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Cyprus must set up public oversight system: EC

The European Commission (EC) has requested Cyprus urgently establish an effective public oversight system or face rule infringement procedures.

European member states are required under EU laws on auditing to set up a public oversight system for statutory auditors and audit firms under national law, which so far Cyprus has failed to do.

The EU Statutory Audit Directive aims to ensure investors and other interested parties can rely on the accuracy of audited accounts. Member states are to do this through setting up a public body responsible for the public oversight of statutory audits and audit firms.

Responsibilities of the body include: the approval and registration of statutory auditors; the adoption of standards on professional ethics; and for ensuring continuing education and quality assurance. It also has the right to conduct investigations where necessary and to take appropriate actions, such as penalties and sanctions.

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,” the EC stated.

The EC added if Cyprus fails to take satisfactory measures to remedy the infringement of EU law within two months, it may decide to refer the case to the EU Court of Justice.

 

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