Simplification of Audit Process for Small and Medium Cypriot Companies
 
On 9 June 2022, the House of Representatives of the Republic of Cyprus passed the Amending Law No.2 of 2022 (the “Amending Law”), amending the Cyprus Companies Law (Cap. 113) (the “Law”) in order to simplify the audit process for small- and medium-sized Cypriot companies. As of 1 January 2023 (the date of which the Amending Law takes effect), and subject to certain thresholds, companies will be allowed, instead of auditing, to submit their financial statements for review (as this is defined according to the International Standard of Review Engagements (ISRE) 2400) by a statutory auditor or statutory audit firm within the meaning of the Auditors Law No. 53(I)/2017.
 
The Amending Law applies to companies:

1. The net turnover of which does not exceed EUR 200,000; and

2. The total balance sheet (i.e. the total value of the assets without deducting the liabilities) does not exceed EUR 500,000,  
at the closing date of the relevant company’s balance sheet.
 
It is provided that companies may submit their financial statements for review only in cases where at the closing date of the balance sheet, they do not exceed or cease to exceed the limits of the two criteria indicated above, for at least two consecutive years.
 
For the sake of clarification, the Amending Law states that the net turnover amount includes the net turnover amount as defined in the provisions of the Law, as well as income from rent, interests, dividends and rights of use.
 
The Amending Law indicates that the above does not apply in the following cases:

- a parent company which is obliged to prepare consolidated financial statements;  

- a subsidiary company the parent company of which is obliged to prepare consolidated financial statements; and  

- in cases where the parent company is not obliged to prepare consolidated financial statements and the said parent company together with its subsidiaries, at the level of a group of companies exceed or do not cease to exceed the limits of the two criteria indicated above at the closing date of the balance sheet of the parent company for at least two consecutive years.  

Finally, it is noted that the above amendments exclude companies which are subject to regulation and supervision by the Central Bank of Cyprus, to regulation and supervision by the Superintendent of Insurance and to regulation and supervision by the Cyprus Securities and Exchange Commission, as well as the companies that acquire or hold a special participation in the said supervised companies.
 
The above Amending Law is to apply to financial statements ending 31 December 2022 or any other subsequent date.