Audit Committee Operating Principles

1. PURPOSE

The Audit Committee operates with the aim of:

·       Ensuring that financial and operational activities are prepared in a sound and legally compliant manner,

·       Ensuring the accuracy, transparency, compliance with legislation and international accounting standards, and integrity of financial statements and other financial information,

·       Measuring the qualifications and independence of independent auditors,

·       Monitoring the effectiveness and performance of the internal audit function and independent audit activity.

2. GROUNDS

This document has been prepared within the framework of the provisions of the Capital Market Legislation.

3. AUTHORITY AND SCOPE

The Committee is established and authorized by the Board of Directors. The Committee may also utilize independent expert opinions on matters it deems necessary in relation to its activities.

The Committee acts within its own authority and responsibility and makes recommendations to the Board of Directors. However, the duties and responsibilities of the Committee do not negate the responsibility of the Board of Directors arising from the Turkish Commercial Code.

The Audit Committee;

·       Audits the accuracy, transparency, and compliance of the financial statements and other financial information with legislation and international accounting standards, and reports its findings in writing to the Board of Directors, taking into account the opinion of the independent audit firm.

·       Examines the independence and competence of the independent audit firm and its employees on behalf of the Board of Directors.

·       Oversees the functioning and effectiveness of the company's accounting system, the public disclosure of financial information, independent audits, and the company's internal audit system.

·       Oversees the selection of the independent audit firm, the preparation of audit contracts, the initiation of the independent audit process, and the work of the independent audit firm at every stage.

·       Investigates and resolves internal and external complaints regarding company accounting, internal audit systems, and independent audits within the framework of confidentiality.

·       Ensures compliance with legal regulations and internal company regulations.

·       Performs other oversight and monitoring activities requested by the Board of Directors.

4. STRUCTURE OF THE COMMITTEE

·      The Committee is established in accordance with the Company's Articles of Association and the Capital Markets Board regulations. At least one member of the Committee must have at least five years of work experience in accounting, finance, auditing, law, etc.

·      Members of the company's executive body and officials responsible for financial affairs cannot serve on the Committee.

·      The Committee is fully authorized to conduct research and investigations on all matters within its scope of duties and responsibilities.

·      The Audit Committee is appointed by the Board of Directors. Members whose terms have expired may be re-elected.

·      Independent experts may be consulted and included in the committee during the conduct of the Audit Committee's activities.

·      The Committee may establish subcommittees reporting to it. Subcommittees work under the Audit Committee and comply with all principles relating to the Committee (meetings, reporting, minutes, membership, etc.).

·      Audit Committee members are selected according to the following criteria.

·      Higher education,

·      At least one member has experience in accounting and financial management,

·      Able to analyze financial statements and reports (able to read financial statements),

·      Possesses high ethical standards,

·      The Audit Committee consists of at least two independent board members. All members, including the Chair, are selected from among individuals recommended by the Corporate Governance Committee, with the approval of the Board of Directors. A member of the Audit Committee may not serve on another committee. If necessary, non-Board members who are experts in their field may also be assigned to the Committee.

·      The Committee meets at least four times a year, and submits the results of its meetings to the Board of Directors before the release of the quarterly financial statements.

·      Decisions taken at Committee meetings are recorded in writing, signed by the Committee members, and kept in an organized manner.

5. DUTIES AND RESPONSIBILITIES

Internal Control and Internal Audit

·       The Committee conducts studies on the effectiveness and adequacy of the company's internal control system, monitors its progress, and oversees its effective operation.

·       The Committee evaluates the adequacy of the internal control system together with the independent audit firm.

·       The Committee evaluates the findings obtained regarding the internal control system and reports them to the Board of Directors.

·       The Committee assesses the importance of company management, internal control, and risk management, and whether a proper "control culture" has been established in the Company.

·       The Committee oversees the healthy functioning of coordination and communication between the Company's subsidiaries and the Internal Audit Unit.

·       The Committee reviews the accountability of management regarding the security and operation of the Company's computer system, crisis plans regarding the recording and protection of transactions in case the computer system becomes inoperable, and the company's sensitivity to backup procedures.

·       The Committee investigates whether the warnings and recommendations made by the Internal Audit Unit regarding internal control have been implemented.

