BOBİ FRS or TFRS? Which Turkish Financial Reporting Framework Applies?

“Should our company apply TFRS or BOBİ FRS?” is a question that comes up, especially for growing companies coming into the scope of independent audit for the first time. This article sets out the decision logic step by step and shows the official source behind each step.

The two frameworks in brief

	TFRS	BOBİ FRS
Full name	Turkish Financial Reporting Standards (the Turkish equivalent of IFRS)	Financial Reporting Standard for Large and Medium-Sized Entities
Issued by	KGK (Turkey’s Public Oversight, Accounting and Auditing Standards Authority)	KGK
Structure	Separate standards and interpretations (TMS, TFRS and interpretations)	A single standard organised in sections
Who applies it	Entities required to apply TFRS by KGK decision; voluntary for others	Entities subject to independent audit that do not apply TFRS

The first edition of BOBİ FRS was published in the Official Gazette of 29 July 2017, No. 30138 (repeat issue), and has applied to reporting periods beginning on or after 1 January 2018. The BOBİ FRS 2021 Edition, which contains extensive changes, applies to reporting periods beginning on or after 1 January 2021. KGK has amended the standard since then; the current text is on KGK’s website.

Decision steps

Step 1: Is the company required to apply TFRS?

KGK’s Board Decision of 21 August 2014 (Official Gazette, 26 August 2014, No. 29100) requires the entities on the list annexed to the decision to apply Turkish Accounting Standards in their separate and consolidated financial statements. The list covers entities subject to capital markets, banking, insurance and pension legislation, and certain entities related to Borsa İstanbul and the precious metals market. Entities not on the list may apply these standards voluntarily.

Because the list may be updated over time, whether a company is in scope should be confirmed against KGK’s current decisions.

Step 2: Is the company subject to independent audit?

Companies subject to independent audit are determined by Presidential Decision No. 6434 on the Determination of Companies Subject to Independent Audit. It was issued in 2022 to replace Council of Ministers Decision No. 2018/11597 and was amended by a decision published in the Official Gazette of 6 April 2024, No. 32512. According to KGK, the decision divides companies into four groups. One group is subject to audit without any size criteria. The other groups use three criteria:

• total assets,
• annual net revenue,
• number of employees.

If a company exceeds the thresholds for at least two of the criteria set for its group, on its own or together with its subsidiaries and associates, in two consecutive reporting periods, it becomes subject to audit for the following period. For example, according to KGK’s 2024 announcement, companies exceeding the criteria in both 2022 and 2023 became subject to audit for 2024. Thresholds differ by group and are revised from time to time. KGK has published separately the criteria that apply to the 2026 and later reporting periods.

Step 3: Determining the framework

• Entity required to apply TFRS: TFRS.
• Subject to audit, not required to apply TFRS: BOBİ FRS. The company may also choose to apply TFRS.
• Not subject to audit: BOBİ FRS covers entities subject to independent audit; this article does not cover in detail the reporting framework of companies outside audit scope. KGK has also published KÜMİ FRS for small and micro entities; whether that standard is mandatory or voluntary for a given company should be confirmed against KGK’s current rules.

Rule on moving between frameworks: Under Article 4 of the BOBİ FRS 2021 Board Decision, an entity applying BOBİ FRS may not voluntarily switch to TFRS until two years have passed. An entity voluntarily applying TFRS must have applied TFRS for at least two consecutive years before it can move to BOBİ FRS. The choice of framework is therefore a multi-year decision.

Where the differences are felt in practice

BOBİ FRS is simpler, but it is not the same as the tax records. The main areas where differences are felt in practice are:

• Leases: Lessees applying TFRS apply TFRS 16. In BOBİ FRS, leases are dealt with separately in Section 15. See TFRS 16 for detail.
• Financial instruments: TFRS 9 applies under TFRS. In BOBİ FRS, financial instruments and equity are dealt with in Section 9.
• Inflation adjustment: KGK announced that entities applying TFRS, BOBİ FRS or KÜMİ FRS must present financial statements for annual periods ending on or after 31 December 2023 adjusted for inflation under TMS 29 (the Turkish equivalent of IAS 29) or BOBİ FRS Section 25. KGK announcements for later periods should be followed separately.
• Disclosures: Under TFRS, notes can be more extensive because each standard carries its own disclosure requirements.

Under both frameworks, accounting may differ from the tax records in areas such as the Turkish severance pay provision (kıdem tazminatı), other provisions and inventory valuation. BOBİ FRS distinguishes on deferred tax: under paragraph 23.3, large entities must present deferred tax amounts, while other entities are not required to (if consolidated statements are presented voluntarily, deferred tax is required in them). Large entities are defined in Article 5 of the Board Decision, and those thresholds are also updated from time to time. For a company entering audit for the first time, the conversion work should be planned before the first audit year.

Preparing for a first audit

1. Confirm scope: Determine, against KGK’s current guidance, the reporting period from which the company is subject to audit.
2. Choose the framework: BOBİ FRS or TFRS, assessed together with shareholders and banks, taking the two-year rule into account.
3. Opening statement of financial position: The prior period may also need to be converted for comparative information; review the standard’s transition provisions.
4. Map accounting policies and the chart of accounts.
5. Appoint the auditor: Align the audit timetable with the closing calendar.

For detail, see the articles on the TFRS conversion process and preparing for an independent audit.

Common mistakes

• Using an old threshold: Assessing scope against a threshold amount from an earlier year.
• Looking at the single company only: Ignoring that the criteria can also be exceeded together with subsidiaries and associates.
• Assuming it matches the tax records: Treating BOBİ FRS as the same as the tax records and squeezing the conversion work into the audit period.
• Forgetting the transition rule: Not allowing for the fact that the framework choice binds for at least two years.

What it means for management

The choice of framework is not an accounting detail. It shapes the company’s financial reporting for years ahead. Confirming scope each period against current rules, allowing for the two-year rule and planning the conversion before the first audit year all help the audit go smoothly.

Sources last checked: 21 October 2026