Year-End Accounting Closing Procedures in Türkiye

1. Cut-off and Accruals

• All income and expenses must be recorded in the correct financial period, ensuring proper matching.

• Revenues earned and expenses incurred up to December 31 must be recognized, even if payments occur later.

• Accruals should be made for unrecorded liabilities such as late invoices.

2.Inventory Count and Valuation

• Companies are required to perform physical counts of inventories, including:

  • Raw materials

  • Finished goods

  • Fixed assets

• Inventory valuation must comply with Turkish tax laws, using the lower of cost or market value principle.

• Impairment losses must be recognized where applicable.

3. Depreciation of Fixed Assets

• Depreciation should be calculated and recorded for all fixed assets.

• Methods:

  • Straight-line depreciation is widely used.

• Turkish Tax Law prescribes specific rates and useful life spans for asset types.

• Acquisition date impacts whether full or half-year depreciation is applied.

4. Provisioning for Liabilities

• Companies must establish provisions for:

  • Legal claims

  • Employee severance payments

  • Doubtful receivables

  • Warranty obligations

• Provisions must comply with:

  • Turkish Tax Procedural Law (for deductibility)

  • Turkish Financial Reporting Standards (TFRS), where applicable.

5. Account Reconciliations

• Reconciliation of balances is a must, covering:

  • Customer and supplier accounts

  • Bank balances

  • Loan and lease obligations

  • Warehouse stocks

• Bank confirmations are essential, especially for audit purposes.

6. Foreign Currency Revaluation

• All foreign currency assets and liabilities must be revalued at the Central Bank’s official rate as of December 31.

• Resulting foreign exchange gains or losses should be recorded in the income statement.

7. Tax Adjustments

• Before year-end close, companies must:

  • Ensure accurate corporate tax calculations

  • Reflect any advance tax payments

  • Recognize deferred tax assets and liabilities if reporting under TFRS

  • Adjust for non-deductible expenses according to tax law.
     

8. Preparation of Statutory Financial Statements

• Companies must prepare:

  • Balance Sheet (Bilanço)

  • Income Statement (Gelir Tablosu)

  • Cash Flow Statement (Nakit Akış Tablosu), if required

  • Statement of Changes in Equity (Öz Kaynaklar Değişim Tablosu), for TFRS reporters

• Reporting must align with:

  • Uniform Chart of Accounts (Tek Düzen Hesap Planı)

  • Turkish Commercial Code (TCC)

  • Tax Procedural Law (VUK)
     

9. General Assembly and Financial Approval

• After board approval, financial statements must be presented to the General Assembly.

• Certain companies are required to register and publish financial statements via the Trade Registry Gazette.
   

10. Independent Audit Requirements

• Companies exceeding certain thresholds (assets, revenue, employee numbers) are subject to mandatory independent audits.

• Audits are conducted according to Turkish Auditing Standards aligned with international standards.

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