What Is an Independent Audit and What Does It Bring Your Company?

The short answer to the question "what is an independent audit?" is this: an independent audit is a statutory assurance engagement in which a company's financial statements and the financial information in the board of directors' annual report are examined under the Turkish Auditing Standards by an auditor authorized by the Public Oversight, Accounting and Auditing Standards Authority (KGK), who then issues an opinion. The auditor is not an employee of the company and does not keep its books. Their task is to state impartially whether the statements fairly reflect the company's financial position.

In this article we explain the legal basis of the audit, who appoints the auditor, the six steps of the process and the four types of opinion you may find in the report. The criteria that determine whether a company is subject to audit are a separate topic; here we only touch on the framework.

What is an independent audit and what rules govern it?

The main legal basis of the independent audit is Articles 397 to 406 of Turkish Commercial Code (TTK) No. 6102. The Code states that the financial statements of companies subject to audit are audited under the Turkish Auditing Standards published by KGK, which are aligned with international auditing standards. Whether the financial information in the annual report is consistent with the statements is also within scope.

In practice, the core of these standards is the Independent Auditing Standards (BDS). Under BDS 200, the auditor's objective is to obtain reasonable assurance as to whether the financial statements contain a material misstatement due to error or fraud. Reasonable assurance (a high but not absolute level of assurance) means that the auditor does not check every transaction one by one but gathers sufficient evidence by focusing on risk areas.

You can find the current list of standards and explanatory materials on KGK's Turkish Auditing Standards page . Which accounting framework the financial statements are prepared under is a separate question; we explain the difference between TFRS and BOBİ FRS in our article What Is TFRS article.

Are an independent audit and a tax audit the same thing?

No. A tax audit is a public power through which the tax administration investigates whether the tax base was declared correctly. An independent audit, by contrast, is based on a contract between the company and an auditor of its own choosing and is addressed to shareholders, investors and lenders.

The two engagements look at the same accounting records but ask different questions. A company's tax burden does not change based on the audit result. Under Article 32 of Corporate Income Tax Law No. 5520, the general corporate income tax rate is 25%, and the tax base is determined under the tax laws; you can find the details in our article what is corporate income tax .

Which companies are subject to audit?

The scope is determined not by individual articles of law but by a Presidential Decree. The fourth paragraph of TTK Article 397 states that the companies subject to audit are determined by the President. The regulation currently in force is Presidential Decree No. 6434 on the Determination of Companies Subject to Independent Audit.

The Decree classifies companies by field of activity and size criteria; the criteria may change over time. Being outside the scope in one period is therefore no guarantee for the next. At the end of each accounting period, the company's status needs to be rechecked against the current Decree.

Audits are not limited to joint stock companies either. TTK Article 635 provides that the joint stock company provisions on auditors and audits also apply to limited liability companies. A limited liability company within scope follows the same audit rules as a joint stock company.

Who is an independent auditor, and who cannot be one?

Under TTK Article 400, an independent auditor is a person holding a Sworn Financial Advisor (YMM) or Certified Public Accountant (SMMM) license and authorized by KGK, or an audit firm whose partners are such persons. Authorization alone is not enough; the auditor must be genuinely independent of the company being audited.

According to KGK's 2024 Annual Report, as of December 31, 2024, a total of 19,801 professionals had been authorized, of whom 17,972 were entered in the registry as independent auditors. According to the same report, of the auditors authorized in 2024, 183 were SMMMs and 40 were YMMs.

The law lists the situations that may impair independence one by one. In any of the following cases, the auditor may not serve at that company:

• If they are a shareholder in the company to be audited,
• If they are a manager or employee of the company, or held such a position within the three years before their appointment,
• If they contributed, other than through the audit, to keeping the company's books or preparing its financial statements,
• If in the last five years they earned more than 30% of their audit income from this company or from companies holding more than 20% of its shares, and expect the same in the current year.

Two more rules are added to these. An auditor who has audited the same company for a total of seven years within ten years cannot be re-elected until three years have passed. The auditor may not provide consulting or other services to the audited company other than tax advisory and tax audit services.

The practical consequence of these rules is clear: the person or firm keeping your books cannot be the auditor of the same company. Investors who want to handle accounting services and the audit under one roof can avoid having to change auditors later by knowing this distinction from the start.

