NEW DECREE INTRODUCING UPDATED THRESHOLDS FOR LARGE ENTREPRISES
The Regulation on Amendments to the Independent Audit Regulation (in Turkish, “Bağımsız Denetim Yönetmeliğinde Değişiklik Yapılmasına Dair Yönetmelik”, the “Amending Regulation”) prepared by the Public Oversight, Accounting and Auditing Standards Authority (in Turkish, “Kamu Gözetimi, Muhasebe ve Denetim Standartları Kurumu”, the“Authority”) was published in the Official Gazette dated 15 June 2024 and numbered 32577.
As per the Amending Regulation, auditing firms and independent auditors which undertake audits will carry out their activities within the framework of a quality management system and the minimum conditions of which are determined by the Authority.
The Amending Regulation envisages penalties for audit firms and auditors if they violate relevant laws and regulations. These penalties, determined by the Authority, include warnings, cautions, activity restrictions, suspensions, and permanent cancellations of their activity permits. Each type of penalty addresses the severity and nature of the violation, ranging from advising firms to be more careful, requiring corrections of legislative violations, temporarily limiting or suspending their audit activities and to permanently revoking their audit licenses.
Besides, the Decree of the Public Oversight Accounting and Auditing Standards Authority dated 12 June 2024 (in Turkish, “Kamu Gözetimi Muhasebe ve Denetim Standartları Kurul Kararı”, the “Amending Decree”), which has been published in the Official Gazette dated 15 June 2024 and numbered 32577, has introduced amendments to the Financial Reporting Standard for Large and Medium- Sized Enterprises (in Turkish, “Büyük ve Orta Boy İşletmeler için Finansal Raporlama Standardı”, “BOBI FRS” ), setting the new thresholds for large businesses (in Turkish, “Büyük İşletme”).
BOBI FRS is the financial reporting framework to be used in the financial statements prepared in accordance with the Turkish Commercial Code by enterprises subject to independent audit but not applying Turkish Financial Reporting Standards (in Turkish “Türkiye Finansal Raporlama Standartları”, “TFRS”).
Enterprises that is subject to independent audit and concerns the public interest, e.g., banks, insurance companies and publicly traded companies are required to apply TFRS, whereas the remaining enterprises subject to independent audit will apply BOBI FRS or TFRS, upon preference.
BOBI FRS was designed to ensure that these enterprises prepare financial statements that are true, meet the need for financial information, and are comparable within the Financial Reporting Standards for Large and Medium Enterprises.
New Thresholds as per the Amending Decree:
In terms of the implementation of BOBI FRS, enterprises that exceed the threshold values of at least two of the following three criteria, in two consecutive reporting periods are considered as large enterprises in the following reporting period. The threshold values which have been updated by the Amending Decree, are as follows:
- Companies with total assets equal to or above TRY 400,000,000(which was TRY 200,000,000 before the Amending Decree);
- Companies with annual net sales revenue of TRY 800,000,000 or more (which was TRY 400,000,000 or more before the Amending Decree).
The amendments will be effective for accounting periods beginning on or after 1 January 2024.
Our Law Firm remains at your disposal for any further clarifications you may need.
Copyright © 2024 Cailliau&Colakel Attorney Partnership, All rights reserved.