VKF_FRAE_2017

266 VakıfBank Annual Report 2017 PART III: FINANCIAL HIGHLIGHTS AND RISK MANAGEMENT CONVENIENCE TRANSLATION INTO ENGLISH OF INDEPENDENT AUDITOR’S REPORT ORIGINALLY ISSUED IN TURKISH (See Note I of Section Three) INDEPENDENT AUDITOR’S REPORT To the General Assembly of Türkiye Vakıflar Bankası T.A.O. A. Audit of the Consolidated Financial Statements 1. Qualified Opinion We have audited the accompanying consolidated financial statements of Türkiye Vakıflar Bankası T.A.O. (the “Bank”), and its subsidiaries (collectively referred to as the “Group”) which comprise the statement of consolidated balance sheet as at 31 December 2017, consolidated income statement, consolidated statement of income and expense items under shareholders’ equity, consolidated statement of changes in shareholders’ equity, consolidated statement of cash flows for the year then ended and the notes to the consolidated financial statements and a summary of significant accounting policies and consolidated financial statement notes. In our opinion, except for the effect of the matter on the consolidated financial statements described in the basis for the qualified opinion section below, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Group as at 31 December 2017, and its consolidated financial performance and its consolidated cash flows for the year then ended in accordance with the Banking Regulation and Supervision Agency (“BRSA”) Accounting and Financial Reporting Legislation which includes “Regulation on Accounting Applications for Banks and Safeguarding of Documents” published in the Official Gazette no.26333 dated 1 November 2006, and other regulations on accounting records of Banks published by Banking Regulation and Supervision Agency and circulars and interpretations published by BRSA and Turkish Accounting Standards (“TAS”) for those matters not regulated by the aforementioned regulations. 2. Basis for Qualified Opinion As explained in Section Five Part II-7 of Explanations and Notes to the Consolidated Financial Statements; the accompanying consolidated financial statements as at 31 December 2017 include a free provision amounting to TL 500,000 thousand recognized in the current period provided by the Bank management considering the negative circumstances that may arise from possible changes in the economy and market conditions. Our audit was conducted in accordance with the “Regulation on Independent Audit of Banks” published by the BRSA on the Official Gazette No.29314 dated 2 April 2015 and the Standards on Independent Auditing (the “SIA”) that are part of Turkish Standards on Auditing issued by the Public Oversight Accounting and Auditing Standards Authority (the “POA”). Our responsibilities under these standards are further described in the “Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements” section of our report. We hereby declare that we are independent of the Group in accordance with the Ethical Rules for Independent Auditors (the “Ethical Rules”) and the ethical requirements regarding independent audit in regulations issued by POA that are relevant to our audit of the financial statements. We have also fulfilled our other ethical responsibilities in accordance with the Ethical Rules and regulations. We believe that the audit evidence we have obtained during the independent audit provides a sufficient and appropriate basis for our qualified opinion.