Cyprus

Member Organizations

Member Organization Associate Other PAOs

  Institute of Certified Public Accountants of Cyprus

Legal and Regulatory Environment

  • Overview of Statuatory Framework for Accounting and Auditing

    As a member of the European Union (EU), Cyprus is subject to the accounting, auditing and financial reporting requirements established in EU Regulations and Directives as transposed into national laws and regulations.

    The Companies Law (Law No. 476 (I) of 2001) sets the requirements for the preparation of corporate financial statements in Cyprus and transposes the EC Accounting Directive (2013/34/EU). The Companies Law requires all entities to apply EU-endorsed IFRS in their consolidated and separate financial statements. Exemptions from consolidation apply for small and medium-sized entities except where any affiliated enterprise is a public-interest entity or where the obligation to prepare consolidated financial statement arises under other legislation.

    Previously, the Companies Law required mandatory statutory audits for all companies in Cyprus excluding small firms. The Law was amended in September 2016 and audit for all registered companies regardless of size has been made mandatory.

    On June 2, 2017 the new Auditors and Statutory Audits of Annual Consolidated Accounts Law (L.53(I)/2017), (superseding Law No. 42 (I) of 2009 as amended), was enacted 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). Until the EC has adopts any ISA, the Law requires the application of the specific ISA as issued by the IAASB. The Cyprus Public Audit Oversight Authority is the designated competent authority and is granted the power to impose audit procedures or requirements and advise the Council of Ministers on the applicability of ISA in Cyprus.

    Under the Audit Law of 2017, a PIE is defined as (i) entities, governed by the law of the Republic, whose transferable securities are admitted to trading on an organized or regulated market; (ii) licensed credit institutions; (iii) insurance and reinsurance undertakings; (iv any other entity that might be defined as such by a decision of the Council of Ministers, after a suggestion from the Cyprus Public Audit Oversight Authority, that carries the essential traits of Public interest.

    The new Auditors and Statutory Audits of Annual Consolidated Accounts Law (L.53(I)/2017) transposes into national law the EU Directive 2014/56/EC and Regulation No. 537/2014.

  • Regulation of Accountancy Profession

    In Cyprus, auditors are formally regulated at the State level. The Auditors and Statutory Audits of Annual Consolidated Accounts Law (L.53(I)/2017) regulates the auditing profession and the public oversight of the audit profession, outlines mandatory quality assurance reviews of statutory audit firms, specifies the requirements for granting license to perform audits and outlines initial and continuing professional development (IPD and CPD respectively) requirements. According to the Law, the Institute of Certified Public Accountants of Cyprus (ICPAC) is explicitly named as a Recognised Body of Auditors (RBA) and all statutory auditors and audit firms must be registered with an RBA.

    ICPAC, as an RBA, is about to be delegated the following duties for non-PIE auditors: (i) certification and registration of statutory auditors and audit firms; (ii) administering, training and monitoring of the CPD program; (iii) enforcement of members’ compliance with the applicable laws, regulations, ethical and professional standards; and (iv) implementation of a quality assurance review system and an investigative and disciplinary system for statutory auditors. As far as PIE auditors are concerned, the above duties will be undertaken exclusively by the Cyprus Public Audit Oversight Authority (CyPAOA), which is the ultimate authority for the audit profession.

    For individuals, four types of licensing certificates are issued by ICPAC: (i) a general practicing certificate; (ii) an audit practicing certificate; (iii) a certificate for the provision of administrative services; and (iv) an insolvency practitioner certificate. Firms are also issued the same licenses except for the insolvency practitioner certificate.

    To perform audits, ICPAC members must obtain a general practicing certificate and an audit practice certificate. For that to happen, it is prerequisite to possess a professional accountancy qualification, an advanced audit education and at least three years of post-qualification experience with an audit firm. ICPAC monitors the performance and quality assurance of auditors through a quality assurance scheme that it operated with the Association of Chartered Certified Accountants (ACCA).

    The CyPAOA is the independent oversight authority that is responsible for the supervision of the audit profession in Cyprus. Based on the Auditors and Statutory Audits of Annual Consolidated Accounts Law (L.53 (I) 2017), the CyPAOA is responsible for the following: (i) supervision of the approval, certification and registration of statutory auditors and audit firms; (ii) adoption of standards on professional ethics and auditing; (ii) supervision and implementation of initial and continuous education requirements; (iv) supervision of the activities of ICPAC and (v) supervision of the quality assurance and maintenance of an investigative and disciplinary system for statutory auditors and audit firms.

