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ACCOUNTING & AUDIT FRAMEWORK

Cyprus’ Accounting & Audit Framework

The Cypriot Company Law requires all companies to use International Financial Reporting Standards (IFRS) in the preparation of their financial statements.

The Republic of Cyprus, as a member of the European Union (EU), has adopted the EU IAS Regulation which requires the members to apply the IFRS Standards as adopted by the EU for the consolidated financial statements of EU companies whose securities are traded in regulated securities market, with effect from 2005.

The application of IFRS and International Accounting Standards (IAS) was required in Cyprus before joining the EU. It was required by the Institute of Certified Public Accountants of Cyprus (ICPAC) since 1981 and later by the regulations of the Cyprus Stock Exchange (CSE) and the subsequent legislation of CSE in 2003.

The application of the EU Directives and Regulations has been transported into national law. The Cypriot Companies Law requires entities to prepare financial statements in accordance with the EU-endorsed IFRS as per the Regulation.

The 2016 amendments to the Companies Law (Cap. 113) require mandatory statutory audits for all companies irrespective of the size of the company.

All Cyprus companies are required to maintain accounting books and records, which give a true and fair view of the company’s financial position and of its profit or loss and prepare annually financial statements in accordance with IFRS as adopted by the EU and the requirements of the Cypriot Companies Law.

The new Auditors and Statutory Audits of Annual Consolidated Accounts Law (L.53(I)/2017), (superseding Law No. 42 (I) of 2009 as amended), was enacted on 2 June 2017 and constitutes the legal framework for the audit profession in Cyprus. The Law requires audits to be conducted in accordance with ISAs as adopted by the European Commission (EC).

The Cyprus Public Audit Oversight Authority (CyPAOA) is the designated competent authority having the power to impose audit procedures or requirements and advise the Council of Ministers on the applicability of ISA in Cyprus. 

Regulation of the Accountancy Profession in Cyprus

The Cyprus Public Audit Oversight Authority (CyPAOA) is the independent oversight authority for the supervision of the audit profession in Cyprus. In accordance with the Auditors and Statutory Audits of Annual Consolidated Accounts Law (L.53(I)/2017), the CyPAOA is responsible for:

  • the supervision of the approval, certification and registration of statutory auditors and audit firms;
  • the adoption of standards on professional ethics and auditing;
  • the supervision and implementation of initial and continuous education requirements;
  • the supervision of the activities of the Institute of Certified Public Accountants of Cyprus (ICPAC); and
  • the supervision of the quality assurance and maintenance of an investigative and disciplinary system for statutory auditors and audit firms.

In accordance with the Law, the ICPAC is the Recognised Body of Auditors (RBA) and all statutory auditors and audit firms must be registered with ICPAC.

ICPAC has been delegated the following duties for non-PIE auditors:

  • the certification and registration of statutory auditors and audit firms;
  • the administering, training and monitoring of the CPD program;
  • the enforcement of members’ compliance with the applicable laws, regulations, ethical and professional standards; and
  • the implementation of a quality assurance review system and an investigative and disciplinary system for statutory auditors.

As far as PIE auditors are concerned, the above duties are the exclusive responsibility of the CyPAOA, which is the ultimate authority for the audit profession.

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