The activities of the CBRT, which operates as a joint stock company, are audited by both internal and external auditors in compliance with the regulations of the CBRT Law No 1211.

Audits Conducted by the Internal Organs of the CBRT

In accordance with the Article No 15 of the CBRT Law, the General Assembly examines and resolves whether to approve the annual report submitted by the Board of the Bank, the report of the Auditing Committee, the Bank’s balance sheet and the income statements. In this way, the General Assembly completes the monitoring of the activities of the Bank every year by discharging the Board of the Bank and the Auditing Committee.

On the other hand, in accordance with the Article No 24 of the Bank Law, the Auditing Committee audits all the operations and accounts of the Bank and submits to the General Assembly a report to be drawn up on operations and accounts of the Bank at the end of the year. Under the authority of the Bank’s Law, the Auditing Committee submits its written opinions to the Board and also to present a copy thereof to the Prime Ministry.

The authority and responsibility for auditing the Bank’s transactions are entrusted with the Audit Department according to the Articles No. 44 and 45 of the Main Regulation on Organization and Duties of the CBRT.

The Audit Department has the duty and authority to conduct audits, examinations and researches and also to carry out investigations and consulting services when needed in the departments, branches and representative offices of the Bank and also at institutions and organizations other than the Bank that fall within the scope of authorities and duties granted by Law No. 1211 as well as other legislations.

According to the Article No. 6 of the “Audit Regulation of the CBRT”, audits are carried out by 4 types of activities. Those are named as internal audit, investigation, examination and consultancy and external audit activities.

According to the Article No. 37 of the “Audit Regulation of the CBRT”; one or several of the operational, financial, compliance and information systems audits are conducted together in all departments, branches and representative offices of the CBRT.

Within the scope of the external audit function, banks operating in Turkey are audited to ensure that calculation of the liabilities subject to reserve requirements, reporting of the maximum and the weighted average interest rates/profit-loss participation rates, compliance of variable interest products and maturity and types of deposits with regulation, the legal compliance of variable interest rate housing loan contracts, the incompliance with the credit card regulations and the controls regarding to reporting of credit cards, the closure of export rediscount credit accounts; the consistency of Trial Balance accounts with credit card and overdraft accounts, announced interest rates, actual maximum interest rates, KT (the weighted average interest rates and amounts for credits in TL) and MT (the weighted average interest rates and amounts for credits in TL) forms, and IBAN applications comply with the relevant regulations. In 2016, Audit Department conducted external audits in 26 banks and 4 financing institutions.

The Audit Department is composed of 18 chief inspectors, five chief auditors, 18 inspectors, one auditor, three information technology auditors, 12 authorized assistant auditors, one authorized information technology assistant auditors, three assistant auditors and two information technology assistant auditors. Among those, one chief inspector and one IT auditor are assigned to assist the Executive Director in the conduct of his duties.

The system of “Follow-up of Audit Results” which was established to monitor whether the necessary actions are taken regarding the issues in the audit reports, to inform and receive the opinions of the Board, the Auditing Committee and the Executive Committee was held in June and December of this year.

External Quality Assessment of internal audit activity, which is mandatory in every 5 years according to Audit Charter of CBRT, was conducted by an external audit firm in 2016 and it was rated as “generally conforms”, meaning that the organizational structure of Audit Department of CBRT and internal audit activity highly conforms to the IIA Standards.

Audits Conducted by External Parties

Article 42 of the CBRT Law constitutes the legal basis of external auditing of the Bank. Accordingly, the Prime Minister may have the operations and accounts of the Bank audited.

In accordance with the Article No. 42 of the CBRT Law, the Governor submits a report to the Council of Ministers on the operations of the Bank and the monetary policy followed and to be followed, each year in April and October. The Bank furnishes information regarding its operations to the Planning and Budget Commission of the Grand National Assembly of Turkey twice a year.

In accordance with the second paragraph of the same Article, the Bank may assign external auditors to audit the balance sheet and the income statements of the Bank. An independent external review of the Bank’s accounts has been deemed as vital to the corporate governance of the Bank, and was first initiated in 2000. As part of the transparency and accountability principles adopted, the reports prepared following the audit engagements each year are made public via the CBRT’s website.

In addition to these audits mentioned above, Treasury, the State Supervisory Commission, the Turkish Court of Accounts, certain ministries and other authorized government agencies, may conduct audits through their auditors in the CBRT on the subjects related to their duties, if needed.