How does the independent audit process work in 6 steps?

The independent audit process starts with the election of the auditor at the beginning of the accounting period and ends with the presentation of the report at the general assembly. The table below summarizes the steps under TTK and KGK regulations:

What happens if the auditor is not elected on time?

If no auditor has been elected by the fourth month of the financial year, the commercial court of first instance appoints the auditor at the request of the board, a board member or any shareholder. The same route applies if the elected auditor declines the engagement or is unable to perform it. It is therefore sounder to complete the election in the first months of the period rather than leaving it to year-end.

Why does the process start before year-end?

The auditor does not look only at the closing statements. TTK Article 401 authorizes the auditor to request information and documents, where needed for preparing the year-end audit, even before the financial statements are drawn up. Attending the inventory count or reviewing major contracts during the year is therefore common practice.

Independent audit report and types of opinion

The independent audit report is the document that describes the type, scope and outcome of the audit in clear language and in comparison with the previous year. The auditor also states the conclusion in a separate opinion letter. TTK Article 403 provides for four types of opinion:

The lesson from the table is this: a disclaimer of opinion is not a “neutral” outcome. Failing to provide documents to the auditor or serious uncertainties in the records lead by law to the same result as an adverse opinion. That is why most of the audit preparation consists of getting the records into a state that can answer the auditor's questions.

The audited company has one more obligation. Under TTK Article 397, the company must clearly state in the heading of its financial statements whether they have been audited and what the auditor's opinion is.

What does an independent audit bring your company?

The audit is often seen as an obligation. Yet the framework set by the law also brings the company tangible management benefits:

• Reliable financial information: Shareholders, banks and investors read audited statements as information approved by a third party. In loan negotiations or partnership talks, this reduces the need for additional explanations.
• Early risk signal: Under TTK Article 398, the auditor prepares a separate report on whether an early risk detection system and committee have been established and submits it to the board. With this report, management sees weak points through an outside eye.
• Alignment with group reporting: A parent company abroad wants to rely on audited data when consolidating the subsidiary's statements. A local audit makes it easier to work with the group auditor.
• Better record-keeping: An audit repeated every year brings order to document retention, reconciliation and closing processes.

Consider, for example, a joint stock company with a foreign shareholder. The parent company wants the statements by a certain date for consolidation, while the local statutory calendar runs differently. A company that elects its auditor at the start of the period and shares the timeline with both sides will not have to deal with two separate teams requesting the same documents at the same time at year-end.

How does KGK oversee auditors?

KGK does not only authorize auditors; it also monitors the quality of their work. According to the authority's 2024 Annual Report, 23,365 audit contracts and 14,223 audit reports were checked as part of oversight activities for the 2024 period. According to the report, KGK also carries out work to identify companies that are subject to audit but fail to meet this obligation.

For the company, this shows that the audit contract and report are on record. Since the statements of a company that is subject to audit but has not been audited are deemed by law not to have been prepared, this gap may call into question the general assembly resolutions based on those statements. We discuss KGK's own role and structure in a separate article.

Preparation gaps we often see in practice

The problems our clients most often encounter in their first audit year relate more to preparation than to technical knowledge:

1. Late auditor election: When the election is left to the end of the period, the auditor cannot attend irreversible procedures such as the inventory count, which may limit the opinion.
2. Unaudited opening balances: In a first-year audit, balances carried forward from the previous period are also examined. If the document archive is disorganized, this work takes longer.
3. Incomplete reconciliations: If bank, current account and related-party balances are not reconciled with the counterparty, the auditor applies additional procedures.
4. Unclear accounting framework: Which financial reporting framework the company will apply should be settled before the audit; otherwise the statements may have to be prepared again from scratch.

You can find the non-audit aspects of the investment process in the articles in our investment guide category.

How should you plan independent audit services?

We recommend treating the audit not as a one-off year-end task but as a process planned at the start of the period. First, clarify whether the company is within scope; then elect an auditor who meets the independence rules on time, and keep the records ready for audit.

At Akal CPA, as part of our independent audit services , we prepare companies for the audit process and support them with planning and correspondence with the auditor. In line with the independence rules, we do not act as auditor for a company to which we provide accounting services; we work on the preparation side.

Last updated: 17.10.2026