Audit Of Public Companies

Audit of Publicly Traded Companies

We can divide the Audit of Public Companies into Public Audit and Independent Audit. Public Institutions; CMB, BRSA, EMRA and Treasury audit the companies authorized by them within the scope of their own laws on whether they carry out activities in accordance with their own legislation. In addition, Independent Audit Companies also supervise whether a Financial Report has been prepared in accordance with the Turkish Commercial Code and Other Legislation.

Independent Audit of Publicly Traded Companies

Independent Audit Companies also audit whether a Financial Report has been prepared in accordance with the Turkish Commercial Code and Other Legislation.

Independent Audit Standards of Publicly Traded Companies

Publicly Traded Companies Prepare Financial Reports in Accordance with Turkish Accounting Standards. The CMB, which has authority in the sector of the audited company, and the companies with BRSA powers are auditing the issues of whether these Financial Reports are prepared in accordance with TFRS.

Internal Audit of Publicly Traded Companies

Public Companies establish an Internal Audit Committee to conduct their Internal Audits. The Internal Audit System and the assurance of the enterprises establishing the Committee are further supported in their Independent Audits. For Companies that have not established an Internal Audit Committee, the scope of an Independent Audit becomes more detailed and comprehensive.

What Are the Reasons for Going Public ?

The company needs different financing methods to meet its financing needs. For this, a lower cost and long-term resource is provided.
Unlike borrowing, it does not require repayment. A secured deposit, or mortgage is not required.
Being a public company means reputation. Effective illustration of the company’s title in written and visual media will have a positive impact on the company’s fame, reputation and competitiveness.
After the public opening on the stock exchange, continuous funds is possible with secondary public listings again.
Your company will be institutionalized by going public and will get modern management techniques. Your clients will gain respect and trust in the eyes of investors and lenders.
Going public provides growth opportunities for companies with Small and medium-sized development potential.
It creates opportunities for your company to enter into partnerships and collaborations with domestic and global enterprises.
The liquidity provided by the transparent buying and selling of Publicly Traded shares on the stock exchange or in an organized market provides important investment opportunities to existing partners.
It ensures that the risk of finding the financing and financing that the company needs is distributed.

What Are the Things to Do After Making a Decision to Go Public?

After making a decision on trading on the stock exchange, you need to determine whether your company is suitable for going public.

Compliance with public listing can be examined in the following aspects;

General eligibility and preparatory stage,
Public listing eligibility review
Obligations of the company after public listing

What are the General Eligibility Processes and Issues to be Considered?

Before going public, here are the important issues to consider:

A well-constructed, attractive investor Story
An Experienced and Expert board of directors and executive team
Control of corporate governance standards of the company
Control and compliance of the existing capital and organizational structure
Examination of past financial performance and its appropriateness
Improving the quality of your Company’s Board of Directors Reporting and financial reporting systems,
Tax planning activities of your company
Formation of the legal department of the company
Targeted premiums and incentives should be determined for the Board of Directors and all employees.

Independent Audit of Public Companies

Independent Audit

It is the process of linking the appropriateness of the financial statements and other non-financial information of the enterprises within the framework of the determined financial reporting to the auditor’s opinion through the audit report.

The Purpose of the Independent Audit

To provide the auditor with an opinion on whether the Company’s financial statements, financial situation and annual reports have been prepared in a fair and accurate manner.

According to the definition in the legislation of the audit: ”…the annual financial statements disclosed to the public or the board is required by Businesses and other financial information sufficient to provide reasonable assurance regarding the accuracy and compliance with appropriate standards for the purpose of obtaining audit evidence required by the standards of independent auditing by applying the techniques of independent audit including all commercial books, records and documents through checking and evaluating, Reporting,”(published by CMB, series: X, No.: 22 ”Decleration on Independent Audit Standards in the Capital Market” Article 4/b).

The purpose of the independent audit is to meet the needs of the company’s partners and other stakeholders to access accurate and reliable information. For this purpose, it is of great importance that the audit is carried out by independent auditors and that these auditors are under the supervision of the public authority. In addition, considering the interests of those who will benefit from the report, an independent audit is in the public interest. For this reason, the Public Supervision, Accounting and Auditing Standards Authority has been established within the scope of the Decree Law No. 660.

