Audit of Financial Statements for Cyprus Companies

Audit services play a crucial role in assessing and validating the accuracy and reliability of financial statements for businesses in Cyprus. Key reasons why businesses should consider audit services include:

1. Legal Obligation: Under the Cyprus Companies Law and International Financial Reporting Standards (IFRS), companies, sole traders, and partnerships in Cyprus have a legal obligation to prepare and submit audited financial statements. Compliance with this requirement is essential to avoid penalties and maintain good standing.
2. Stakeholder Confidence: An independent audit report provides assurance to stakeholders, including shareholders, investors, creditors, and regulatory bodies, about the credibility and accuracy of the financial statements. This enhances trust and confidence in the business’s financial position.
3. Risk Identification: An audit helps identify potential financial risks and areas for improvement within the business’s financial operations. This enables management to take proactive measures to mitigate risks and strengthen financial governance.

Businesses in Cyprus, including companies, sole traders, and partnerships, have an obligation to prepare and submit financial statements in accordance with the Companies Law of Cyprus, Partnership and Business Names Law, and relevant accounting standards.

As from 01.01.2023, The Cyprus House of Representatives has endorsed amendments to the Companies Law and the Assessment and Collection of Taxes Law. These amendments are specifically designed to streamline the audit procedures for small and medium-sized companies in Cyprus.

Following this, all small sized companies are now able to be exempt from the weight of complying with the ISAs if they meet certain criteria.

If a Cyprus company meets the below listed thresholds, then this company will be able to submit financial statements with a limited assurance review, instead of a full audit.

Thresholds for Companies:

• Net turnover does not exceed €200,000. Turnover refers to all sources of income with no exceptions and;
• Total value of assets does not exceed €500,000

The above thresholds must be met for at least two consecutive years.

Thresholds for Individuals:

• Turnover exceeds €70,000 but does not exceed €200,000; and
• Total value of assets do not exceed €500,000

For individuals with a turnover that does not exceed €70,000, they are exempt from preparing financial statements.

If the above thresholds are exceeded, full audit applies.

Partnerships are required to adhere to the provisions outlined in sections 118 to 122 (inclusive) of the Cyprus Companies Law. It is mandatory for partnerships to maintain accurate and up-to-date books of accounts. The partners themselves (excluding LLP partners) are individually responsible for maintaining appropriate accounting records. It is important to note that when a partner’s taxable income exceeds €70,000, the preparation of audited accounts becomes necessary.

By engaging our audit services, businesses can ensure that their financial statements meet the necessary legal and regulatory requirements, providing accurate and reliable information to stakeholders.