An independent audit is the examination of the financial statements and other financial information of the companies. This process is applied by the independent auditors. They are authorized to access the necessary information about the appropriateness and accuracy of the financial statements. As a result of this review, the audit team can give a positive opinion, conditional opinion or negative opinion about the appropriateness and accuracy of the company’s financial statements. The independent audit may be carried out by all companies in order to see the accuracy of the financial statements or to present information for foreigners.

These foreigners are someone outside of the company (buyers, banks, sellers etc.). However, there are some situations whent independent audit is mandatory. The financial data that make a company obligated for independent audit varies according to the presence of companies in the stock market or the quality. The boundaries that the state mentioned can be found here. According to this sentence there are four different boundaries for four types of companies.

• Companies not listed in the lists (Limited Liability Company, Joint Stock Company, Collective and Limited Liability Companies, Personal Enterprises).
• List I.
• List II.
• Companies that are not traded on the stock exchange but are publicly listed under the Capital Markets Board  (CMB).

You can learn whether independent audit is mandatory for your company or not from here which is a service of the state.

A.Independent Auditing for Non-Specified Companies in Lists

Companies and businesses within this scope are companies and businesses currently traded for commercial purposes.(For example, A Construction Inc., B. Export Import Trade Co. , C Sports Club Inc.). The majority of companies in this area are the most commonly known company types. If there are no public affiliates or if a company is not a bank or a valuation company, the current ratings for a company are as follows:

-Companies that exceed the threshold values ​​of at least two of the following criteria in two consecutive accounting periods (eg. Companies that exceeds more than two of the thresholds in 2017 and 2018 are subject to independent audit for year 2018):

• Total assets: 30 million Turkish Liras,
• Annual net sales revenue: 40 million Turkish Liras,
• Number of employees: 125

B. List No: I

According to the decision, it was determined separately by the legislator in terms of the nature of the related companies. The institutions listed on the list I, referred to in the decision, have been determined to be subject to independent audit without having been granted.

• Investment Organizations ,
• Collective Investment Organizations ,
• Portfolio Management Organizations ,
• Mortgage Financing Organizations ,
• Asset Rental Organizations,
• Central Trade Organizations,
• Central Storing Organizations,
• Rating Agencies,
• Valuation Organizations,
• Banks,
• Leasing Firms,
• Factoring Firms,
• Financial Holdings,
• Media Organizations that legally have right to broadcast.
• Insurance Companies.

C. List No: II

Listede belirtilen şirketler için bağımsız

Companies that exceed the threshold values ​​of at least two of the following criteria in two consecutive accounting periods (eg. Companies that exceeds more than two of the thresholds in 2017 and 2018 are subject to independent audit for year 2018):

• Total assets: 30 million Turkish Liras,
• Annual net sales revenue: 40 million Turkish Liras,
• Number of employees: 125

The companies indicated in the list are:

• Companies publishing daily newspapers,
• Companies whose capital’s at least 25% share belongs to public affairs,
• Companies whose subject of activity is about energy (distribution, production of electricity etc.)
• The firm’s whose capital’s at least 50% share belongs to municipalities.

D. Unlisted in Stock Exchange But Public Companies

Companies that exceed the threshold values ​​of at least two of the following criteria in two consecutive accounting periods (eg. Companies that exceeds more than two of the thresholds in 2017 and 2018 are subject to independent audit for year 2018):

• Total assets: 15 million Turkish Liras,
• Annual net sales revenue: 20 million Turkish Liras,
• Number of employees: 50

Consequences of Not Audit Although It is Mandatory

If a company is subject to an independent audit and has not been audited for the relevant period (if the auditor is selected and not published on the website) sanctions are imposed on the company in terms of material and other aspects. All of the following penal sanctions apply to the responsible company:

• The fine is applied according to the company’s balance sheet size. Amount varies from 20 TL to 100 TL per day. In this case, the company does not fulfill the legal requirements, the company is fined a minimum of TL 7.240 and the maximum amount of TL 36500. (TCK MD. 52 / 2-3. Click here for the relevant law.)
• If a company does not have a independent audit report, the trust level of it seems low by the third party companies. They could reconsider to invest in the company because it is so risky. If the company’s financial tables are applied audit standards, it means these financial tables are more reflective for true values.
• The responsible company cannot issue an annual report in accordance with Article 397/2 of the Turkish Commercial Code (TCC). This causes other conditions to occur (mentioned below).
• The responsible company cannot increase or decrease the capital.
• The responsible company cannot distribute profit in legal aspect.
• The responsible company cannot make their financial statements approve to the CPA or Accountants.
• The Company cannot approve the annual report. If it is a corporation (A.Ş. or joint stock company), the desicions made by the Board are deemed null and cannot be accepted in the official movements. Limited Company; The decisions taken by the Board of Directors are also null and cannot be accepted.
• Financial statements cannot be certified.

Güven Certified Financial Consultancy and Financial Consultancy, which challenges all the events in the pursuit of difference and vision, also helps the business partners in all relevant documents, as well as in opportunities. You can learn all the details about the subject from our head office or branch offices.