Turkey: The Obligation of Independent Auditing of Corporations under the New Turkish Commercial Code

Last Updated: 16 April 2011
Article by Hale Kutlay

The New Turkish Commercial Code ("New Code") has been enacted and will enter into force in July 2012. One of the major changes brought by the New Code regards mandatory independent audits of corporations. Pursuant to the current Turkish Commercial Code ("TCC"), a corporation has to contain a general board, a board of directors and a board of auditors. Under the New Code, a board of auditors is no longer considered a mandatory body of a corporation; instead mandatory audits by independent firms are established. An auditor also being a shareholder of the audited corporation is prohibited under the New Code; in other words, auditors must be from outside the corporation. Pursuant to the New Code, such an independent auditor has to be a certified public accountant or an independent financial advisor.

The current TCC does not mention the applicable standards of auditing, whereas the New Code states that auditing activities shall be done according to the Turkish Accounting Standards complying with the International Financial Reporting Standards. Today, with the progress of the international financial market and increased economic relationships between countries, corporations have a greater need to have transparent and illuminating audit reports and therefore, the independent auditing obligation has been enacted to satisfy that need.

Auditing of Corporations under the Current TCC

Corporations consist of three mandatory bodies, namely; the general assembly, board of directors and board of auditors. The current TCC divides the auditing obligation of corporations into two, internal and external audits. The New Code, however, has abolished the obligation of internal auditing and made external auditing mandatory.

Under the current TCC, auditors do not have to have specific qualifications. In practice, most of the time auditors are selected by the majority of the shareholders (in General Assemblies) from among themselves, without regard to their qualifications. Auditors are obliged to conduct audit activities within the corporation and protect the financial rights of the shareholders; however, they're not obligated to be from outside of the company under current legislation. Therefore auditors are not expected to be independent and impartial, since they are from within of the company.

Auditors do not have to be real persons; they can be legal persons as well, since there are no such restrictions under the TCC. The New Code attempts to meet the need for professional auditing. Therefore, auditors shall be professionals in their fields.

The duties of auditors are specified both under the TCC and the New Code. Pursuant to the TCC, auditors' duties can be considered in three (3) groups, consisting of monitoring/supervision, management, and representation. The New Code does not mention some of the duties of auditors listed under the current TCC, such as inspecting the cash desk of the company, supervising the official buyers, calling general assembly meetings, being present at meetings of the board of directors and general assemblies, examining and analyzing the problems of shareholders, etc.

External Audit of Corporations

An external audit of a corporation is carried out by persons or institutions from outside of the corporation. An internal audit aims to protect the interests of the shareholders, whereas an external audit aims to protect not only the existing shareholders', but also prospective shareholders' interests and the economic order of the public.

External auditing is not mandatory under current legislation. External auditing is done by Ministry of Industry and Commerce auditors according to the existing Bylaw on the Auditing of Corporations, to verify the accuracy and correctness of the financial statements. The New Code mandates an external audit be done in accordance with the Turkish Accounting Standards complying with the International Financial Reporting Standards and only by a certified public accountant or an independent financial advisor. Furthermore, the scope of external audits has been extended in the New Code. Auditing of financial reports, including year-end and interim financial statements, and auditing of the annual report of the board of directors are considered within the scope of external audits under the New Code.

Auditing under the New Code

As mentioned above, a board of auditors shall no longer be a mandatory body of a corporation under the New Code. Corporations may still form a voluntary internal auditing body. The New Code regulates the term "auditor" in more detail, giving auditors and the profession of auditing more importance. The main reason for removing the mandatory internal auditing body from corporations is that it has not been functioning properly, creating a need for independent audits by outside organizations/auditors.

Under the New Code, independent auditing includes not only a company's accounts and balance sheets but also all financial statements, accounting records and consolidated accounts of conglomerates. While composing financial statements, the standards set by the Turkish Accounting Standards Board are to be taken as a minimum. Moreover, the technical details and ethical rules set by the International Auditing Standards shall be followed as a reference. Auditing activities shall be conducted within the scope of institutional management and transparency principles and audit reports shall be explicit, clear, and comprehensible, and shall serve to inform the shareholders.

Autonomy of the Auditors

Auditors shall be chosen by the general assembly and, pursuant to the New Code, auditors shall have no relationship with the audited corporation and their duties shall not be transferred wholly or partially to third persons. Pursuant to Article 399 of the New Code, there has to be a court decision and a valid reason, such as a violation of impartiality, to discharge an auditor.

The conditions to be an auditor are specified in detail under Article 400 of the New Code. Unlike the current TCC, under the New Code, neither people working in a company nor its shareholders may be auditors of that company. Pursuant to Article 400/2 of the New Code, the same auditor may audit a company at most for 7 years; after this period, the auditor shall be discharged from the company. The same persons auditing the same company over long years may have difficulty maintaining objectivity and independence.

Some of the duties of auditors stated in the current TCC are not stated under the New Code, such as calling general assembly meetings and being present at meetings of the general assembly and board of directors, as mentioned above. On the other hand, the obligation of auditors to be Turkish citizens is not mentioned in the New Code. Some conditions, such as the bankruptcy or conviction of an auditor, automatically terminate his/her duties under the current TCC, whereas this rule is not accepted under the New Code. Also, after how many years a member of the board of directors shall become an auditor is not stated in the New Code.


With the New Code, new regulations are applied to corporations to meet modern social and economic needs. Undoubtedly, it is economically advantageous for corporations to have impartial and objective auditors and an auditing system that is in conformity with certain rules and standards. In this way, the auditing of corporations shall become more functional and specialized.


The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.