  • Audit Oversight Arrangements

    The Cyprus Public Audit Oversight Authority (CyPAOA) was established in accordance with the Auditors and Statutory Audits of Annual Consolidated Accounts Law (L.53 (I) 2017as the supreme public oversight authority to independently oversee and regulate auditors in Cyprus.

    According to the Law, the primary responsibilities of CyPAOA include the following: (i) supervision of the approval, certification and registration of statutory auditors and audit firms; (ii) adoption of standards on professional ethics and auditing; (ii) supervision and implementation of initial and continuous education requirements; (iv) supervision of the activities of the Institute of Certified Public Accountants and (v) supervision of the quality assurance and maintenance of an investigative and disciplinary system for statutory auditors and audit firms.

  • Professional Accountancy Organizations

    The Institute of Certified Public Accountants (ICPAC)

    The ICPAC was established in 1961 in accordance with the provisions of the Companies Law, Cap. 113. ICPAC membership is comprised of practicing and non-practicing accountancy professionals. Practicing professionals are accountants and auditors in public practice who possess a practicing certificate and provide accounting, audit, tax, consulting, company administration services, insolvency and other services. Non-practicing accountancy professionals work in the public and private sectors and are not required. In accordance to the Law, all statutory auditors and audit firms must be registered with a Recognised Body of Auditors.

    ICPAC, is expected to be delegated the responsibility for the following duties when the delegation agreement is signed with the Cyprus Public Audit Oversight Authority: (i) certification and registration of statutory non-PIE auditors and audit firms; (ii) administering, training and monitoring of the CPD program; (iii) enforcement of members’ compliance with the applicable laws, regulations, ethical and professional standards; and (iv) implementation of a quality assurance review system and an investigative and discipline system for statutory non-PIE auditors.

    In addition to being a member of IFAC, ICPAC is a member of Accountancy Europe and the Mediterranean Federation of Accountants.

  • Projects or Other Information

    The Auditors and Statutory Audits of Annual Consolidated Accounts Law of 2017 resulted in the sharing of responsibilities between the Cyprus Public Audit Oversight Authority (CyPAOA) and the Institute of Certified Public Accountants of Cyprus (ICPAC) over the QA review system in the. CyPAOA will conduct quality assurance reviews of statutory audit firms that audit public interest entities (PIEs), while ICPAC will perform QA reviews of firms that audit non-PIEs.

Adoption of International Standards

  • Quality Assurance

    The Cyprus Public Audit Oversight Authority (CyPAOA) is responsible for the quality assurance (QA) review system for the audits of financial statements in accordance with the Auditors and Statutory Audits of Annual Consolidated Accounts Laws (L.53 (I) 2017).

    The Law outlines specific obligations for public interest entities (PIEs) and their auditors. PIEs are required to: (i) establish an audit committee; (ii) establish mandatory audit firm quality assurance reviews at least every three years; and (iii) publish a transparency report by audit firms on an annual basis.

    The previous Auditors Law L.42(I)/2009 recognised the Institute of Certified Public Accountants of Cyprus (ICPAC) as a competent authority for the statutory auditors. ICPAC operated a QA review system that required mandatory inspections of all its members who held practicing certificates and were thus authorized to conduct statutory audits. ICPAC operates the system via an agreement with the Association of Chartered Certified Accountants (ACCA), in which the ACCA conducts monitoring visits of ICPAC’s practicing members. ICPAC indicates in its 2017 SMO Action Plan that the QA review system is fully compliant with the revised SMO 1 requirements.

    Following the enactment of the new Law, ICPAC being a Recognised Body of Auditors will be officially delegated these duties via a Delegation Agreement. CyPAOA is expected to conduct QA reviews of audit firms that audit public interest entities (PIEs), while ICPAC will be responsible for the QA review system for firms that audit non-PIEs. ICPAC also reports that the scope of responsibilities will be determined as part of the reform.

    Current Status: Adopted

  • International Education Standards

    In Cyprus, the Law regulates the initial and continuing professional development (IPD and CPD respectively) requirements for auditors.

    The Auditors and Statutory Audits of Annual Consolidated Accounts Law (L.53 (I) 2017) outlines the IPD requirements for the audit profession and obliges members of the profession to undergo CPD.

    The Institute of Certified Public Accountants of Cyprus (ICPAC) is responsible for the certification of the accountancy profession and the implementation of the IPD and CPD education requirements, the latter under the oversight of the Cyprus Public Audit Oversight Board. It operates a Joint Examination Scheme with the Association of Chartered Certified Accountants (ACCA), which is administered by the ACCA and reviewed annually to ensure that it is aligned with IAESB pronouncements. The joint scheme is modified to incorporate Cyprus Corporate and Business Law and Cyprus Taxation. ICPAC operates the mandatory CPD program for its members, both auditors and non-auditors. ICPAC reports that the program is based on the ACCA’s CPD scheme and incorporates the requirements of IES 8.

