A company’s independent audit obligation should not be evaluated through a single inquiry performed shortly before year-end. Total assets, annual net sales revenue and employee numbers must be compared across the relevant accounting periods. Subsidiaries, associates and intragroup transactions must also be reflected correctly in the calculation. When conducting a 2026 independent audit assessment, the company must first determine which regulatory group applies because the thresholds for companies subject to general criteria differ from those applicable to specific sectors and company categories.
Companies that may enter the audit scope should review their accounting records, financial statements, reconciliations and internal control processes before the obligation becomes definite. Starting the preparation early reduces the volume of year-end adjustments, improves the reliability of information provided to the auditor and helps prevent delays in the reporting calendar. The scope assessment and financial preparation should therefore be managed as two connected workstreams within the same timetable rather than as separate year-end obligations.
How Is It Determined Whether a Company Is Subject to Independent Audit in 2026?
The first step is to determine which of the four groups identified by the Public Oversight, Accounting and Auditing Standards Authority applies to the company. Companies listed in Annex I of the relevant Presidential Decision are subject to audit without meeting any financial threshold. Other companies are assessed according to their total assets, annual net sales revenue and employee numbers. When identifying companies subject to independent audit, reviewing only the standalone figures of the company may therefore be insufficient.
For companies subject to the general criteria, the applicable thresholds for accounting periods beginning in 2026 and subsequent years are total assets of TRY 500 million, annual net sales revenue of TRY 1 billion and 150 employees. A company enters the audit scope if it exceeds at least two of these three thresholds in two consecutive accounting periods. Companies operating in specific sectors may be subject to lower thresholds, which means the independent audit criteria 2026 must be evaluated together with the company’s legal status and field of activity.
| Company group | Total assets | Annual net sales revenue | Number of employees |
| Companies listed in Annex I | No threshold | No threshold | No threshold |
| Companies listed in Annex II | TRY 120 million | TRY 150 million | 100 employees |
| Companies deemed public but not traded on an exchange | TRY 30 million | TRY 40 million | 50 employees |
| Other companies subject to general criteria | TRY 500 million | TRY 1 billion | 150 employees |
How Are Total Assets, Net Sales Revenue and Employee Numbers Calculated?
Total assets are determined using the asset total presented in the financial statements relevant to the assessment. Annual net sales revenue represents the amount remaining after deductions from gross sales. The employee criterion is not based solely on the workforce at year-end; the average number of employees for the relevant accounting period must be calculated. The calculation method should remain consistent between periods, payroll information should be reconciled with accounting records and the financial reporting framework used should be documented.
How Are Subsidiaries and Associates Included in the Independent Audit Calculation?
Where a company has subsidiaries, the total assets and net sales revenue of the parent and its subsidiaries are evaluated together, while intragroup transactions are eliminated where applicable. The average employee numbers of the parent and subsidiaries are also aggregated. Financial figures and employee numbers relating to associates are included in proportion to the company’s ownership interest. Before completing the independent audit assessment, companies should therefore update their ownership structure, direct and indirect shareholding percentages and intragroup transaction records.
Which Accounting Periods Are Used to Determine Whether the Independent Audit Criteria Have Been Exceeded?
To determine whether a company is subject to audit for the 2026 accounting period, its financial data for the 2024 and 2025 accounting periods are generally reviewed. The obligation arises for 2026 when the company exceeds at least two of the three thresholds applicable to its category in both reference periods. The two thresholds exceeded do not have to be identical in each year. A company may, for example, exceed total assets and employee numbers in one year and total assets and net sales revenue in the following year.
The assessment should begin using projected results before the annual closing so that a potential obligation can be identified early. The final conclusion should nevertheless be based on approved or otherwise applicable financial statements, final payroll data and the current ownership structure. If the company has undergone a merger, demerger, change of legal form or change in accounting period, the data and calculation methodology used for the reference periods should be reviewed separately and documented clearly.
How Do Consecutive Accounting Periods Affect the Audit Scope?
Exceeding the thresholds in a single year is not normally sufficient for entry into the audit scope. The company must exceed at least two of the three relevant thresholds in two consecutive accounting periods. It then becomes subject to audit in the following period. This approach prevents temporary increases in sales or one-off balance sheet growth from immediately creating an audit obligation. However, the thresholds exceeded in the two periods may differ, so the assessment should not focus only on the continuation of the same two criteria.
What Are the Conditions for Entering and Leaving the Audit Scope?
A company that entered the audit scope by exceeding the applicable thresholds may leave the scope in the following period if at least two criteria remain below the relevant thresholds for two consecutive accounting periods. Leaving the scope may also be considered where at least two criteria fall 20% or more below the applicable thresholds in a single period. For companies directly included in Annex I, legal status and regulated activity remain decisive because their audit obligation does not depend on financial thresholds.
