ngo audits: legal basis, scope and process

09 November 2020

Auditing of the Associations

Organizations which are subject to the Law of Associations, such as associations, representative offices, direct activity offices and branches of international non-governmental may be audited by the Ministry of Interior Auditors of Associations. In this post we will evaluate some basic issues with respect to this type of audit and briefly indicate other types of audits which may be applicable.


Legal Basis

Organizations subject to the Law of Associations shall be audited in accordance with the Associations Law and secondary legislation. Detailed regulations regarding audits may are found on the Ministry of Internal Affairs Associations Auditors Regulation, the Ministry of Internal Affairs Association Auditors Duty and Work Directive, and related circulars.  In addition, the Ministry of Internal Affairs Association Auditors Guide is an essential resource outlining how an audit will be conducted.  These are public resources, and their current versions are always available online.


Scope of the Audit

The purpose of the audit is to determine whether the relevant organizations operate per the purposes stated in their articles of association or main statute and whether their activities are generally in compliance with the legislation. Although the primary aim is to audit the organization' compliance with the Law of Associations and related legislation, the responsibility of the auditors may include a variety of legislation such as those relating to tax and social security. For example, the relevant legislation stipulates that financing terrorism and money laundering regulated under the Turkish Penal Code and anti-terrorism legislation shall be considered within the scope of an audit.


Commencement of the Audit

The organization to be audited should be informed at least 24 hours in advance regarding the audit. The audit notice must be in writing. Since official correspondence procedures take a relatively long time, in general, many organizations are notified more than 24 hours before the audit. Audit notices are expected to contain information regarding the scope of the audit.

It would be appropriate for an association that has been notified regarding an auditing to start preparations, collect the documents that may demanded and to complete missing documents (if any). You can find our article on this subject here.


Authorities of Auditors

Auditors may request the ledgers, records, and documents they deem necessary within the scope of the audit. The documents which shall be examined are the mandatory ledgers, notifications, authorization documents and documents showing the income and expenses of the organization. However, auditors may also examine other documents they deem necessary. Auditors may take certified copies or originals of the documents they have examined at the end of the audit.

In addition to document examination, auditors have the authority to inspect safes, storage, warehouses and to count stocks, seal the cash boxes or other areas if necessary. Auditors are authorized to request information and documents from public institutions and organizations, legal entities, and individuals.


Obligation to Assist the Auditors During the Audit

The officials present in the audit are obligated to provide all documents and records requested by the auditors during the audit as well as permit their entrance to the management places, establishments, and their annexes. Members of the board of directors, representatives, or other persons who are in breach to this provision may be punished with up to 3 months imprisonment or a judicial fine. For this reason, providing access to the documents, information and areas requested by the auditors during an audit is very important.


Audit Result

An audit report shall be issued by the auditors after the audit has been finalized. The report shall be directed to the relevant units within the General Directorate of Civil Society Relations depending on the findings of the report. Moreover, in the event:             

  • a condition requiring the closure of an organization is determined this issue shall be immediately reported to the governor office;
  • an action constituting a crime is determined this issue shall be immediately reported public prosecutor's office.

An audit report shall be shared with the audited organization. The purpose here is to inform the organization about determined breaches and provide recommendations on how to move forward. These reports are very important since the fulfillment of the recommendations in the previous audit reports will be considered in future audits.


Other Audits

In general audits that non-governmental organizations will be subjected shall be conducted by Associations Auditors of the Ministry of Internal Affairs within the scope of the Associations Law. However it is important to note that these organizations may also be audited by institutions such as Social Security Institution, Turkish Employment Agency, Revenue Administration, Personal Data Protection Authority and other state institutions which are legally authorized to carry out audits. These audits may be done together, or separately.

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