New criteria for the companies to be subject to independent audit within the scope of the “Decision on the Identification of Companies Subject to Independent Audit” (Decision) has just been published in the Official Gazette on 30.11.2022. The amendments will enter into force on 1.1.2023. You may reach the Decision (in Turkish) via the link.
Companies Subject to Independent Audit in the Scope of New Criteria
1. Investment institutions, portfolio management companies, data storage ınstitutions, rating institutions, banks, insurance, reinsurance and pension companies, media service providers and other institutions stipulated in the Annex 1 shall be subject to independent audit without any conditions.
2. Companies whose capital market instruments are not traded on a stock exchange or other organised markets, but are deemed to be publicly traded within the scope of the Capital Markets Law, which can meet any two of the criteria listed below, the threshold values have been updated as follows. In order to be subject to independent audit, companies must exceed the criteria in two consecutive fiscal years. The criteria for these companies to be subject to independent audit have been updated as follows:
Current Threshold New Threshold
• Total Assets: TRY 15 million TRY 30 million
• Annual Net Sales Revenue: TRY 20 million TRY 40 million
• Number of Employees: 50 50
3. Companies that can meet any two of the criteria listed below, companies with at least 25% of their capital directly or indirectly owned by professional organisations with the status of public institutions, trade unions, associations, foundations, cooperatives and their supreme organisations, companies that publish daily newspapers nationwide and more, which are listed in Annex 2, are subject to independent audit:
Current Threshold New Threshold
• Total Assets: TRY 30 million TRY 60 million
• Annual Net Sales Revenue: TRY 40 million TRY 80 million
• Number of Employees: 125 100
► To be subject to independent audit, the companies must exceed the criteria in two consecutive fiscal years.
4. Companies that are not within the scope of the above-mentioned companies and that can meet any two of the criterias listed below, the criteria values have been updated as follows:
Current Threshold New Threshold
• Total Assets: TRY 35 million TRY 75 million
• Annual Net Sales Revenue: TRY 70 million TRY 150 million
• Number of Employees 175 150
► To be subject to independent audit, the companies must exceed the criteria in two consecutive fiscal years.
Excluded Companies
In addition to the companies listed in Decision No. 2018/11579 (the previous decision determining the criteria for being subject to independent audit), savings finance companies whose liquidation process is carried out by the liquidation commissions appointed by the Savings Deposit Insurance Fund (SDIF) are excluded from the scope of the Decision. Further companies that excluded from independent audit procedure can be reached from the Decision.
Conclusion
In the light of the such amendments, there are significant changes to the criteria for the companies to be subject to independent audit, especially in terms of monetary limits. In this context, it would be critical for the companies to evaluate their liabilities based on the new criteria on the independent audit.
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Authors: Bilge Derinbay, Hande Ülker Pehlivan
Contact: bilge.derinbay@nsn-law.com