Turkey: Independent Audit Of Joint Stock Companies According To The TCC No. 6102


As is known, the old Turkish Commercial Code No. 6762 set forth an internal auditing system in which an auditor would be appointed as an internal organ of a joint stock company and the company would be subject to "internal audit". Within this context, the annual report of the internal auditor was one of the general assembly documents submitted to the examination of the Ministry of Customs and Trade ("Ministry") representative and the shareholders of the company during the ordinary general assembly meeting held each year. With the entry into force of the Turkish Commercial Code No. 6102 ("TCC")1, a new system was adopted whereby joint stock companies possessing certain qualifications determined by the Ministry are audited by independent firms and institutions.

Art. 397 (4) of the TCC, by stating "companies subject to independent audit shall be determined by the Council of Ministers", indicates that not all joint stock companies will be subject to independent audit.

Following the entry into force of the TCC, the Council of Ministers enacted the Resolution on the Determination of Companies Subject to Independent Audit ("Resolution")2 .

In accordance with the Resolution, companies subject to independent audit shall be joint stock companies that are listed in the annex of the Resolution which are particularly associated with the financing or those fulfilling two of the three requirements below individually or with their affiliates and subsidiaries;

a) Assets totaling or above one hundred fifty million Turkish Liras.

b) Annual net sales revenue totaling or above two hundred million Turkish Liras.

c) Number of employees totaling or above five hundred people.

Pursuant to Article 4 of the Resolution, if a company fulfills at least two of these criteria for two consecutive fiscal years, it shall be subject to independent auditing as of the following fiscal year.

If a company does not fulfill at least two of these criteria for two consecutive fiscal years or if it is under the limit by a percentage of twenty or more for at least two of these criteria for one fiscal year, then it shall be excluded from independent audit.

The principles of auditing for joint stock companies subject to audit are determined by the Independent Audit Regulation3 ("Audit Regulation").

In addition, auditing provisions may also be found in the Regulation on the Principles and Procedures of the General Assembly Meetings of Joint-Stock Companies and the Ministry of Customs and Trade Representatives Attending These Meetings4 ("GA Regulation"). Pursuant to the GA Regulation, the presence of the auditor is required at the general assembly meetings of the companies subject to audit.

The manner in which the audit shall be conducted is regulated under the Decree Having the Force of Law on the Organization and Duties of Public Oversight, Accounting and Auditing Standards Authority5 ("Decree").


Only persons authorized by the Public Oversight, Accounting and Auditing Standards Authority and/or companies whose shareholders are such persons, and who hold the title of certified public accountant or independent financial adviser (YMM or SMMM) for the purpose of conducting independent audit, may be auditors.

In principle, auditors must be elected by the general assembly of the company until 31.03.2013 pursuant to Provisional Article 6 (2) of the TCC. The term of duty of internal auditors shall end automatically upon such election and at the latest on 31.03.2013.

In accordance with Art. 399/1 of the TCC, the board of directors shall have the appointed auditor registered with the trade registry and announced in the Turkish Trade Registry Gazette, as well as on the website of the company without delay.

Except tax consulting and tax auditing, an auditor may not provide consulting or other services to a company he audits. Nor can the auditor provide such services through a subsidiary.

The auditor may be released from his duty only if another auditor is appointed. Other than this, the auditor may be released from duty only by way of a court decision.

Moreover, if the certified public accountant, the independent financial adviser and/or the auditing company or one of its shareholders or persons working with its shareholders or person(s) with whom the aforementioned persons are working together, are a shareholder, director or employee in the company to be audited; a director, shareholder or one of blood and in-law relatives up to the third degree of the statutory representative or the director of the legal person connected with the company to be audited; has been active in or contributed to the bookkeeping or organizing of the financial statements of the company to be audited or bear similar characteristics which may prevent the auditor from realizing his duty independently as determined by the Auditing Regulation or if the auditor is employed by an auditor with such characteristics, he shall not be allowed to audit.

Similarly, an auditor appointed for seven years within ten years for the same company may not be appointed again before three years. For independent audit firms, the term spent as auditor under the old legislation shall be taken into account in the calculation of this period. In our opinion, the term spent as auditor shall be included in the calculation of this period for independent audit firms appointed voluntarily by companies as well.

Audit contract

The auditing contract concluded in writing between the audit firm or the auditor and the company must bear some minimum qualifications as per the Audit Regulation. The general assembly resolution constituting the basis of the auditing contract, the purpose, scope and term and, if any, the special reasons of the audit, the subject of the audit and its criteria, the responsibilities of the parties, the audit fee, the commencement and termination date of the audit and the delivery date of the report, the professional liability insurance may be stated as examples of these minimum qualifications.

The contract may not foresee the provision of any service other than audit; the payment of the audit fee may not be subject to any condition other than the provision of audit services.

The audit contract shall be concluded for the fiscal year in which the audit firm or the auditor has been elected in accordance with the TCC.

Scope of the Audit

The financial statements of companies, the consistency of the financial information in the annual activity report of the board of directors and the financial statements, as well as whether they are accurate, shall all be audited within the scope of independent audit.

Whether the financial statements and the activity report of the board of directors has been audited or not, and if so, the opinion of the auditor must be indicated in the title of the financial statement and the activity report.

The financial statements shall be audited as per Turkish Auditing Standards in compliance with International Auditing Standards.

The non-audited financial statements and annual activity report of the board of directors shall be deemed invalid if the company is subject to audit.

If the financial statements and the annual activity report of the board of directors have been amended after the submission of the audit report and if these amendments may affect the audit reports, the financial statements and the annual activity report of the board of directors shall be audited again. The re-audit and its result shall be explained separately in the report.

If there is a dispute about the report between the company and the auditor, this dispute shall be resolved by the commercial court of first instance located at the place of the headquarters of the company upon the request of the board of directors or the auditor.


The independent auditing system aims to realize auditing in compliance with the International Accounting Standards and the transparency in the accounts of joint stock companies.

The regulation that only joint stock companies possessing certain characteristics and that are over a certain size shall be subject to independent audit increased the functionality of the system.

Accordingly, the duty of the internal auditors of the joint stock companies subject to independent auditing shall automatically end on 31.03.2013 and the companies must elect an independent auditor as of this date.

The independent auditor shall be elected by the general assembly of the company (TCC Art. 399/1, Art. 408/2) and, as explained above, shall be appointed with the signing of an independent auditing contract.


1 Turkish Commercial Code numbered 6102 has been published in the Official Gazette dated 14.02.2011 and numbered 27846.

2 Resolution on the Determination of the Companies Subject to Independent Auditing has been published in the Official Gazette dated 23.01.2013 and numbered 28537.

3 The Independent Auditing Regulation was published in the Official Gazette dated 26.12.2012 and numbered 28509.

4 The Regulation on the Principles and Procedures of the General Assembly Meetings of Joint-Stock Companies and the Ministry of Customs and Trade Representatives Attending These Meetings Anonim was published in the Official Gazette dated 28.11.2012 and numbered.

5 The Decree Having the Force of Law on the Organization and Duties of Public Oversight, Accounting and Auditing Standards Authority was published in the Official Gazette dated 02.11.2011 and numbered 28103.

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.

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