An Evaluation of Accounting Auditing in Cooperatives

Abstract

Cooperatives are typically small and micro-enterprises where at least seven natural or legal persons come together for a common purpose. As structures strengthened by the collaboration of members with shared objectives and serving their communities, cooperatives generally contribute to the strengthening of local economies and societies. However, like any institution, cooperatives are expected to act responsibly in their activities, comply with applicable regulations, and create value for their stakeholders. Therefore, it is important that cooperatives are also subject to oversight, just like other businesses.

Until 2022, internal audit practices were valid for cooperatives. However, with the regulation on the "Audit of Cooperatives and Their Higher Organizations" published on February 1, 2022, external audit has become mandatory for cooperatives, provided they meet certain conditions. In this regard, it can be stated that independent auditing is now also on the agenda for cooperatives. In this context, the auditing of cooperatives has been arranged as a limited review of their financial statements, with the aim of meeting this need through limited assurance auditing. Limited independent auditing does not provide reasonable assurance as in independent auditing. This contradiction arises from the difference between the desired goal and the chosen form of auditing.

The aim of the study is to examine the practices related to the auditing of cooperatives in Turkey, assess the current situation, provide recommendations on the audit mechanism, which should be seen as one of the key determinants of strengthening the cooperative movement. To this end, the auditing of cooperatives is evaluated within the framework of laws, regulations, and Limited Independent Auditing Standard (LIAS) 2400, the auditing process of cooperatives in Turkey is discussed.