Although legislation in force exempts small size companies from audit, other relevant provisions require an audit of the accounts of all companies.
On April 30, 2009, a specific Act was passed which envisages that a statutory audit on annual and consolidated accounts is carried out by legitimate auditors and audit firms, to bring Cypriot Legislation into conforming with the corresponding European legislation. The Act entered into force on 11 April 2011.
The Companies Act requires the board to keep proper accounting records for the preparation of financial statements, as well as the preparation for each and every company of a complete set of financial statements, in accordance with the International Financial Reporting Standards.
The Act which envisages that statutory audits are carried out on annual and consolidated accounts by legitimate auditors is put into force in accordance with the audit:
- for companies set up in accordance with the Companies Act
- for cooperatives registered in accordance with the Partnerships and Limited Partnerships and Trade Names Act
- for cooperative societies
- for public bodies
- any entities established under Cypriot legislation or legislation by another member state or a third country whose accounts are subject to statutory audit in Cyprus.
The information to appear on invoices is mentioned under the Value Added Tax (General) Regulation.
The inventory is calculated based on International Accounting Standard 2 and audited based on International Standard on Auditing 501.
The main accounting and audit requirements that must be satisfied by companies are in summary the following:
- appointment of an independent auditor, holder of a licence to exercise the profession, issued by the Institute of Certified Public Accountants of Cyprus (SELK), who will serve in his position from one general meeting to another;
- filing with the Registrar of Companies of an annual report and financial statements; the financial statements must be drawn up in accordance with the International Financial Reporting Standards (IFRS) as adopted by the European Union and be in keeping with the requirements of the Companies Act;
- a consolidated financial statement for subsidiary companies, except for IFRS-based exemption cases.
According to the Companies Act proper bookkeeping can only be achieved if the books kept are sufficient to present a true and fair image of the company's affairs and provide a clear explanation of its transactions.
An inventory should be carried out at least once a year in accordance with International Standard on Auditing 501.
According to the Companies Act, financial statements should be presented within 18 months after the establishment of the company and thereafter at least once per calendar year.
Storage and submission of documents
According to the Companies Act, accounting records should be kept at the company's registered office or elsewhere and always be available for inspection by directors. Every year companies should send an annual report along with the financial statements to the Registrar of Companies.
In accordance with the Act on the Assessment and Collection of Taxes books and records must be kept for a period of at least seven years.
Audit, disclosure and publication
In accordance with the Act on Auditors and Audits of Annual and Consolidated Accounts the audit should be conducted in accordance with the International Standards on Auditing adopted by the European Commission.
The Department of the Registrar of Companies is in possession of a list of individuals and companies licensed to practice a profession. The list is available to the public for inspection.