Cyprus Auditing Practices In EU Sights
The warning is in the form of a reasoned opinion, and the next step could be financial penalties from the Court of Justice.
The government has been asked to set up a body which monitors auditors for independence and ethical practices.
The system would approve and register statutory auditors, adopt standards on professional ethics and ensure continuing education and quality assurance.
It would also conduct investigations where necessary and to take appropriate actions accordingly, such as penalties and sanctions.
How is Cyprus not respecting this rule?
Member States had to implement the Statutory Audit Directive by 29 June 2008. However, Cyprus has so far only partly transposed this directive into national law.
While the law adopted does foresee the setting up of a public body responsible for the public oversight of statutory audits and audit firms, this institution has not actually been created yet.
How are EU citizens and/or businesses suffering as a result?
There is to date no guarantee that supervision over audit firms in Cyprus is conducted by an independent body. Therefore, statutory audits performed in Cyprus may be considered less reliable by investors than elsewhere in the European Union.