Filenews 14 August 2022
By Eleftheria Paizanou
From January 1, 2023, they will be subject to the new procedure for auditing the financial statements of 37,000 micro-enterprises. Following the approval of the law by Parliament last June, these businesses and self-employed persons will now only receive an overview of their financial statements by a statutory auditor or audit firm, instead of the full audit procedure currently in place, with the submission of audited financial accounts.
The change in the audit procedure was the result of the adoption of a draft law to the formation of which the Institute of Certified Public Accountants (ICPAC) also contributed. With the introduction of the institution of the review, Cyprus is in line with the European acquis and at the same time the control procedures will be simplified, which will contribute to the reduction of the administrative burden on small and medium-sized enterprises. The review process will apply to the financial statements of companies maturing on 31 December 2022 or any other later date. As ICPAC states in its circular, the purpose of the review of the financial statements of small businesses is to simplify the procedures followed by the legal audit firms for auditing companies, emphasizing that in this way the principles of proportionality and relativity will be applied. At the same time, he points out that statutory auditors will be able to offer other supporters / consulting services to their clients, which will help them operate more efficiently.
The obligations of enterprises
According to the ICPAC guidelines, small enterprises that choose the review process instead of an audit will continue to be subject to four obligations. As it states, they will prepare their financial statements based on the International Accounting Standards (IFRS), as approved by the EU. In addition, the filing requirements with the Registrar of Companies as it applies to the audited financial statements will be in accordance with the Companies Act and will also have tax claims for income declarations. The review process can only be carried out by a statutory auditor or a statutory audit firm that has been previously authorised.
The criteria
A company that will apply the review process should be a private company and both the net amount of turnover and its total assets must not exceed or cease to exceed the criteria of €200,000 and €500,000, respectively, for at least two consecutive years. The net amount of turnover includes income from rents, interest, dividends and royalties. In addition, in the case of an arrangement, if this is exempted from the obligation to prepare consolidated financial statements, then it may choose an overview assignment if together with its subsidiaries they do not exceed or cease to exceed the relevant criteria for at least two consecutive financial years.
