Significant Amendments to the Procedures and Principles Regarding the Determination of Companies Subject to Independent Audit (7 May 2026)

Following the amendment made on 17 March 2026 to the threshold values applicable to the determination of companies subject to independent audit, further amendments have now been introduced to the procedures and principles governing the application of such threshold values.

Pursuant to the decision of the Public Oversight, Accounting and Auditing Standards Authority published in the Official Gazette dated 7 May 2026 and numbered 33246, certain provisions regarding becoming subject to independent audit, falling outside the scope of independent audit and the application of inflation accounting have been updated.

These amendments are particularly important as they clarify for which accounting periods and in what manner the relevant threshold values should be applied.

1. The conditions for becoming subject to independent audit have been clarified

Under the amendment, in order for the relevant companies to become subject to independent audit, at least two of the criteria relating to total assets, annual net sales revenue and employee headcount must exceed the applicable threshold values for two consecutive accounting periods.

In this respect, the two criteria exceeded in consecutive accounting periods do not have to be the same. For example, if the total assets and employee headcount criteria are exceeded in one accounting period, and the total assets and annual net sales revenue criteria are exceeded in the following accounting period, the condition for becoming subject to independent audit will be deemed to have been fulfilled.

2. The applicable period principles in case of changes to threshold values have been clarified

The amendment provides important clarification as to how changes to threshold values will apply to previous accounting periods.

Accordingly, in the event of a change in threshold values, when assessing whether a company is subject to independent audit or falls outside the scope of independent audit for accounting periods preceding the accounting period in which the amendment entered into force, the threshold values applicable in the relevant accounting periods will be taken into account.

In other words, the new threshold values will not be applied retroactively to previous accounting periods. For example, in an assessment concerning the 2025 accounting period, the new threshold values applicable to accounting periods beginning on or after 1 January 2026 will not be taken into account; instead, the threshold values applicable for the 2025 accounting period will apply.

3. The conditions for falling outside the scope of independent audit have been revised

Companies that are subject to independent audit due to exceeding the threshold values will fall outside the scope of independent audit as of the following accounting period if, either individually or together with their subsidiaries and affiliates, they fall below the threshold values for at least two of the relevant criteria for two consecutive accounting periods.

In this case as well, the two criteria falling below the threshold values in consecutive accounting periods do not have to be the same. For example, if total assets and annual net sales revenue fall below the thresholds in one accounting period, and annual net sales revenue and employee headcount fall below the thresholds in the following accounting period, the condition for falling outside the scope of independent audit will be assessed accordingly.

This amendment demonstrates that, when evaluating their independent audit obligations, companies should consider not only a single accounting period, but also the financial indicators of consecutive accounting periods together.

4. Provisions regarding inflation accounting have been updated

The amendment also revises the provisional article concerning the application of inflation accounting.

Accordingly, in determining whether a company falls within the scope of independent audit in 2024, the financial statements for 2022 that have not been adjusted for the effects of inflation will be taken as basis.

For 2025, in the assessment of total assets and annual net sales revenue for the 2023 accounting period, the amounts included in the financial statements approved by the general assembly will be taken into account.

The same principle will also apply to accounting periods in which the application of inflation accounting continues pursuant to the relevant Turkish Accounting Standards. Therefore, when assessing their independent audit obligations, companies will need to verify not only their current financial statements, but also which financial statements and threshold values should be taken as basis for the relevant period.

5. Practical implications and assessment

When evaluated together, the amendments show that, following the threshold value changes introduced on 17 March 2026, the relevant application principles have also been aligned with the new system.

In this respect, when assessing their independent audit obligations, companies should consider the following matters together:

• the threshold values applicable for the relevant accounting period;
• the financial indicators for the previous two accounting periods;
• the assessments to be made together with subsidiaries and affiliates; and
• the impact of inflation accounting on the financial statements.

 

As GEMS Schindhelm Istanbul, we continue to provide legal consultancy services to our clients in relation to the assessment of independent audit obligations, the application of relevant financial thresholds, the analysis of the impact of subsidiaries and affiliates within group company structures, and the management of compliance processes concerning new regulations. Please do not hesitate to contact our team should you have any questions regarding this matter.

 

Author: Müge Şengönül