In its original form, the Turkish Commercial Code ("TCC") dated 13 January 2011 and numbered 6102 required all joint stock and limited liability companies to perform independent audits of their accounts and other financial records. This was a paradigm shift to the previous system where auditors were internal and arguably did little more than to rubber stamp corporate documents.
A series of relaxations followed the original enactment of the TCC in response to market feedback. One key relaxation was to independent audit requirements, giving authority to the Council of Ministers to determine materiality thresholds for the application of audit requirements.
Currently, only those institutions that exceed the materiality thresholds specified in the Council of Ministers Decision numbered 2012/4213 are subject to independent audit requirements under the TCC. While the TCC provides that audit requirements, presumably of a lighter nature, for companies outside of these requirements will be set out in secondary legislation, this has not yet been enacted.
The Independent Audit Regulation published in the Official Gazette dated 26 December 2012 and numbered 28509 (the "Regulation") sets out, among other things, eligibility and authorisation criteria and rules of conduct for both institutional and individual independent auditors.
The latest amendment to the Regulation, published in the Official Gazette dated 21 July 2017 and numbered 30130 (the "Amendment"), re-shapes the requirements for non-institutional "individual independent auditors", previously termed "auditors acting in their own name".
The Amendment introduces more robust eligibility criteria for individual independent auditors as to education, staffing and internal controls. Furthermore, a number of changes have been made to set specific time limits for the presentation of audit reports as well as the entry into of audit contract and more detailed provisions as to termination of contracts.
The transition provisions apply the new criteria for individual independent auditors to audits undertaken in 2019 and companies should seek to confirm that their individual independent auditors will be able to satisfy the new criteria before extending their current engagements.
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