·       The Committee monitors the Internal Audit Unit's compliance with its operating principles. It examines the Unit's plans, activities, organizational structure, and the qualifications of the internal auditors.

·       The Committee may make recommendations to the Board of Directors regarding the appointment, transfer, and dismissal of personnel working in the Internal Audit Unit, taking into account their qualifications.

·       The Committee reviews the effectiveness of internal audit activities. It ensures that necessary measures are taken to ensure transparency in internal audits.

·       The Committee develops recommendations to uncover events leading to abuse, violations of laws and regulations, or deficiencies in internal control or similar matters.

To this end, it reviews the monitoring system developed by the Company regarding compliance with laws and regulations, and the results of the monitoring, and makes recommendations to management for necessary adjustments and actions.

Independent External Audit

·       The Committee takes the necessary measures to ensure that independent external audits are conducted effectively, adequately, and transparently.

·       The selection of the independent audit firm, the preparation of audit contracts and the initiation of the independent audit process, and the work of the independent audit firm at every stage are carried out under the supervision of the Committee.

·       The Committee reviews the scope and approach to audit proposed by the independent external auditors; informs the Board of Directors about any issues that limit or hinder their work and makes recommendations.

·       The Committee decides on the independence of the independent external auditors, taking into account the consulting services provided by the independent audit firm or its related entities.

·       It makes recommendations to the Board of Directors regarding the appointment or dismissal of the independent audit firm.

·       It examines the content of the independent audit and measures its adequacy. The Committee evaluates the performance of the independent external auditors.

·       It identifies situations that may hinder the objectivity of the independent audit firm and its employees, or compromise their independence.

For this purpose, the Committee reviews the monitoring system developed by the Company regarding compliance with laws and regulations, and the results of the monitoring, and makes recommendations to the management for necessary adjustments and procedures.

 

Financial Reporting

·       The Committee monitors and approves the compliance of periodic financial statements and footnotes with applicable legislation and international accounting standards.

·       The Committee reviews significant accounting and reporting matters and legal issues and investigates their impact on the financial statements.

·       The Committee reviews transactions that are subject to the discretion and decision of management of the Company in their recognition in accounting records, such as the valuation of assets and liabilities; guarantees and sureties; fulfillment of social responsibilities; litigation provisions; other liabilities and contingent events.

·       The Committee, together with the independent audit company, examines accounting policies and principles that will significantly affect the financial statements and legislative changes that will significantly affect the Company's operations.

·       The Committee, together with the Company's legal department, examines any legal situation that may affect the financial reports.

The Committee examines:

·       Significant differences between actual interim financial results and budgeted or estimated financial results;

·       Significant changes in financial ratios and whether these changes are consistent with changes in the Company's operations and financing practices;

·       Whether there has been or is planned a change in accounting or financial reporting practices;

·       Whether there has been any unusual or significant transaction;

·       Whether the public disclosures regarding financial information contain sufficient and appropriate information.

·       The Committee obtains the opinions of the Company's responsible directors and independent auditors regarding the accuracy and truthfulness and also compliance with the accounting principles of The Company of the financial statements and footnotes to be disclosed to the public, and reports these, along with its own assessments, to the Board of Directors in writing.

·       The Committee reviews the activity report to be disclosed to the public and investigates whether the information contained therein is accurate and consistent with the information available to the Committee.

·       The Committee checks whether the public disclosures and analyst presentations regarding financial information comply with the Company's "Information Policy," including laws and regulations.

·       The Committee investigates the extent to which public disclosures regarding financial information are subject to the Auditors' control and how such announcements and presentations are prepared.

·       It reports to the Board of Directors any changes in accounting policies, internal control systems, and legislation that would significantly affect the preparation of the Company's financial statements.

 

Compliance with Laws and Regulations

·       The Committee monitors whether the company's operations are conducted in compliance with legislation and internal regulations.

·       The Committee receives and evaluates regular quarterly reports from the company's management, lawyers, or external legal advisors regarding lawsuits filed against the company, provisions set aside in relation to these lawsuits, required provisions, provisions that are no longer relevant, and the total potential risk.

·       The Committee obtains and evaluates the necessary information regarding the company's compliance with the applicable legal provisions in the preparation of financial statements and footnotes.

6. ENFORCEMENT

The duties and working principles of the Committee and any changes to be made shall enter into force with the decision of the Board of Directors.