Turkey: Amendments To The Criteria For Determining The Companies Subject To Independent Audit

A. INTRODUCTION

The Decision on Determination of Companies Subject to Independent Audit numbered 6436 ("Decision"), which regulates the procedures and principles regarding the companies subject to audit under article 398 of the Turkish Commercial Code, is published in the Official Gazette dated November 30, 2022 and numbered 32029. The companies subject to audit, the thresholds for being subject to independent audit, the companies excluded from the scope of independent audit and the procedures and principles regarding independent audit are redetermined with the Decision. The Decision will replace the Decision on Determination of Companies Subject to Independent Audit dated May 26, 2018 and numbered 2018/1597 ("Former Decision") and will enter into force as of January 1, 2023.

B. COMPANIES SUBJECT TO INDEPENDENT AUDIT

The Decision introduces some amendments to the criteria for determining the companies subject to independent audit. With the Decision, the companies subject to independent audit pursuant to the provisions of the TCC and the Decree Law on the Organization and Duties of the Public Oversight, Accounting and Auditing Standards Authority numbered 660 are regulated as follows:

1. The companies under List (I) annexed to the Decision are subject to independent audit regardless of any criteria. Unlike the companies under List (I) of the Former Decision, savings finance companies, companies holding qualified shares in financial holding companies and banks as defined in the Banking Law numbered 5411 are also included in the companies subject to independent audit.
2. For companies whose capital market instruments are not traded in the stock exchange or in other organized markets but are considered publicly traded under the Capital Markets Law, the thresholds in the Former Decision are amended as follows:

3. For the companies under List (II) annexed to the Decision, the thresholds in the Former Decision are amended as follows:

4. For companies other than those mentioned above, the thresholds in the Former Decision are amended as follows:

The requirement for companies to exceed at least two of the relevant thresholds in paragraphs 2, 3 and 4 above in two consecutive fiscal periods is preserved in the Decision.

C. COMPANIES EXCLUDED FROM THE SCOPE OF INDEPENDENT AUDIT

Following the determination of the companies subject to independent audit, the Decision also includes the companies excluded from the scope. Unlike the Former Decision, the savings finance companies, whose liquidation was decided by the Banking Regulation and Supervision Agency within the scope of the fourth paragraph of the provisional article 7 of the Financial Leasing, Factoring, Financing and Savings Finance Companies Law numbered 6361 and dated 21/11/2012 and the liquidation process is carried out by the liquidation commissions appointed by the Savings Deposit Insurance Fund, are also excluded from the scope of independent audit with the Decision.

D. CONCLUSION

With the Decision, companies will be required to take into consideration the new thresholds while assessing whether they are subject to independent audit or not and will be required to conduct their independent auditor appointment procedures accordingly.

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