Each new decree is turning out to be worse than the previous one. Frankly, I am having difficulty understanding the goal.

Some while ago, I commented, “What a contrast,” referring to the recent arrangements about the Turkish Commercial Code (TCC) and decrees contradicting with the TCC. I have been watching with astonishment that the current government, which is making an effort to modernize the legislations applicable for the commercial life with the TCC, at the same time, has been trying to advance central tutelage with decrees and therefore has been departing from market-friendly achievements. Each new decree has turned out to be worse than the previous one. Frankly, I am having difficulty understanding the goal. With each new decree, “Turkey is becoming just like China.”

With these decrees, Turkey is taking determinate steps back towards the statism of the 1930s, a regime of central tutelage. There is more to this story: Nowadays, the corporate sector has been voicing its concern about the new TCC. At the center of the complaints lies the Public Surveillance, Accounting and Audit Standards Agency (PSA), established by Decree No. 660. By centralizing the power, the PSA delays the probable transition period regulations on the auditing and accounting standards for the corporate sector. The PSA regulation, judged by the Decree No 660, puts a spoke in the wheel of the TCC.  The date of effect of the TCC should no longer be delayed. The current case, however, seems to be the opposite.

First, let me explain how the PSA is associated with the TCC: On November 2, 2011, the government issued a decree (No. 660) to establish the PSA. The PSA regulation is putting a spoke in the TCC’s wheel. The agency is not fully operational yet. However, the authority for accounting and audit standards and surveillance has to become operable so that the exemptions and exceptions about external auditing and accounting reports for small companies can be put into effect. The PSA took over all of the relevant powers of relevant public agencies among which are the Accounting Standards Board, the Capital Markets Board, the Banking Regulation and Supervision Agency, the Undersecretariat of Treasury, and the Ministry for Customs and Trade. But the Agency has yet to become fully operational. The decree concerning the establishment of the PSA closely affects Article 88 on financial reporting and Articles 397 and 400 on external auditing as well as the second provisional article of the TCC. A series of exemptions and exceptions which could have been devised inherently via the TCC now have to wait for the PSA to become operational. Nevertheless, we are meaninglessly debating the TCC instead of the PSA. This is the first point to keep in mind.

And the second one: The preamble of the decree concerning the PSA stresses that the economic crisis at the center of the global economy has dissolved the accounting and auditing standards system build on professional organizations. Therefore, the decree claims, the system has to be centralized. But as Associate Professor Korkut Özkorkut wrote in a book published by the Institute for Banking and Commercial Law, the Financial Accounting Standards Board of the US established after the Enron scandal was not directly affiliated to the state, but was a non-profit private and independent agency. It was not designed as a tool for tutelage.

The third point goes as follows: Lately, the opposition has been parading at the Parliament arguing that their voice is lowered during Parliament works and activities. But no one is raising his voice against the decree system that reinvigorates the central tutelage system of the 1930s in full flood. This really annoys me. Decrees were in introduced during Turgut Özal’s time, as well, but each one had a concrete target that was explained clearly and temporarily handed over a Parliamentary power to the executive body. What we see today is nothing but an evident seizure of powers, in my consideration. The government is rebuilding the tutelage regime of the 1930s with long term and broad authority seized under the name of “enhancing public administration.” This was not how I saw it before. But having seen bits and pieces of the new regulations, these points have been occupying my mind. It is bad. The recent developments are nonsense at the current level of the development of the Turkish economy.

And here is a question for you: Is it good that the Ministry of Finance is the sole authority to set the reporting standards for the corporate sector? I think it is not. This shall not be among the duties of the Ministry of Finance. Let me note this down here.

This commentary was published in Radikal daily on 10.02.2012