THE LAW OF CERTIFIED PUBLIC ACCOUNTANCY AND SWORN IN CERTIFIED PUBLIC ACCOUNTANCY PART ONE

PART ONE

GENERAL PROVISIONS

Objective

ARTICLE 1. The objectives of this Law are to ensure the healthy and reliable functioning of operations and transactions in enterprises to audit and evaluate the results of the operations within the framework of the relevant legislation, to present the actual facts to the use of the concerned persons and authorities, to regulate the fundamentals concerning the establishment, organization, operations, activities and the elections of the principle organs of “Certified Public Accountancy” and “Sworn-in Certified Public Accountancy ” and the Chambers of Certified Public Accountants and Sworn in Certified Public Accountants. The brief name of the Union is TÜRMOB Pursuant to the provisions of this Law, persons authorized to perform the professions are entitled as “Certified Public Accountant (SMMM)” and “Sworn-in Certified Public Accountant (YMM)”. Subject of Profession

ARTICLE 2. A) The subjects of the profession of Certified Public Accountancy comprise the following services rendered to enterprises and business concerns owned by real and legal persons.

a. To keep books; prepare the balance sheets, profit and loss statements, tax returns and other relevant documents in compliance with generally accepted accounting principles and the provisions of the relevant legislation.

b. To establish and improve accounting systems: to regulate administration, accounting, finance, financial legislation and to perform the jobs related to their applications and to provide advisory services in the related fields. c. Based on the relevant documents on issues specified in the aforementioned paragraph, to perform investigations, analyses and audit, to present written opinions regarding financial statements and tax returns, to prepare reports and similar documents, to perform arbitration, expertise and similar services. Persons, who perform the activities mentioned above independent from a business entity, are defined as Certified Public Accountants.

B) Subject of the profession of Sworn-in Certified Public Accountancy In addition to the duties specified in sub-paragraphs (b) and (c) of Paragraph (A) above, the

subject of the profession of Sworn-in Certified Public Accountancy also includes the application of certification within the framework of the regulation to be promulgated in compliance with Article 12 of the Law. Sworn-in Certified Public Accountants can not keep books related to accounting, cannot establish an accounting office and cannot become partners to the accounting offices already established. Unauthorized Employment of the Professional Titles

ARTICLE 3.The employment of the titles of “Certified Public Accountant”, and “Sworn-in Certified Public Accountant” by individuals legally unauthorized, and the employment of titles, signs and symbols simulating the said professional titles, or likely to cause erroneous identification, are prohibited. The Chambers are required by Law to inform the Public Prosecutor, should they become aware of any such violations. The Chambers and the concerned individuals will be notified on the results of the investigation to be carried out by the Public Prosecutor. General Conditions

ARTICLE 4. General conditions for being a member of the profession are as follows:

a. To be a citizen of the Republic of Turkey (provisions for foreign Certified Public Accountants remain reserved).

b. To be competent in exercising the civil rights.

c. Not to he deprived of public rights.

d. Not to be sentenced for offences against state security, offences against Constitutional order and the functioning of this order, offences against national defense, offences against secrets of the state and espionage, embezzlement, official corruption, bribery, theft, swindling, fraud, breach of confidence, fraudulent bankruptcy, bid rigging, corruption in performance of an obligation, laundering the value of assets gained via an offense or smuggling, irrespective of being sentenced to one or more years of imprisonment for intentional offences or granted amnesty, although the periods specified in Article 53 of Turkish Criminal Code have been passed.

e. Not to be penalized by expulsion from the government service consequent to an investigation.

f. Not to possess conditions incompatible with the honor and dignity of the profession. Special Conditions Applicable to Become a Certified Public Accountant

ARTICLE 5. A – The following conditions are required to become a Certified Public Accountant:

a. To have at least a B. A. degree in law, economics, business administration, accounting, banking, public administration and political science from a Turkish university, or from foreign universities offering degrees equivalent to their Turkish counter parts, on the condition that this equivalence is ratified by the Higher Education Committee, or to hold a post-graduate degree in one of the disciplines mentioned above, following an undergraduate degree received in a different branch.

b. To have a practical experience minimum of 3 years.

