Cyprus Audit vs Review Engagement (2026): Which One Applies to You

Every Cyprus company needs annual financial statements. What varies is how much assurance a licensed professional puts on those statements. Under the amending Companies Law and Regulations that took effect in early 2026, small Cyprus companies can now use a lighter review engagement (negative assurance) instead of a full statutory audit (positive assurance) — saving typically 40–60% on annual professional costs. Above the thresholds, or where certain tax claims are made, a full audit remains compulsory. This guide sets out exactly which regime applies to you, what each actually covers, and what it costs.Companies Law Cap. 113

The choice in one paragraph

Cyprus historically required every active limited company to undergo a full statutory audit. The review-engagement alternative for small companies, allowing the lighter "limited assurance" engagement instead of the full ISA audit, has its turnover threshold raised from €200,000 to €300,000 for financial years beginning on or after 6 February 2026 (the total-assets test stays at €500,000). For companies below both thresholds, the review engagement is a genuine cost-saver. Above either threshold, or where the company makes certain tax claims, the full audit is still compulsory.

The size test in 2026

A Cyprus company qualifies for the review engagement regime if it meets both tests for two consecutive financial years:

Both conditions must be satisfied for two consecutive financial years before the company is eligible to elect the review engagement. The higher €300,000 turnover threshold applies to financial years beginning on or after 6 February 2026 (it was €200,000 previously); the €500,000 total-assets test is unchanged. There is no employee-number test for the review option.Companies Law Cap. 113, s.155 (as amended 2026)

Claims that force an audit regardless of size

Size alone is not enough. A full ISA audit remains compulsory whenever the company:

• Claims Notional Interest Deduction (NID). Article 9B, Income Tax Law N.118(I)/2002
• Claims IP Box 80% deduction on qualifying IP profit. Article 9(1)(l), Income Tax Law N.118(I)/2002
• Claims the R&D super-deduction (120%).
• Utilises group loss-relief (intra-group offset of current-year losses).
• Is a member of a consolidated group that exceeds the size tests.
• Has controlled-transactions documentation requirements under Cyprus transfer-pricing rules (local file / master file obligations).
• Is a regulated entity (CySEC-licensed CIF, AIF, AIFM, EMI, payment institution, trust and corporate service provider, etc.).
• Has material cross-border transactions where an auditor’s sign-off is commercially needed for bank or counterparty purposes.

What a full statutory audit actually covers

A Cyprus statutory audit under ISA:

• Gives a positive assurance opinion: the auditor expresses the view that the financial statements show a true and fair view.
• Includes risk assessment and planning at the start of the year.
• Tests transactions and balances: sales, purchases, payroll, bank balances, receivables, payables, inventories, fixed assets.
• Includes third-party confirmations for material bank balances, receivables and legal claims.
• Tests the internal controls over financial reporting.
• Issues the audit report signed by the ICPAC-licensed auditor.
• Output: audited IFRS financial statements filed with HE32.

What a review engagement covers (and doesn’t)

A review engagement under ISRE 2400:

• Gives negative assurance: the reviewer confirms that nothing has come to their attention to suggest the statements are not properly prepared.
• Uses inquiry and analytical procedures primarily — limited substantive testing.
• Does not require third-party confirmations or internal-control testing.
• Issues a review report from the ICPAC-licensed practitioner.
• Output: reviewed financial statements, typically accepted for filing where the company qualifies under the size rules.

A review is sufficient for the Registrar and for most banking counterparties that serve small Cyprus companies. It is generally not sufficient where a commercial counterparty (institutional investor, multinational customer, regulator) explicitly requires an audited opinion.

Realistic 2026 costs

Ranges are indicative 2026 market levels for Cyprus mid-tier firms. Big-four firms typically charge 40–100% premiums.

Timeline and filing deadlines

1. Financial year ends (most Cyprus companies run calendar-year: 31 December).
2. Bookkeeping closes typically by end of February.
3. Draft management accounts prepared in March.
4. Auditor / reviewer fieldwork: typically April–August.
5. Audited / reviewed financial statements signed.
6. Company holds AGM.
7. HE32 filed with Registrar: within 28 days of AGM, accompanied by the audited or reviewed financial statements. Late filing carries a €50 fixed penalty plus €1 per day, capped at €150. Companies (Amendment) Law 18(I)/2024
8. TD4 corporate tax return: under the 2026 permanent deadline, by 31 January of the second year following the tax year (so 2026 tax year → 31 January 2028). Assessment and Collection of Taxes Law N.4/1978
9. Provisional tax payments: 31 July and 31 December of the current tax year (two equal instalments).

What your auditor will ask for

• Opening trial balance (reconciled to prior-year audited figures).
• Complete general ledger and trial balance for the year.
• Bank statements and bank reconciliations for every account (Cyprus banks, EMIs, foreign currency).
• Sales invoices listing and supporting documentation sample.
• Purchase invoices file and supporting documentation sample.
• Payroll register, SI/GESY submissions, employment contracts.
• Fixed-asset register and depreciation schedule.
• Contract registers: major customer / supplier / financing agreements.
• Related-party transaction summary and any transfer-pricing documentation.
• Statutory registers (directors, members, minutes of meetings).
• Previous year’s TD4, VAT returns, audited accounts.
• Any correspondence with the Tax Department during the year.

How to choose if you qualify for either

Where the company is eligible for the review regime but has the option to go full audit, consider:

• Banking pipeline. If you are applying to a Cyprus bank or an international banking partner, audited accounts often unlock faster onboarding.
• Funding pipeline. Angel / VC / institutional due diligence is smoother with audited accounts.
• Exit horizon. If a share-sale exit is plausible in the next 3–5 years, build a clean audit history now.
• Complexity. Multiple currencies, payroll, VAT, cross-border suppliers — an audit enforces more discipline and reduces the chance of an error accumulating into a material issue.
• Pure cost. If none of the above apply, the review saves 40–60% per year.

Switching between audit and review year-to-year

Eligibility for review turns on meeting both thresholds for two consecutive financial years, so a company cannot drop into the review regime on the strength of a single good year — it must stay below €300,000 turnover and €500,000 total assets across two years running. Equally, a one-off spike above a threshold can disqualify it. For consistency, many clients prefer to stay on one regime even when they become eligible to switch — it simplifies year-on-year comparability and avoids arguing the "wait, did we do an audit last year?" question during funding or audit cycles. We generally recommend switching only once, when the company first qualifies for review, and then staying on review until size grows again.