Independent audit can be divided into audit of public/joint stock companies and independent audit of other companies. Joint stock companies are mainly covered by a triple public audit by the Ministry of Customs and Trade in accordance with the provisions of the BRSA and the TCC in that they fall under the jurisdiction of the Capital Market Authority and the BRSA in accordance with the capital market legislation. (aka as ”Audit of Publicly Traded Companies”)

The audit authority of the Capital Markets Board includes the implementation of the provisions related to the capital market and all kinds of capital market activities and transactions in accordance with Article 88 of the CMB and other laws of the CMB. According to Article 89 of the CMB, all institutions and organizations within the scope of the CMB, as well as other individuals and legal entities related to the CMB, are subject to the supervision of the CMB within the framework of the audit authority of the CMB. In this regard, it is subject to CMB supervision in joint stock companies.

According to the provisions of the CMB, exporters’ financial statements and reports should be arranged by the attribution of Turkish auditing standards determined by an independent auditing institution pointed out by the board in order to organize and investigate and must receive an independent audit report (CMB m. 14/3). Again, in comparison with this provision, capital market institutions are required to conduct independent audits (CMB m.36/1 ). In that sense, public joint stock companies are obliged to have their financial statements and reports audited by independent audit institutions and receive an audit report.

According to the Capital Markets Law, Turkish Audit Standards have been cited in relation to independent audit standards (CMB art.14/3) and attempted to create a common standard. The Turkish Auditing Standards have been published by KAMUDESK. The CMB will prepare a new regulation in accordance with the audit standards published in this context. The draft of the new declaration on independent Capital Market regulations has been published on the CMB’s website. However, the new declaration has not been fully prepared and entered into force. According to the The Capital Markets Law is provisional Article 1, until the regulations come into force, the provisions of the existing regulations that are not contrary to the law will be applied. (Audit of Publicly Traded Companies)

The current regulation on independent auditing in the capital market is Serial: X, No: 22 “Declaration on Independent Auditing Standards in the Capital Market”, published in accordance with CMB No. 2499. The declaration in question has been amended in accordance with the CMB provisions No. 6362 and the Public Sector regulations and Serial: X, No: 28 “Declaration on Amendments to the Communiqué on Independent Audit Standards in the Capital Market” has been published. 1,2 and 3 of this declaration in question until the new regulation is published. Parts of it will still be in force.

Independent audit in publicly traded joint stock companies can be carried out in three ways: continuous, limited and private audit. In continuous audit, companies subject to independent audit are required to conduct every year. The auditing of the interim financial statements of the companies that have to have continuous auditing, arranged by the capital market institutions, is called limited audit, and finally, the auditing of the financial statements prepared by the companies and capital market institutions that are in the process of merger, division, transfer and liquidation or applying to the CMB for the public listing of capital market instruments is defined as a special audit. (Audit of Publicly Traded Companies)

In contrast to the provisions of the Turkish Commercial Code, private independent auditing is carried out according to the capital market legislation. During the application to the CMB for the IPO of capital market instruments, the CMB may request an independent audit report from the parties to the transaction on important qualified transactions defined in Article 23 of the CMB, as well as events and developments that significantly affect the activities and financial position of the partnership, when applying for trading on the stock exchange. (CMB m. 14/4). Audit of Publicly Traded Companies

Frequently Asked Questions

Who oversees publicly traded companies?

We can divide the Audit of Public Companies into Public Audit and Independent Audit. Public Institutions CMB, BRSA, EMRA, Treasury supervise the companies authorized by them within the scope of their own laws in terms of whether they carry out activities in accordance with their own legislation. In addition, Independent Audit Companies also supervise whether a Financial Report has been prepared in accordance with the Turkish Commercial Code and Other Legislation.

What kind of audit are publicly traded joint stock companies subject to?

Publicly Traded Companies Prepare Financial Reports in Accordance with Turkish Accounting Standards. The CMB, which has received authority in the sector of the audited company, and the companies with the powers of BRSA are auditing the issues of whether these Financial Reports are prepared in accordance with TFRS.

Is internal audit mandatory in publicly traded companies?

Are limited liability companies subject to audit?

Yes, of course. Independent Audit Companies also supervise whether a Financial Report has been prepared in accordance with the Turkish Commercial Code and Other Legislation.

SOURCE: Public Offering Information Booklet CMB GOV. TR