    Current Status: Partially Adopted

  • International Standards on Auditing

    Under the Auditors and Statutory Audits of Annual Consolidated Accounts Law (L.53 (I) 2017) all audits in Cyprus must be conducted in accordance with ISA adopted by the European Commission (EC). Until the EC adopts an ISA, the Law requires application of the specific ISA as issued by the IAASB. The Companies Law does not allow for a non-audit exception and all incorporated entities and self-employed individuals and partnerships with annual turnover of over €70,000 (as per Tax Laws) are obligated to produce audited financial statements in accordance with IFRS’s.

    The Cyprus Public Audit Oversight Authority (CyPAOA) has the legal authority to impose audit procedures or requirements and advise the Council of Ministers on the applicability of ISA in Cyprus. The Institute of Certified Public Accountants in Cyprus collaborates with CyPAOA and the Greek professional accountancy organization on the translation of IAASB pronouncements into Greek. Translation of the 2009 Handbook on International Standards on Auditing and Quality Control was completed in 2010.

    No arrangements have been made to update the translations to bring them in line with the latest version of the international pronouncements.

    Current Status: Partially Adopted

  • Code of Ethics for Professional Accountants

    The Auditors and Statutory Audits of Annual Consolidated Accounts Law (L.53 (I) 2017) mandates all statutory auditors and audit firms to be subject to principles of professional ethics. Furthermore, according to the Law, the Cyprus Public Audit Oversight Authority may adopt ethical standards for the audit profession in line with the IESBA Code of Ethics for Professional Accountants and relevant decisions of the European Commission (EC). The Law also stipulates that, until the EC issues a decision, auditors in Cyprus must be subject to the requirements of the IESBA Code of Ethics.

    The Institute of Certified Public Accountants of Cyprus (ICPAC), through its regulations, also requires all of its members, both auditors and non-auditors, to comply with the IESBA Code of Ethics which are directly incorporated into ICPAC’s Members’ Handbook. The Institute collaborates with the Greek Accounting and Auditing Oversight Board on the translation of the Code of Ethics into Greek. The 2009 version of the IESBA Code has been translated and is being applied. ICPAC reports that the translation of the 2013 Edition of the IESBA Code of Ethics is in progress.

    Current Status: Adopted

  • International Public Sector Accounting Standards

    The Fiscal Responsibility and Financial Framework Law of 2014 states that the Accountant General determines the accounting standards to be used for the public sector. The Institute of Certified Public Accountants of Cyprus (ICPAC) reports that public sector accounting standards are transitioning from cash to accrual basis, with the government taking a formal decision to adopt and gradually implement IPSAS.

    ICPAC reports that the government has set up an action plan and a steering committee to convert to accrual-basis accounting. The time frame of the action plan expands from 2016 and is expected to be completed in 2022. The action plan was launched in April 2016 by the Treasury Department of the government.

    Current Status: Partially Adopted

  • Investigation and Discipline

    The Auditors and Statutory Audits of Annual Consolidated Accounts Law (L.53 (I) 2017) grants authority to the Council of Ministers, with advice from the Cyprus Public Audit Oversight Authority (CyPAOA), to issue regulations for the establishment of a system of investigation and discipline (I&D) for the detection, correction, and prevention of inadequate execution of statutory audits.

    The new Auditors Law of 2017 specifies a detailed process of investigation and disciplinary process under the authority of the CyPAOA. Once the delegation agreement has been signed between ICPAC and the CyPAOA, the responsibilities will be shared between the two parties. CyPAOA will be responsible for the investigation and discipline of auditors who audit public interest entities and ICPAC will be responsible for the I&D of the rest of the profession. Until these responsibilities have been formalized, ICPAC continues to implement a system of I&D for its members that is aligned with the requirements of SMO 6.

    Current Status: Adopted

  • International Financial Reporting Standards

    The Companies Law (article 142) requires all entities to prepare financial statements in accordance with EU-endorsed IFRS. Greek translations of the standards are available through the EU legislative process.

    Current Status: Adopted

Disclaimer

IFAC bears no responsibility for the information provided in the SMO Action Plans prepared by IFAC member organizations. Please see our full Disclaimer for additional information.

Methodology

Methodology
Last updated: 07/2017
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