What Financial Data Should Be Prepared When Assessing the Independent Audit Scope?
A reliable scope analysis requires at least two years of comparative balance sheets, income statements, detailed trial balances, employee information and ownership records. Before total assets and annual net sales revenue are taken directly from the statements, companies should confirm that period-end adjustments have been completed. A provisional trial balance may be used for an accounting period that has not yet been closed, but differences between projected results and final financial statements should be monitored separately.
An independent audit financial preparation file should not consist solely of a spreadsheet showing the threshold calculation. Each amount should include its source, calculation date, applicable reporting framework and responsible preparer. Where a group structure exists, elimination entries, ownership percentages and changes in capital during the period should also be documented. This allows the result to be recalculated and verified by management, the finance function and the appointed auditor.
How Should Comparative Financial Statements Be Prepared?
Comparative financial statements should be prepared using consistent accounting policies and classifications. An account classified as current in one period and non-current in another, or sales recognised under different revenue categories, may distort the comparison. If the chart of accounts has changed, a mapping between the former and current account codes should be prepared. Prior-period adjustments, inflation accounting effects and reclassifications should also be supported by explanations that make changes in the company’s financial size understandable.
Which Documents Should Support the Audit Criteria Calculations?
The calculation file should include approved financial statements, annual trial balances, sales account breakdowns, monthly employee lists, social security declarations and trade registry documents showing the ownership structure. If the company has subsidiaries or associates, documents confirming ownership percentages, financial statements of the relevant entities and intragroup transaction lists should also be included. Connecting every calculation to its original source allows potential differences of opinion to be examined quickly and makes the final scope conclusion verifiable.
Which Accounting Records Should Be Reviewed Before an Independent Audit?
Once a potential audit obligation has been identified, the detailed trial balance should be reviewed on an account-by-account basis. Long-outstanding balances, accounts showing unusual debit or credit positions, journal entries without adequate explanations, retrospective entries posted after period-end and transactions without supporting documentation should be prioritised. During pre-audit preparation, companies must document not only the correction itself but also its supporting evidence, authorisation and financial statement impact.
The accounting team should classify identified issues according to their significance and assign responsible individuals for matters that must be resolved before the closing date. Customer and supplier accounts, inventories, fixed assets, taxes, provisions and equity should not be reviewed in isolation. An inventory valuation error, for example, may affect cost of sales, profit and tax calculations simultaneously. The broader financial statement impact of each adjustment must therefore be considered before it is posted.
How Should Customer, Supplier, Bank and Cash Reconciliations Be Completed?
Customer and supplier balances should be confirmed with counterparties, while differences should be investigated through invoices, payments and offsetting entries. Bank balances must be compared with statements and external confirmations; cash in transit, blocked accounts and accrued loan interest should be reviewed separately. Where the cash account contains unusually high or long-outstanding balances, the company should compare the accounting records with the physical position and document the reason for any adjustment required.
How Should Inventory, Fixed Assets and Depreciation Records Be Reviewed?
Inventory records should be reconciled with physical count results, and count differences, slow-moving items, impaired goods and negative inventory positions should be investigated. The fixed asset register should include acquisition dates, cost, useful lives, depreciation methods and accumulated depreciation. Assets that have been disposed of or are no longer in use should be removed from the records. Construction in progress and similar expenditures should also be reviewed to determine whether they meet the applicable capitalisation requirements.
How Should Revenue and Expense Cut-Off Errors Be Corrected?
Revenue and expenses should be recognised in the accounting period to which they relate rather than according to the date of collection or payment. Invoices issued close to year-end, sales delivered in the following period, prepaid expenses and services received but not yet invoiced require particular attention. Cut-off tests should cover transactions immediately before and after year-end. Accrued income, accrued expenses and prepaid amounts must be transferred to the appropriate accounts and supported with contracts, delivery documents or other verifiable evidence.
How Can Financial Statements Be Made Ready for Audit?
Financial statements should not be prepared merely by transferring balances from the statutory trial balance into a standard reporting template. The applicable financial reporting framework must first be determined, and its measurement, classification, presentation and disclosure requirements must be applied. For a financial statement audit, consistency between accounting records and the primary statements is essential, but the auditor will also evaluate whether accounting policies and estimates comply with the relevant reporting standards.
The complete reporting package should include the statement of cash flows, statement of changes in equity and all required notes. Amounts disclosed in the notes must be cross-checked against the primary statements, while related-party transactions, commitments, litigation, guarantees and events after the reporting period should be disclosed completely. Through its Accounting and Financial Reporting Services, STB CPA Turkey can analyse differences between statutory records and the applicable reporting framework and support the preparation of the financial reporting package.
