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.
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), 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).
On 9 June 2022, Cyprus’ Companies Law (Cap. 113) has been amended in order to simplify the process of auditing financial statements of small and medium-size companies by allowing the review of financial statements instead of the audit.
The amendment is effective from 1 January 2023 and applies to the companies whose net turnover does not exceed €200,000 and the total balance sheet (total assets) does not exceed €500,000 for at least two (2) consecutive years. Therefore, companies satisfying these criteria may elect to have their financial statements reviewed instead of audited.
The Cyprus Public Audit Oversight Board (CyPAOB) 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.