EXTENDED SCOPE OF INDEPENDENT AUDIT
The Article 397 of the Turkish Commercial Code (in Turkish “Türk Ticaret Kanunu”) provides that the companies subject to independent audit shall be determined by the Council of Ministers. In other words, not companies shall be subject to independent audit.
Accordingly, the Council of Ministers enacted the Decree numbered 2012/4213 on Determination of the Companies Subject to Independent Audit (in Turkish “Bağımsız Denetime Tabi Olacak Şirketlerin Belirlenmesine Dair Karar”, hereinafter referred to as the “Decree”), which was published in the Official Gazette numbered 28537 on 23 January 2013, with effect as of 1 January 2013. The said Decree has been amended significantly by another decree numbered 2014/5973 (hereinafter referred to as the “Amendment Decree”), which was published in the Official Gazette numbered 28941 on 14 March 2014. The Amendment Decree became effective on 1 January 2014.
Independent audit aims to realize auditing in accordance with the International Accounting Standards and to ensure the transparency of the accounts of companies. The Council of Ministers has extended the scope of the companies subject to independent audit by the amendments made by the above- mentioned Amendment Decree. Below you may find the significant changes brought by the Amendment Decree.
Companies Subject to Independent Audit
As per the Article 3 of the Decree (as amended), the companies falling into the scope of the Annex I thereof are subject to independent audit.
Additionally, the companies who, solely or together with the affiliated companies and subsidiaries, meet at least two of the three following measures are subject to independent audit:
- Companies with total assets equal to or above TRY 75,000,000.- (which was “equal to or above TRY 150,000,000.-” before the Amendment Decree)
- Companies with annual net revenues equal to or above TRY 150,000,000.- (which was “equal to or above TRY 200,000,000.-” before the Amendment Decree)
- Companies with total employees equal to or above 250 employees (which was “equal to or above 500 employees” before the Amendment Decree).
Furthermore, the companies falling into the scope of the Annex II of the Decree (as amended) solely or together with their affiliated companies and subsidiaries, taking into account the limitations stated thereunder, shall also be subject to independent audit.
The Article 4 of the Decree (as amended) provides that companies exceeding the limits of two of these three measures for two consecutive fiscal years shall be subject to independent audit, starting from the following fiscal year.
The companies subject to independent audit shall be excluded from the scope of such audit, if (i) they remain below the limits of at least two of the said measures for two consecutive fiscal years, or (ii) they remain 20% or more below the limits of two of these three measures for one fiscal year starting from the following fiscal year.
In accordance with the Paragraph 2 of the Article 4 Decree (as amended), in order to determine whether the measures designated in the said Decree (as amended) have been exceeded or not; (i) the financial statements of the previous two fiscal years, with regard to the total amount of assets and net revenue of the company, and (ii) the average number of employees for the previous two fiscal years, with regard to the number of employees, shall be taken into account.
Our Firm remains at your complete disposal for any further clarifications you may require with regard to the extended scope of independent audit and the obligations of the companies in this scope.