New thresholds triggering independent audit requirements for Turkish companies became applicable as of 1 January 2023. Below is a general overview of the applicable criteria.
A. Companies Always Subject to Independent Audit
The following types of companies, among others, must at all times engage an independent auditor on an ongoing basis:
– Publicly traded companies (including companies whose listing applications have been approved)
– Private companies with outstanding securities (including issuers whose applications have been approved)
– Subject to limited exceptions, companies subject to the regulation of the Turkish Capital Markets Board
– Subject to limited exceptions, companies subject to the regulation of the Turkish Banking Regulation and Supervision Agency
– Insurance companies
– Licensed television networks
B. Companies Subject to Independent Audit Depending on Certain Criteria
1. Companies that are not traded on an exchange but are deemed to be public companies by statute, if the company exceeds at least two of the following three thresholds for two consecutive financial years:
– Total Assets: TRY 30 million
– Net Sales: TRY 40 million
– Number of Employees: 50
2. Companies that are at least 25% owned by professional organizations, unions, associations, foundations, cooperatives deemed to be public institutions; national daily newspapers; certain companies subject to the regulation of the Turkish Information and Communication Technologies Authority; certain companies subject to the regulation of the Turkish Energy Market Regulatory Authority; certain companies owned by the Savings Deposit Insurance Fund of Turkey; and certain state-owned enterprises and municipal enterprises, if the company exceeds at least two of the following three thresholds for two consecutive financial years:
– Total Assets: TRY 60 million
– Net Sales: TRY 80 million
– Number of Employees: 100
3. All other companies (i.e., companies other than the ones described under (1) and (2) above), if the company exceeds at least two of the following three thresholds for two consecutive financial years:
– Total Assets: TRY 75 million
– Net Sales: TRY 150 million
– Number of Employees: 150
C. Exemptions
Certain companies that are at least %50 state-owned, certain state-owned enterprises subject to privatization and certain companies in the process of liquidation by the Savings Deposit Insurance Fund of Turkey, among others, are exempt from independent audit requirements.
A company subject to independent audit by virtue of triggering the thresholds described under (B) above will become exempt if (i) it falls below at least two of the three thresholds for two consecutive financial years or (ii) it falls 20% or more below at least two of the three thresholds for one financial year. Such exemption begins in the following financial year.
Other exceptions or exemptions may be applicable depending on the specific entity.
By Esin Camlibel, Partner and Naz Esen, Associate, Turunc