Turkey: Scope Of Independent Audit Is Widened By The Recent Decree Of The Council Of Ministers

Last Updated: 28 June 2018
Article by Hande Özgen
Most Popular Article in Turkey, July 2018

Pursuant to Article 397 of the Turkish Commercial Code numbered 6102, the Council of Ministers designates companies that shall be subject to compulsory independent audit. In that regard, the Council of Ministers has abolished the former Decree of Council of Ministers numbered 2012/4213 which has been amended time to time, through the Decree of Council of Ministers numbered 2018/11597 published in the Official Gazette dated 26 May 2016 and numbered 30432.

Independent audit was formerly foreseen only in the event that some thresholds in relation to total amount of assets, net sales revenue, and number of employees are exceeded. These thresholds are reduced by this Decree, and some companies have been imposed the obligation of independent audit due to their scope of business and their shareholders being public institutions, in such case no thresholds are applicable. According to this Decree, the listed companies upon which independent audit has been imposed irrespective of any criterion, and companies exceeding at least two of foreseen criteria in two consecutive fiscal years have become under the obligation of independent audit as of the following fiscal year. Additionally, the thresholds provided by the former decrees have been reduced, and the obligation of independent audit is imputed upon some companies without any threshold; for this reason, the number of companies expected to comply with this requirement has increased.


1. Regardless of their nature, and scope of business, the companies exceeding at least two of the following thresholds shall carry out the compulsory independent audit:

i) total assets of 35 million Turkish Liras,

ii) annual net sales revenue of 70 million Turkish Liras, and

iii) employment of 175 persons.

2. The following thresholds of compulsory audit apply to companies whose capital market instruments are not transacted in stock markets, or in other organised markets; but which are deemed publicly held as per the Capital Markets Code, again with the rule of exceeding at least two thereof:

i) total assets of 15 million Turkish Liras,

ii) annual net sales revenue of 20 million Turkish Liras, and

iii) employment of 50 persons.

3. For the companies:

a) at least a quarter of whose capital directly or indirectly belongs to public professional organisations, labour unions, associations, foundations, cooperatives and their superior organisations;

b) which publish daily newspapers countrywide;

c) which are subject to regulation and supervision of Information Technology and Communication Authority as per the Electronic Signature Act, Electronic Communication Act, Post Services Act, and article 1525 of the Turkish Commercial Code, with an exception of companies carrying out call centre services;

d) which have obtained licence, certificate, authorisation from the Energy Market Regulatory Authority, and operate under regulation thereof;

e) whose supervision and management have been acquired by the Savings Deposit Insurance Fund, or its affiliates, including, inter alia, companies and affiliates that required amendments to their articles of association, and similar procedures are yet to be carried out; but excluding those whose operations are ceased, suspended, or cancelled;

f) public economic enterprises and their affiliates, or

g) at least a half of whose capital are possessed by municipalities; the thresholds were determined as follows:

i) total assets of 30 million Turkish Liras,

ii) annual net sales revenue of 40 million Turkish Liras, and

iii) employment of 125 persons.

And again, the aforementioned companies transcending at least two of these limits will be expected to comply with the independent audit requirement.

Fulfilment of these criteria is based upon financial statements of the company concerned, and average number of employees for two consecutive years. To determine whether these thresholds are exceeded or not, companies are taken into consideration with their affiliates and subsidiaries.


Companies recited below have become under the burden of audit regardless of any further criterion:

a) Among corporations under regulation and supervision of Capital Markets Board pursuant to the Code numbered 6362, i) investment enterprises, ii) collective investment enterprises, iii) portfolio management firms, iv) hypothecation financing establishments, v) asset leasing firms, vi) central clearing institutions, vii) central securities depositories, ix) rating bureaus, x) valuation establishments, xi) joint stock companies whose capital market instruments are traded, or which hold prospectus, or issuance approval endorsed by the Capital Markets Board with a validity term to enable their capital market instruments to be traded, xii) without being traded in a stock market, or other organised markets; joint stock companies issuing capital market instruments other than shares without public offering until the end of the fiscal year that the instruments are taken in pledge, or holding prospectus, or issuance approval endorsed by the Capital Markets Board for these purposes;

b) Among corporations under regulation and supervision of the Banking Regulation and Supervision Authority, i) banks, ii) rating bureaus, iii) financial holding companies, iv) financial leasing firms, v) factoring companies, vi) financing companies, vii) asset management companies, viii) companies holding qualified shares of financial holding companies within the meaning defined by the Code numbered 5411;

c) Insurance, reinsurance, and pension companies operating within the framework of the Insurance Act, and the Individual Pension Savings and Investment System Act;

d) Establishments, precious metal intermediaries, and companies carrying out precious metal production, or trade that are allowed to operate in the markets of the Stock Exchange of Istanbul.

e) Licenced warehouses established in accordance with the Agricultural Products Licenced Warehousing Act, and public warehouses founded in pursuant of the Public Warehouses Act.

f) Media services providers having obtained at least one of right to nationwide television broadcasting in terrestrial environment, licence for satellite television broadcasting, or licence for cable television broadcasting valid for more than one province.


It should be noted for companies under the burden of independent audit that unaudited financial statements and annual reports of board of directors shall be deemed as not prepared pursuant to article 397 of the Turkish Commercial Code, which poses a severe sanction upon such companies. The relevant decree of the Council of Ministers has become in force as being effective from the date of 01 January 2018.

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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