Turkish Public Oversight, Accounting and Auditing Standards Authority (“KGK”) is established as a regulatory and administrative body vested with supervisory and sanctioning powers in the field of independent auditing under Decree Law No. 660. Following its supervisory examinations, the Authority may impose various administrative sanctions whenever it identifies conduct that violates the Turkish Auditing Standards (“TDS”) / Independent Auditing Standards (“BDS”), ethical principles, or its own regulatory instruments. The purpose of these sanctions is to ensure that auditing activities are conducted in a manner consistent with public trust, to promote standardization within the auditing system, and to preserve audit quality. Nevertheless, the legal basis of these sanctions and their compatibility with the constitutional principle of legality constitute a subject of ongoing doctrinal and judicial debate.

The legal foundation of KGK’s sanctioning regime is grounded in Articles 25 and 26 of Decree Law No. 660 and Articles 39–44 of the Independent Auditing Regulation. Article 26 of the Decree Law explicitly provides that only administrative monetary fines may be imposed in cases of non-compliance with the Authority’s regulations; in contrast, other severe administrative sanctions -such as warnings, restrictions on activities, suspension of audit authorization, and revocation of authorization- are not prescribed by the Decree Law itself but are instead introduced at the level of secondary legislation, namely the Regulation. This constitutes a problematic framework in terms of the principle of legality, enshrined in Article 38 of the Constitution, which requires that measures bearing sanctioning characteristics be prescribed by statute. The constitutional principle thus limits the executive’s ability to introduce new and more severe sanctions through regulatory acts. Accordingly, whether the sanctions introduced solely by the Regulation meet the minimum standards of legal safeguards is a significant issue that may become subject to judicial review.

In practice, severe sanctions such as the suspension of audit authorization exert a direct restrictive effect on the professional activities of audit firms and generate consequences that affect economic freedom and entrepreneurial liberty. The imposition of such sanctions solely on the basis of the broadly framed provisions of the Decree Law and the Regulation provides fertile ground for annulment actions on the basis of ultra vires administrative authority, the expansion of statutory sanctioning power through secondary legislation, and the insufficiency of a statutory basis. The settled case law of the Council of State (Danıştay) underscores that administrative sanctions may only be lawfully imposed where they are expressly provided for by statute and subjects the introduction of new sanctions through regulatory acts of the executive to strict judicial scrutiny.

An examination of KGK’s concrete supervisory decisions reveals that non-compliance with TDS/BDS, failure to obtain sufficient and appropriate audit evidence, and deficiencies in independence and quality control processes frequently form the basis for severe sanctions such as suspension of authorization. However, because the legal basis for such sanctions rests solely upon the provisions of the Regulation, the requirement of a “statutory basis for sanctions” is not fully satisfied. The introduction of sanctions not explicitly regulated by the legislature but instead created through secondary legislation raises concerns particularly with respect to proportionality, legal certainty, and foreseeability. Furthermore, given that these sanctions may generate considerable economic consequences for individuals and firms, they may possess a punitive character exceeding that of a mere administrative measure, thereby necessitating an even stricter interpretation of the principle of legality.

For these reasons, assessing the legality of KGK’s administrative sanctions requires a two-dimensional analysis: first, whether in the specific case a genuine violation of TDS/BDS or other relevant regulations exists and whether such a violation justifies the imposition of a sanction; and second, whether the sanction imposed has a valid statutory basis. In particular, for severe sanctions such as suspension or revocation of authorization that are grounded solely in secondary legislation, it is possible to bring an annulment action alleging that (i) the sanction lacks explicit statutory regulation, (ii) the Regulation unlawfully introduces a sanction independent of the statutory framework, (iii) the administration exceeded its legal authority by imposing a restrictive measure of such magnitude, and (iv) the decision violates the principles of proportionality, legal certainty, and foreseeability.

Given the highly technical nature of KGK’s evaluations, which concern the application of professional auditing standards and entail specialized methodological assessments, it is advisable to seek assistance from professionals with expertise in this field — both for preparing submissions during the administrative phase and for identifying the legal grounds that may be advanced during judicial review. Such professional support ensures that technical assessments are coherently integrated with legal arguments and that the issues arising under the principle of legality are analyzed with the requisite depth and precision.