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Consolidated
Accounting And Consolidated Prudential Supervision Standards For The Turkish
Banking System A technical advisory project, including training, in the area of
consolidated accounting and application of consolidated prudential supervision
standards for the Turkish banking system was undertaken starting from January
2001. The project, which was sponsored by the World Bank, was carried out by
PricewaterhouseCoopers and completed in April 2001. The main objectives of the
project were to provide technical assistance and training to Turkish banks,
through collaboration with the Banks’ Association of Turkey (BAT), in; i)
the preparation of consolidated financial statements in relation to
International Accounting Standards (IAS 27) and, ii)
the application of consolidated prudential supervision/reporting
requirements based on the models from developed markets. Within this framework,
and working closely with the BAT consolidation work committee, the project team
covered the following: 1.
One of the major difficulties facing Turkish banks in preparing
consolidated financial statements is the accounting policy differences between
banks and non-bank financial institutions. In order to identify significant
inconsistencies between the current accounting policies for banks and non-bank
financial institutions (particularly brokerage firms, insurance companies
financial leasing companies and factoring companies),
an analysis of the existing discrepancies was undertaken. For any
significant inconsistencies which surfaced as a result of this analysis, short
and medium term measures were proposed to align accounting policies of non-bank
financial institutions with bank accounting policies (Annex I). 2.
In order to bring the existing consolidation rules for banks in line with
International Accounting Standard 27 (IAS 27 Consolidated Financial Statements
and Accounting for Investments in Subsidiaries), an analysis was performed of
the discrepancies between IAS 27 consolidation requirements and current
consolidation rules for banks (Annex I). 3.
A one day seminar was organised on the 17 Jnuary 2001 for an audience of
selected representatives from banks and their non-bank subsidiaries to explain
the full implementation of IAS 27 (Annex II). 4.
An overview of the consolidated supervision regime in the European Union
was developed. However, in order to
provide specific guidance on a possible approach to consolidated supervision to
be adopted in Turkey, the following issues were explored in respect of the
existing regimes in Germany and the United Kingdom (Annex III): - General objectives of consolidated
supervision of banking groups -
Quantative and qualitative tools applied by the banking supervisors in
relation to consolidated supervision -
Consolidation scope and principles used by bank supervisors 5.
In order to illustrate, in practical terms, how consolidation (for
supervisory purposes) is currently performed in the Unted Kingdom and Germany,
two case studies, highlighting the differences in approach between the United
Kingdom and Germany,were developed using ‘hypothetical’
Turkish bank groups with different organizational structures (Annex III). 6.
A pilot workshop was organised on the 19 March 2001 for selected
representatives of banking groups to
present the case studies as well as other work performed for consolidated
supervision as discussed above. During this pilot workshop, discussions were
also held on the approaches to be developed for consolidated supervision in
Turkey and the key obstacles which may be encountered
(Annex III). Appendix: II.
Consolidation According to
International Accounting Standards. |