Turkey: The Regulation Amending the Regulation on the Working Procedure and Principles of Internal Auditors

The Regulation on the Working Procedure and Principles of Internal Auditors ("Regulation") which entered into force by being published in the Official Gazette dated 12.07.2006 and numbered 26226 was amended by the Regulation Amending the Regulation on the Working Procedure and Principles of Internal Auditors ("Amendment Regulation") published in the Official Gazette dated 07.02.2013 and numbered 28552. The important amendments brought by this Regulation are the subject of this article.

The purpose of the Regulation is stipulated as the determination of the working procedure, principles, qualifications and other related issues regarding internal auditors to be assigned to public authorities. The Internal auditors, the internal audit activities of local authorities and the authorities mentioned on lists (I), (II) and (III) annexed to Law No. 5018 on Public Financial Management and Control, the Banking Regulation and Supervision Agency and the Savings Deposit Insurance Fund fell within the scope of the Regulation. However, the Amendment Regulation excluded the Banking Regulation and Supervision Agency and the Savings Deposit Insurance Fund from its scope.

Internal Audit Activity

Pursuant to Article 5 of the Regulation, an internal audit activity aims "to organize and manage the activities of public authorities pursuant to its purpose and policies, development and strategic plans and performance programs; to ensure that resources are used efficiently and economically; and to ensure data security, integrity and to provide this data in due time".

The scope of an internal audit activity is regulated under Article 6 of the Regulation. According to this article, the activities of public authorities are systematically subject to an internal audit within the framework of the risk based on audit plans and programs.

Pursuant to the Regulation, the auditing of public authorities consists of the following: an appropriateness audit, a performance audit, a financial audit, an information technologies audit and a systems audit.

Article 9 of the Regulation is also amended by the Amendment Regulation. According to this amendment, not only the internal auditors but also internal audit unit president shall comply with the audit standards and ethical principles.

Responsibility of the Manager

The responsibility of the manager is regulated in detail under the Regulation. The manager is, for example, obliged to take necessary precautions so that auditors can execute their duties independently. The Amendment Regulation amended paragraphs d, f and g of Article 12. Therefore, the manager: (d) takes precautions to ensure that resources are used efficiently and economically and to ensure that the problems are cured subsequently according to the information and suggestions provided by the internal audit activity; (f) sends the internal audit reports and operations effectuated pursuant to these reports to the Internal Audit Coordination Board; (g) surveys the quality of the internal audit and ensures that corrective precautions are taken with regard to the results of the external audit.

Responsibilities, Duties and Obligations of Internal Auditors

The duties of internal auditors are set forth under Articles 13 et seq. The duties of internal auditors consist of evaluating the management and control mechanisms of public authorities, making audits and suggesting how to use the resources more efficiently, auditing the legal appropriateness of expenses. The Amendment Regulation also regulates the duties and authorities of the internal audit unit president. According to the amendments, the internal audit unit president, for instance, must manage the internal audit unit pursuant to the audit reports and standards, control the internal audit reports, follow the results of the audits and take corrective precautions pertaining to the external audit results.

Moreover, Article 14 of the Regulation is entirely amended and is entitled as "audit survey activity".

Independence, Objectiveness and Assurance of Internal Auditors                

Pursuant to their duties, the independence and objectiveness of internal auditors are very important issues. Therefore, these issues are regulated under the Regulation, along with the issue of their assurance.

Internal auditors execute their duties independently and act objectively, and they cannot be appointed to perform any duty which is not mentioned under this Regulation or under the related directives.

It can be said that the Amendment Regulation does not bring any important modifications to Part Five of the Regulation which governs internal auditors' independence, objectiveness and assurance.

Planning, Conducting and Reporting the Internal Audit

Pursuant to the Regulation, an internal audit plan is prepared for three years in accordance with the internal audit strategic plan prepared by the Internal Audit Coordination Board. Moreover, an internal audit program which shall not exceed a period of one year shall also be set.

It should be noted that the Amendment Regulation amends Article 44, which governs the filing of reports, in its entirety.

The Amendment Regulation excluded the Banking Regulation and Supervision Agency and the Savings Deposit Insurance Fund from the scope of the Regulation, detailed certain articles of the Regulation, determined clearly duties and authorities of internal auditors and managers. Moreover, certain additions to definitions in the Amendment Regulation make the Regulation easier to understand and follow.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.