQI)

Table 1 Opinions of respondents about the statement related to foreign partner

Table 2 Top ﬁve audit Auditing ﬁrm Scandals Share (%)

AFQI ¼ ðiÞ ðiiÞ ðiiiÞ ðivÞ ðvÞ ðviÞ ðviiÞ ð1Þ

AFQI ¼ w1 ðiÞ þ w2 ðiiÞ þ w3 ðiiiÞ þ w4 ðivÞ þ w5 ðvÞ þ w6 ðviÞ þ w7 ðviiÞ ð2Þ

each personnel. An experience of minimum 27 years is advised for an engagement

Engagement Manager In-charge Auditor Staff Title

(ii) Leverage: Ratio of professional staff to audit partners.

number of audit professionals

LeverageIdeal Audit Firm

Number of Non Partner Audit Staff

Chargeable Hours per Audit Staff Coefficient

(iv) Workload Coefﬁcient: Professional chargeable hours managed per audit

Professional chargeable hours

Average Training HoursAudit Firm

The second component is Audit Team Independence Score. Principally, it is

is to guarantee that auditors are independent in substance and appearance. This

Multiplication of both coefﬁcients will generate Audit Firm Independence

Audit Firm Audit Firm Engagement Independence Coefficient

AuditPFirm Independence Coefficient Factor

Staff retention rate (%) 25 50 75 90

Any contribution of ﬁnancial statements users to the Payment Pool should be

The coefﬁcient of the audit client entity to be audited would be a combination of

Funds to be collected in Domestic and foreign investors—real persons and corporate 6%

Sustainability, Governance & Fraud: Theory and Application,

I. Kesimli, External Auditing and Quality, Accounting, Finance,

VE SMMM A.Ş. TIONAL

KÖKER YEMİNLİ 75 6 58.50 20.00 1+1+1+0 16 3 2 1 2 2 8 AGN

DENETİM A.Ş. Alliance Ltd.

CHAPTER 98 PUBLIC COMPANY ACCOUNTING REFORM AND CORPORATE

© Springer Nature Singapore Pte Ltd. 2019 239

Wednesday, December 26th, 2012 Ofﬁcial Gazette Number: 28509

English version of the Independent Audit By-Law is meant purely as a

© Springer Nature Singapore Pte Ltd. 2019 247

be performed in compliance with speciﬁed standards and principles with the

(x) “Certiﬁcate of authorization” means the Audit Firm Certiﬁcate or Statutory

application method, place, time, form, duration, announcement of results, fee,

(h) Information on their registrations, if any, by the competent authorities of other

divorced, and relatives by blood and marriage up to (and including) third

Unfair competition ban

Conditions for becoming a responsible auditor

Obligations arising out of Turkish Commercial Code

(i) Acting in violation of the provisions of Article 29;

(b) Obtaining the certiﬁcate of authorization by making incorrect or misleading

(e) Other similar cases that can be accepted by the Authority.

Entry into force

INTERNATIONAL STANDARD ON QUALITY CONTROL 1

© Springer Nature Singapore Pte Ltd. 2019 275

International Standard on Quality Control (ISQC) 1, Quality Control for

Authority of this ISQC

(h) Inspection—In relation to completed engagements, procedures designed

Relevant Ethical Requirements

(b) The ﬁrm to promptly communicate identiﬁed breaches of these policies

(b) If a potential conflict of interest is identiﬁed in accepting an engagement

A5. Of particular importance in promoting an internal culture based on quality is

(a) A sole practitioner, partnership or corporation of professional accountants;

Human Resources (Ref: Para. 29)

• Helping personnel understand that advancement to positions of greater

A38. Effective consultation on signiﬁcant technical, ethical, and other matters

resolved to the engagement quality control reviewer’s satisfaction on or before the

consultations become signiﬁcant, the reviewer’s objectivity may be compromised

• The use of a password among engagement team members to restrict access to

• Enable authorized external parties to access and review speciﬁc engagement

including the timing of selection of individual engagements, depends on many

• Has sufﬁcient and appropriate experience;

She was born in Üsküdar Istanbul, attended elementary school at Babaeski