How Are Statutory Tax Records Reconciled with Audit Financial Statements?
Differences may arise between records maintained under Turkish tax legislation and financial statements prepared under TMS, TFRS or BOBI FRS. Employee benefit provisions, deferred tax, financial instrument valuations, leases and depreciation are among the areas where such differences commonly occur. Conversion entries should create a clear bridge between the statutory trial balance and the reporting trial balance. Each adjustment should state the affected account, rationale, tax impact and corresponding financial statement line item.
How Should Provisions, Impairment and Foreign Exchange Differences Be Evaluated?
Expected credit losses, inventory impairment, litigation provisions, warranty costs and employee benefit obligations should be reassessed at period-end using current information. Foreign currency monetary items should be translated using the appropriate closing rates, and exchange differences should be recognised in the correct accounts. Management estimates should not rely solely on prior-year practice. Collection histories, legal opinions, inventory movement reports, contractual conditions and other verifiable information should support the assumptions used in the calculations.
Which Documents and Working Files Should Be Created for Independent Audit?
A well-organised audit file directly improves the speed and consistency of responses to auditor requests. Documents should be classified according to financial statement line items, with trial balance details, reconciliations, contracts, calculations and management approvals stored under a common reference system. File names should indicate the period, entity, account and document type. Outdated versions should be kept in a separate archive to prevent them from being mistaken for current evidence.
Files should be designed to explain how each material financial statement balance was created rather than serving merely as a document repository. When a schedule submitted to the auditor is updated, the previous version should be retained and the reason for the revision should be recorded. Access rights should be defined for the document-sharing environment. Personal data, trade secrets and sensitive contracts must be stored and shared through a controlled digital system.
Which Financial Documents Should Be Provided to the Auditor?
The auditor should receive the general ledger, detailed account statements, financial statements, bank and customer or supplier reconciliations, inventory count results, fixed asset registers, loan agreements, tax returns and payroll summaries. Provision calculations, foreign currency valuations, related-party lists and guarantee schedules supporting the financial statement notes should also be included. Matching the documents to the relevant statement balances enables incomplete or contradictory information to be identified before substantive audit work begins.
How Should Contracts, Board Resolutions and Legal Documents Be Organised?
Loan, lease, sales, supply, distribution and related-party agreements should be classified using their latest versions. Board and general assembly resolutions should be compared with accounting entries relating to capital transactions, dividend distributions, borrowings, guarantees and significant investments. Updated information should be obtained from legal advisers concerning ongoing litigation, and potential obligations should be evaluated for recognition or disclosure. Contract amendments and supplementary documents should be retained together with the original agreement.
How Should the Internal Control System Be Reviewed Before an Independent Audit?
The purpose of an internal control review is not limited to identifying past errors. It should also reveal process weaknesses that may cause financial information to be recorded incorrectly. Sales, purchasing, payments, collections, inventory, payroll and financial closing processes should be traced from initiation to accounting entry. The individuals responsible for initiating, approving, recording and reviewing transactions should be identified, and compensating controls should be introduced where incompatible responsibilities are assigned to the same person.
The existence of a control in a written procedure does not demonstrate that it operated effectively. Approval records, system logs, reconciliations and checklists should be retained as evidence that controls were performed during the period. Manual controls should identify the responsible person and completion date, while automated controls should document the relevant system rule and changes in user access. Deficiencies should be classified by significance, with corrective actions completed before the financial closing where possible.
How Should Authorisation, Approval and Segregation of Duties Controls Be Established?
Activities that create a conflict of interest should be assigned to different individuals. Examples include preparing a payment instruction and approving the bank transfer, creating a supplier account and recording its invoices, or determining sales prices and monitoring collections. Where a small team cannot achieve full segregation, management review, periodic transaction reports or independent reconciliations may operate as compensating controls. ERP and banking access rights should be reviewed regularly, and access should be removed promptly when employees leave or change roles.
How Are Financial Reporting Risks Identified?
Risk assessments should consider both the monetary size of an account and its exposure to error or manipulation. Provisions based on management estimates, manual journal entries, related-party transactions, unusual year-end sales and complex contracts may represent higher-risk areas. Each risk should identify the affected financial statement line item, existing control, control frequency and responsible owner. High-risk areas without adequate controls should be converted into priority actions within the closing and audit preparation plan.
What Are Management’s Responsibilities During the Independent Audit?
Management is responsible for preparing the financial statements, selecting appropriate accounting policies and providing complete and accurate information to the auditor. The auditor’s examination of the records does not transfer the company’s reporting responsibilities to the audit team. Before the independent audit process begins, management should approve the applicable reporting framework, evaluate significant accounting estimates and obtain confirmation from relevant departments that the financial information is complete.
