Recently, The Institute of Certified Public Accountants of Cyprus (ICPAC) proposed an alternative option to the assurance of the financial statements of very small entities.
In accordance with the ISRE 2400 (revised) a private company, a partnership and a self-employed person whose annual turnover and any other gross income exceeds 70.000 euros per annum, and therefore has an obligation to submit audited financial statements and groups that are exempted from preparation of consolidated financial statements, can opt to undertake a review engagement instead of an audit engagement in case their net turnover does not exceed or cease to exceed 200.000 euros per annum and their total gross assets do not exceed or cease to exceed 500.000 euros per annum for at least two consecutive years. Both criteria must be co-existed to consider that they are not exceeded.
Regarding groups, given that a group of companies is exempted from the obligation to prepare consolidated financial statements, it can then opt for a review engagement if together with its subsidiaries they do not exceed or cease to exceed the relevant criteria for at least 2 consecutive years.
The allowance of conduct for a review engagement instead of an audit applies to the financial statements for reporting periods ending on or after 31 December 2022.
In the case where the companies have a year-end other than a calendar year, the changes in the laws apply for the first year ending in 2023.
Finally, the entities that will choose a review engagement will continue to be subject to the following:
- Preparation of their financial statements under the International Financial Reporting Standards (IFRS's) as adopted by the EU in accordance with the Companies Law, Cap.113.
- Requirements of the Prevention and Suppression of Money Laundering Activities Law.
- Filing requirements with the Registrar of Companies as is the case for the audited financial statements as per Companies Law, Cap.113.
- Relevant tax requirements of the Tax Department.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
We operate a free-to-view policy, asking only that you register in order to read all of our content. Please login or register to view the rest of this article.