AMENDMENTS INTRODUCED BY THE DECREE ON THE DETERMINATION OF THE COMPANIES SUBJECT TO INDEPENDENT AUDIT PUBLISHED IN THE OFFICIAL GAZETTE DATED 30.11.2022 AND NUMBERED 32029

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6 December 2022

The Presidential Decree No. 6434 on the Determination of the Companies Subject to Independent Audit (“Decree”) published in the Official Gazette dated 30.11.2022 and numbered 32029. With this Decree, the criteria for the companies to be subject to independent audit has been re- determined and the thresholds relating to the companies to be subject to audit have been changed.

The significant amendments introduced by the Decree are briefly summarized below.

Amendments to the List (I) annexed to the Decree

The companies specified in Article 3 of the Decree are subject to independent audit within the framework of the provisions of the Turkish Commercial Code No. 6102 ("TCC") and the Statutory Decree No. 660 on the Organization and Duties of the Public Oversight, Accounting and Auditing Standards Authority.
Accordingly, the companies listed in the list (I) annexed to the Decree are subject to independent audit regardless of any criteria in terms of total assets, annual net sales revenue and number of employees. With the Decree, savings finance companies were added to the list (I) and to the companies subject to the regulation and audit of the Banking Regulation and Supervision Authority in accordance with the Banking Law No. 5411.

Amendments to the Criteria

In addition to the companies listed in the list (I) annexed to the Decree, other companies that exceed the threshold values of at least two of the three criteria in paragraph (b) of Article 3 of the Decree in two financial years in a row are also subject to independent audit. The threshold values of these criteria have been amended via the Decree.

• Pursuant to subparagraph (1) of paragraph (b) of Article 3 of the Decree, relevant criteria required for companies to be subject to independent audit whose capital market instruments are not traded in the stock exchange or other organized markets but are considered as publicly held companies within the scope of Capital Markets Law No. 6362; the threshold value of the total assets has been increased from 15 million Turkish Liras to 30 Million Turkish Liras, the threshold value of annual net sales revenue has been increased from 20 Million Turkish Liras to 40 Million Turkish Liras, and the value sought for the number of employees, which is 50 employees, has been kept the same.
• In accordance with subparagraph (2) of the same paragraph, the threshold values required for the audit of the companies included in the list (II) annexed to the Decree increased in parallel. Accordingly, the threshold value of the total assets to be exceeded for the auditing of the companies included in the list numbered (II) has been increased from 30 million Turkish Liras to 60 million Turkish Liras, the threshold value of annual net sales revenue has been increased from 40 million Turkish Liras to 80 million Turkish Liras, and the number of employees sought has been reduced from 125 to 100 employees.
• In line with subparagraph (3) of the same paragraph, for companies not covered by those specified in subparagraphs (1) and (2), the threshold value of the total assets has been increased from 35 million Turkish liras to 75 million Turkish liras, the annual net sales revenue has been increased from 70 million Turkish liras to 150 million Turkish liras, and the number of employees sought has been reduced from 175 to 150 employees.

Amendments to the Excluded Companies

The companies covered in Article 4 of the Decree are excluded from the scope of the Decree and are not subject to independent audit. Pursuant to the newly added paragraph to the Decree, savings finance companies whose liquidation process is decided by the Banking Regulation and Supervision Authority within the scope of the fourth paragraph of the provisional Article 7 of the Law no. 6361 on Financial Leasing, Factoring, Financing and Savings Finance Companies, and whose liquidation process is carried out by the liquidation commissions appointed by the Savings Deposit Insurance Fund, have been exempted from independent audit.

Effective Date

The Decree will enter into force on 1 January 2023 by abolishing the 2018/11597 numbered and 26.03.2018 dated Council of Ministers’ Decree with the same name and subject.