New Criteria Established for Companies Subject to Independent Audits

Pursuant to Article 397 of the Turkish Commercial Code numbered 6102 (“TCC”), companies subject to independent audit within the scope of TCC are determined by the President. In this context, the Presidential Decree No. 8313, published in the Official Gazette No. 32512 dated 6 April 2024 (“Amendment Decree”), introduces changes to the Presidential Decree No. 6434, published in the Official Gazette No. 32029 dated 30 November 2022, on the Determination of Companies Subject to Independent Audit (“Decree”). These changes, effective from the date of publication of the Amendment Decree, will be applicable to fiscal periods beginning on or after 1 January 2024.

The main changes introduced by the Amending Decree are categorized under the following three main headings:

1.      In terms of general audit thresholds:

Companies that are not included in the updated lists (I) and (II) of the Amendment Decree and do not have any specific characteristics, but are subject to general audit thresholds, will be subject to independent audit in the 2024 fiscal period if they exceed the threshold values of at least two of the following three criteria, either individually or together with their subsidiaries and affiliates, in consecutive 2022 and 2023 fiscal periods. Accordingly, the comparative table regarding the changes introduced by the Amendment Decree is as follows:

Consequently, the thresholds for total assets and annual net sales revenue have been increased, while no changes have been made regarding the number of employees.

2.      In respect to the companies listed in Annex (I) of the Decree:

Companies listed in Annex (I) of the Decree are subject to independent audit without any threshold values. The Amendment Decree has included the following companies within the scope of this list:

a.      Companies subject to the regulation and supervision of the Radio and Television Supreme Council under Law on the Establishment and Broadcasting Services of Radio and Television numbered 6112, including (i) media service provider organizations that hold at least two of the following licenses: the right to broadcast national television via terrestrial networks, satellite television broadcast license, or cable television broadcast license covering multiple provinces, and (ii) media service provider organizations that hold the right to provide on-demand broadcasting over the internet,

b.     Companies obtaining a license, certificate, or authorization document from the Energy Market Regulatory Authority and operating under the regulations of this Authority, which impose independent audit obligations according to these regulations,

c.      Payment institutions and electronic money institutions subject to the regulation and supervision of the Central Bank of the Republic of Turkey under Law on Payment and Securities Settlement Systems, Payment Services, and Electronic Money Institutions numbered 6493,

d.     State economic enterprises and their subsidiaries operating within the scope of Decree Law on Public Economic Enterprises numbered 233.

3.      In terms of the companies listed in Annex (II) of the Decree:

The audit criteria for companies listed in Annex (II) of the Decree are determined as “Total assets amounting to TRY 60 million”, “Annual net sales revenue of TRY 80 million”, and “Number of employees: 100.” With the Amendment Decree, while there are no changes to these criteria, the (II) numbered list has been modified to include the following companies:

a.      Companies regulated and supervised by the Information Technologies and Communication Authority under the Electronic Signature Law numbered 5070, dated 15/1/2004, the Electronic Communications Law numbered 5809 dated 5/11/2008, the Postal Services Law numbered 6475 dated 9/5/2013, and Article 1525 of TCC, excluding call center companies.

b.     Companies under the supervision and management of the Savings Deposit Insurance Fund (TMSF) within the scope of the abolished Banks Law numbered 4389 and Law numbered 5411, excluding subsidiaries and companies that are inactive, temporarily suspended, or canceled (including those for which necessary changes to the articles of association and similar procedural transactions have not yet been completed).

c.      Companies with at least 50% of their capital owned by municipalities.

The companies belonging to (i) professional organizations with the status of public institutions, unions, associations, foundations, cooperatives, and their parent organizations, as well as (ii) companies publishing newspapers nationwide on a daily basis, which were removed from Annex (II) of the Decree, are still subject to independent audit. In other words, the mentioned (i) and (ii) companies have only been excluded from the scope of Annex (II) of the Decree.

Please see this link or the full text of the Amendment Communiqué. (only available in Turkish)