A Company Audit, often referred to as a Statutory Audit or “closing of the books” is a legal requirement by all Cyprus companies and it is essentially an Independent 3rd Party Check by a qualified firm of auditors who, based on their tests, will ascertain if the financial statements prepared (by the accountants of the company or the client) show a True and Fair View of the operations of the Company for a particular year.
At the end of their work the auditors will issue their audit opinion which will be included in the financial statements of the Company and which will state whether these Financial Statements Show a True & Fair View (also called a “Clean Auditors Report”) or it will include all Major Findings identified that compromise the understanding of the reader of the financial statements.
Based on these Audited Financial Statements, the Auditors will then prepare and submit the Company’s Tax Return to the Cyprus Income Tax Office, a Company obligation which takes place once per annum, preferably before the 31 March following the calendar year, at which point all company taxes must be paid to avoid penalties and taxes.
Note: The magnitude of penalties and taxes for Non-Submission of the Company Tax Return (I.R4) depend on whether there is tax payable to the Income Tax Office.
If there is No Tax Payable, then the only penalty will be for Non-Submission of the Return at Euro 100.
If, however there is Tax Payable then the penalty for the Company will be Euro 100 + Interest on the Tax Due + Penalties on the Tax Due, at rates which vary on the specific year.
Therefore, it is important to ensure that any Company Taxes are paid before March following the year end to avoid such penalties and charges.
The Audit Engagement – How Does It Work?
We will liaise with you to obtain all necessary information and clarification needed to perform the audit which usually takes 2 – 3 weeks for completion. Such information contains amongst others:
- Financial Statements to be Audited
- Payroll Records
- Tax & VAT Records and Correspondence
- Legal Correspondence
- Book-keeping Records
- Bank Statements
- Invoices (sales and purchases)
- Confirmations from the banks, debtors and creditors
- Correspondence with directors and any other stakeholder we consider necessary
Upon completion of the audit we will provide you with our comments and constructive advice about the status of your financial statements and express our Audit Opinion as to whether they present a True and Fair View. Thereon, we will prepare and submit your tax return to the Income Tax Office and the Audited Financial Statements to the Cyprus Registrar of Companies.
This is a standardised procedure adopted by all Cyprus Companies which effectively outsource the audit function to an Accredited Audit firm like CYAUSE Audit Services Ltd.
Why Cyprus Companies Require an Audit
Besides the statutory requirement to have an audit and submit the company’s tax return o the Income Tax Office the value of an audit is enormous for the owners of the Company. In a financial world that is constantly evolving and new, complex regulatory requirements increasingly surface into the financial reporting arena the need for financial transparency has never been greater. Where auditing and assurance was once an annual obligation imposed by the authorities, it is now an opportunity for all companies to obtain an independent financial evaluation which will ultimately aid in the long-term viability and profitability of the company.
With our expertise and experience, we aim in excelling in our audit and assurance services, going beyond the regulatory annual audit and looking at the broader picture giving assurance and ultimately independent advice to every single one of our clients.
We look beyond the numbers and review your systems and operations to ensure that they are operating effectively in a controlled environment. Through careful examination of the transaction cycles that make up your business, we can obtain key knowledge of the structure, markets, risks and opportunities that surround your business and ultimately provide you with useful information and advice.
Our audit methodology is adapted to suit the size and nature of your organisation. We always operate with a focus on the specific client needs, and we draw upon our international industry knowledge and experience to offer the best available services. Believing that this quality of service can only be achieved through close cooperation we aim in achieving strong, long-term relationship with our clients.
Our network and affiliate group includes fully licensed firms of auditors. We are therefore able to undertake all types of audit engagements, including:
- Statutory audit of Annual Financial Statements and submission to the authorities;
- Internal Audit engagements, assessing the internal controls system of a business using a risk assessment and mitigation methodology;
- Specific purpose audit engagements;
- Other Investigations.