c. To pass the examination for Certified Public Accountants. This condition does not apply to individuals authorized for tax inspection in compliance with the relevant legislation and to individuals who have passed the examination for sworn-in certified public accountants after achieving professional proficiency examination d. To receive a license as a Certified Public Accountant.Practical Experience and Services Considered as Training Period

ARTICLE 6.Practical experience of certified public accountancy has been gained at public practices of certified public accountants or sworn-in certified public accountants of firms. In order to begin the practical experience it is must to pass the practical experience entrance exam and to complete successfully the education program of the Education and Training Center established by the Union. The periods, not longer than six months, spent ant the courses and seminars of the Education and Training Center are considered as practical experience period. Those have services that considered as practical experience period as indicated in (a), (b), (c), (d), (e), (f), (g), (h) and (i) clauses of the second paragraph, are out of the context of this paragraph.

Below service periods are considered as practical experience period:

a. Services performed in public services of the persons worked as authorized tax inspectors,following the said authorization.

b. The service periods of inspection staff who are working at the Treasury Undersecretariat Board of Treasury Controllers having audit authorization according to the Law on the Structures and Duties of the Treasury Undersecretariat and the Foreign Trade Undersecretariat, No. 4059 and who are authorized with bank audit according to the Banking Law, No.5411,

c. The service periods of persons who are working at the Capital Markets Board of Turkey authorized with audit according to the Capital Market Law, No.2499 and the service periods of experts of Turkish Accounting Standards Board established according to the Supplementary Article 1 of the same Law,

d. The service periods of inspectors authorized with audit at the Inspection Board of Finance in Turkey according to the Law about Approving the Amended Prime Ministry Authority Decree, no.3056,

e. The service periods of budget controllers, public accounts controllers and national estate controllers who are working according to the Decree on Structure and Duties of Ministry of Finance, No. 178,

f. The audit service periods of inspectors and controllers of Ministry of Industry and Commerce who are authorized with audit at commercial companies according to the Law on the Structures and Duties of the Ministry of Industry and Commerce, No.3143 and Turkish Commerce Law, No.6762,

g. The service periods of judges who are working at tax judgment, h. The service periods of bank inspectors, who have attended the profession with the

competition examination and have passed the professional proficiency examination, at banks and public institutions and establishments from the date they are given the authority to make fiscal control throughout Turkey,

ı. The service periods of the persons who are responsible from the management or auditing of the accounting by holding a signature authority of the first degree in the accounting departments of the public establishments and of the private establishments that keep books according to the balance sheet principle and the service period of candidate professional members who have opened practical experience file at chamber and passed the practical experience entrance exam enforcing the practical experience requirements from the date they have passed the practical experience exam under the oversight and control of the certified public accountants or sworn-in certified public accountants working at this departments, not exceeding the number of them.

i. The service periods of the persons who have worked as faculty member, academic or researcher in subjects listed in Paragraph (A) of Article 5 of this Law. Examination for Certified Public Accountancy ARTICLE 7. Examination for Certified Public Accountant is conducted in written, by the Union. The examination commission consists of 7 members. Two of these members represent the Ministry of Finance. Three of the members are selected among five candidates proposed by the Higher Education Council, and the remaining two are selected by the Ministry of Finance among the four candidates proposed by the Union. The candidates for membership in the examination commission are required to have a graduate or post graduate degree in one of the subjects of law, economics, finance, accounting, management, banking, business administration, and are required to have worked in the relevant fields for fifteen years, or to have worked as a member of the teaching staff in a university for the same period. Foreign Certified Public Accountants

ARTICLE 8.Individuals who are citizens of the countries which have officially codified the profession of Certified Public Accountancy may, under the condition of reciprocity, be authorized to render the services relevant to the rights they have acquired in their own countries, that are included within the scope of Article 2, upon the proposal of the Ministry of Finance, by the approval of the Prime Minister. Special Conditions to become a Sworn-in Certified Public Accountant

