Introduction of limited assurance review

On 9 June 2022, the House of Representatives approved amendments to the Companies Law and to the Assessment and Collection of taxes law (“the laws”). The purpose of the amendments is to simplify the procedure of auditing the Financial Statements of small and medium-sized enterprises (“SMEs”).

Enterprises that satisfy the thresholds mentioned below will be allowed to submit their Financial Statements to a limited assurance review as opposed to a full audit, by a statutory auditor or audit firm as per the Auditors Law of 2017. The amendments were considered necessary for reducing the administrative burden and unnecessary costs on SMEs and audit firms alike.

The laws apply to the following persons:

• Companies whose net turnover and total balance sheet does not exceed €200.000 and €500.000 respectively, for at least two consecutive years. Τhe amendment enters into force on 1 January 2023 and its provisions apply to the Financial Statements of companies ending on 31 December 2022 or any other later date.
• Individuals whose turnover and any other income from sources defined in articles 5(1)(c), 5(1)(f) and 5(1)(g) of the Income Tax law exceed €70.000 but do not exceed €200.000, and whose total balance sheet does not exceed €500.000, for at least two consecutive years.
• For individuals whose turnover is less than €70.000 there is no obligation to prepare Financial Statements. For individuals whose turnover and total balance sheet exceed the above limits, they are still required to have their Financial Statements subjected to a full audit.

The above amendments do not apply to parent companies that are required to prepare consolidated Financial Statements and companies which are regulated and supervised by the Central Bank of Cyprus, the Cyprus Securities and Exchange Commission and the Commissioner of Insurance, as well as companies which acquire or hold a qualifying participation in such companies.

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