Management must also provide the auditor with timely access to accounting records, relevant personnel and supporting explanations. Delayed information requests or contradictory responses from different departments may extend the audit timetable. A single audit coordinator should therefore be appointed, significant matters should be monitored at management level and proposed audit adjustments should be reviewed for their broader financial statement effects before being posted.
How Should Responsibilities Be Divided Between Finance and Accounting Teams?
A preparer and reviewer should be assigned to every material financial statement area. The accounting team may be responsible for entries and reconciliations, the finance team for valuations and estimates, the legal department for litigation and contracts, and human resources for employee information and benefit provisions. The audit coordinator should direct requests to the relevant individuals and monitor deadlines. A written responsibility matrix should be shared with all teams and updated promptly whenever personnel or responsibilities change.
How Should Auditor Information Requests Be Managed?
Auditor requests should be recorded in a central tracker showing the request date, responsible person, target submission date, current status and document link. Information should be reviewed internally before submission, particularly where documents contain personal data or amounts that do not reconcile with the financial statements. Version control should prevent multiple responses from being issued for the same request. Outstanding items should be reviewed during regular meetings, and potential delays should be communicated to the audit team at an early stage.
How Should the 2026 Independent Audit Preparation Calendar Be Created?
The preparation calendar should be planned backwards from the expected audit completion date. Scope assessment, auditor appointment, engagement procedures, interim work, inventory counts, year-end closing, financial statement preparation and report delivery should be defined as separate milestones. Each milestone should identify the responsible person, required data, internal review date and management approval. This structure makes it possible to see how a delay in one activity may affect subsequent stages.
The calendar should not be treated as a document belonging solely to the accounting department. Information from purchasing, sales, human resources, legal, information technology and operations must also be incorporated into the closing timetable. Inventory counts, valuations, legal confirmations and external reconciliations require time and should not be postponed until year-end. Critical deadlines should be monitored in management meetings, with additional resources allocated where completion risks emerge.
Which Financial Controls Should Be Completed During the Year?
Bank, customer, supplier, tax, payroll and inventory reconciliations should be completed monthly or quarterly. Fixed asset movements, loan interest, foreign exchange valuations and related-party transactions should also be reviewed regularly. Interim closings help prevent accounting issues from accumulating at year-end. When a significant contract is signed, its accounting implications should be assessed and the recognition method determined promptly rather than waiting for the transaction to be reviewed for the first time during the annual audit.
How Should Year-End Closing and Audit Dates Be Planned?
The year-end plan should specify deadlines for final invoice processing, inventory counts, reconciliation requests, payroll closing, valuation entries and preparation of the first financial statement draft. The trial balance should be locked before fieldwork begins, with subsequent entries subject to a controlled approval process. Separate time should be allocated for management review, note disclosures and the posting of audit adjustments. The final reporting date should not be planned solely according to the expected completion of fieldwork.
What Are the Most Common Financial Deficiencies in Independent Audit Preparation?
Common deficiencies include incomplete reconciliations, unexplained historical balances, outdated fixed asset registers, inventory records that do not match physical quantities and revenue or expenses recognised in the wrong period. Within group structures, missing elimination entries, incorrect ownership percentages and incomplete related-party disclosures may affect both the scope calculation and the financial statements. When such problems are discovered during the audit, they lead to additional information requests, broader testing and a higher volume of adjustments.
Weak document management may create consequences as significant as an accounting error. Calculations without supporting evidence, different departments providing conflicting figures and inconsistencies between accounting records and note disclosures can prolong the engagement. Each material balance should therefore be supported by a working paper, preparer and reviewer responsibilities should be separated, the closing checklist should be monitored by management and the wider financial statement impact of every correction should be reassessed.
How Can STB CPA Turkey Support Companies During Independent Audit Preparation?
STB CPA Turkey can assess the company category and applicable 2026 thresholds before reviewing calculations relating to total assets, annual net sales revenue and employee numbers. Subsidiaries, associates and intragroup transactions can be incorporated into the assessment to document the basis of the scope conclusion. For companies entering the audit scope, financial statements, note disclosures, accounting records and internal control processes can then be reviewed according to the agreed reporting and audit timetable.
Through its Audit and Assurance Services, STB CPA Turkey can examine the financial statements under the applicable reporting standards and evaluate audit evidence, reconciliations and supporting working papers systematically. Where the financial organisation or closing process requires additional coordination, Outsourced CFO Services can support the reporting calendar, responsibility allocation and management controls. This creates a more controlled and predictable structure from the initial scope assessment through completion of the audit report.
