The Decision on Determination of Companies Subject to Independent Audit (“Decision“), which sets forth the new procedures and principles regarding the determination of companies subject to independent audit under Article 397 of the Turkish Commercial Code numbered 6102 (TCC), was published in the Official Gazette dated 30 November 2022. The Decision will enter into force on 1 January 2023 by replacing the Council of Ministers’ Decision with the same name and subject published in the Official Gazette on 26 May 2018 (“Former Decision“).
The Decision introduces a number of amendments to the procedures and principles regarding the determination of companies subject to independent audit.
Pursuant to the Decision, the following companies are deemed to be subject to independent audit in accordance with 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:
- All companies indicated in List I annexed to the Decision are subject to independent audit regardless of any criteria. In this context, companies holding qualified shares in banks as defined in Law No. 5411 have been also added to List I, as specified in the Former Decision, in addition to financial holding companies. In addition, savings finance companies have also been included in the list.
- The monetary thresholds for determination of the companies subject to independent audit have been increased compared to the values in the Former Decision as follows:
|Company type||Former thresholds||New thresholds|
|Companies whose capital market instruments are not traded on a stock exchange or other organized markets but are considered publicly traded under the Capital Markets Law|
|The companies listed in List II annexed to the Decision|
|Companies other than those listed above|
The main principle of exceeding at least two of the new thresholds specified in the table above in two consecutive fiscal periods to be subject to independent audit remains in effect.
Pursuant to the Decision, if a savings finance company’s liquidation was decided by the Banking Regulation and Supervision Agency within the scope of the fourth paragraph of the provisional Article 7 of the Law on Financial Leasing, Factoring, Financing and Savings Finance Companies, and the liquidation process is carried out by the liquidation commissions appointed by the Savings Deposit Insurance Fund, such savings finance companies are also included among the companies excluded from the scope of independent audit.
The Decision will enter into force on 1 January 2023, and accordingly, it is crucial to determine whether companies are subject to independent audit by performing an assessment based on the new thresholds and to complete the procedures for the appointment of independent auditors for those companies that are subject to independent audit.