Financial Reporting & Auditing
All Cypriot Companies, whether local or international, are required to maintain accurate books of accounts, which should reflect the true and correct position of their affairs, as well as give sufficient clarification of their activities.
In particular, correct and proper records should be kept to reflect:
- All monies received and disbursed, together with details of the related transactions.
- All sales and purchases of stock by the company.
- All company assets and liabilities.
In addition the Cypriot Company Law, which is closely modelled on its English counterpart, requires that company accounts must include the following:
- A directors’ report, which should accompany the balance sheet and be submitted to the shareholders’ annual general meeting.
- An auditor’s report containing certain prescribed statutory information, unless the company is exempt from this requirement (small companies).
- Full financial statements as prescribed by IFRS (International Financial Reporting Standards) and Consolidated Financial Statements in the case of parent companies (unless specifically exempted in some cases).
However, for Income tax purposes (s.38 of The Income Tax Law) full financial statements that are audited or certified by officially authorized auditors or accountants and a declaration on the Income Tax Return - which the return agrees to the audited financial statements-, are required. So, in effect, audited financial statements and an Income Tax Return are required for all companies, even companies with no taxable income and/or dormant companies.
Furthermore, all companies with share capital are required to submit an Annual Return to the Registrar of Companies.
The Annual Return must be accompanied by the audited financial statements of the company, adopting the IFRSs translated into the Greek language.
Cyprus- Registered Branches of foreign companies are not legally bound to compile full separate branch accounts but, when taxed on the island, are obliged to do so for income tax purposes.
They also have to submit accounts of the main company, translated into Greek, to the Registrar of Companies. Partnerships are exempt from any requirement to prepare audited accounts, but they are legally bound to keep proper books of account which must be available for scrutiny by individual partners.