ARTICLE 9. The following conditions apply to become a Sworn-in Certified Public Accountant: a. At least ten years of experience as a Certified Public Accountant, b. To pass the Sworn-in Certified Public Accountant examination c. To receive a license for practicing sworn-in certified public accountancy. To the effect that, the service periods of those individuals authorized for tax inspection at public institutions or establishments, following such authorizations and the service periods of the persons who are responsible from the management or auditing of the accounting by holding a signature authority of the first degree in the accounting departments of the private establishments that keep books according to the balance sheet principle, service period passed in sworn-in certified public accountancy and certified public accountancy firms; service period of certified public accountants adherent to a business work in that business, as well as the service period of those who have been appointed as an faculty member or academic in one of the fields of law, economics, finance, accounting, business administration, public administration or political science are considered as service periods spent as certified public accountant. But, the service period of those individuals, who are not successful in the proficiency examination from the individuals who are authorized for tax inspection in compliance with the relevant legislation, passed in the public institutions and establishments not having tax inspection authority after the examination date have not been taken into consideration. Persons who have been authorized for tax inspection and who have passed the professional proficiency examination in compliance with the relevant laws after passing the proficiency exam can participate the Sworn-in Certified Public Accountancy examination according to general conditions. However, in order to have the Sworn-in Certified Public Accountancy certification they should complete period indicated at the (a) clause of the first paragraph. Examinations for Sworn-in Certified Public Accountancy

ARTICLE 10. The examination for Sworn-in Certified Public Accountant is conducted by the Union as written examination. Ministry of Finance is authorized to take necessary actions to make the examination fair, objective and eligible for its legislation. The examination commission consists of 7 members including a chairman. The Chairman and the members of the Examination Commission are selected by the Ministry of Finance, four among tax auditors of the Ministry of Finance, one among two candidates proposed by the Higher Education Council, and two among four candidates proposed by TURMOB. The candidates for membership in the examination commission are required to have a graduate or post graduate degree in one of the subjects of law, economics, finance, accounting, management, banking, business administration, and are required to have worked in the relevant fields for fifteen years, or to have worked as a member of the teaching staff in a university for the same period. Terms of reference of the examination commission, examination issues and other procedures and principles about examination are set in regulations issued by the Union taking the relevant opinion of Ministry of Finance. In the case of the results of the examination for the certified public accountants and sworn-in certified public accountants are submitted to the court and expert examination is required by the court, a triple expert group is assigned consist of one central tax auditor of Ministry of Finance, one professional member having expertise in relevant field and one teaching staff having expertise in sued examination issue provided that they have not served in examination commission. Oath Taking

ARTICLE 11. Persons accepted for the profession of sworn-in certified public accountancy, take an oath written below in the Court of First Instance, before initiating in the profession: “Being fully aware that the profession of sworn-in certified public accountancy is a public service, I swear upon my honor that I shall obey the laws of the Turkish Republic, and the rules, and ethics of the profession, that I shall remain fully independent, impartial and honest in the performance of my profession, and that I shall exert utmost care and attention in my undertakings “. Certification and Responsibility

Article 12.Sworn-in Certified Public Accountants certify the compliance of the financial statements and tax returns prepared by individuals and entities and the enterprises and establishments thereof, with the provisions specified in the legislations, accounting principles and the accounting standards, and further certify that the accounts have been inspected in accordance with the auditing standards. The documents to be certified by sworn-in Certified Public Accountants, subjects of certification and the rules and principles applicable to certification are determined by the regulations issued by the Ministry of Finance, by taking into consideration the types of liabilities of the individuals or entities, fields of business and turnovers, foreign currency generating transactions, imports and exports, types and amounts of investments and the offices to which these documents will be submitted. Certified financial statements submitted to public institutions and establishments pursuant to the laws, are considered as documents investigated within the framework of the certification, by the officials of the relevant public institution or establishment. However, issues related to the exercise of authorities of inspection and investigation granted to public administration through various laws and the recurrence of such authorizations if and when deemed necessary, remains reserved. Sworn-in Certified Public Accountants are responsible from the verifiability of the certification. If a defect occur in the verifiability of the certification, the concerned sworn-in Certified Public Accountants shall be held responsible jointly and successively with the liable taxpayer in the penalties and the tax losses, confined to the content of the certification. Sworn-in Certified Public Accountants clearly specify the content of the certification in their reports. The responsibilities of the performers of the profession in compliance with the provisions of this Law as regards to the tax laws and other legislations are reserved. Persons not to be Employed in Positions Related to the Profession

ARTICLE 13.Members of the profession may not employ persons who are prohibited to perform the profession in their own or associate offices and may not cooperate with such persons on any issue whatsoever.

PART TWO

PART THREE

PART FOUR