Kyriakos Iordanou: The accountancy profession is deeply embedded in the economy

Kyriakos Iordanou, General Manager of the Institute of Certified Public Accountants of Cyprus (ICPAC), discusses the evolving landscape of the accounting profession, shifting regulatory frameworks and ICPAC’s proactive role in guiding firms to adapt to these changes.

What are the most pressing challenges currently facing the accounting profession in Cyprus and how is ICPAC addressing them?

Like other sectors, the accountancy profession as a whole, which includes accounting firms and ICPAC, is facing various challenges, some of which are urgent while others can be addressed in the near future. The profession is inherently linked to the broader economy and market trends and, therefore, has to contend with common issues such as macroeconomic fluctuations, government response times and complex banking processes.

One major challenge is how to attract and retain talent; many vacancies in accounting firms currently remain unfilled. ICPAC is committed to several key initiatives, including advocating for tax reform and enhancing Cyprus' role as a financial and services centre within Europe and globally. The organisation is also focused on the effective implementation of EU Directives, such as those on foreign direct investment screening, global taxation of multinational corporations, AML and compliance measures and the installation of supervisory mechanism for AML and sanctions competent authorities.

Additionally, the transposition of the EU’s CSRD Directive, updates to the Auditors Law, and the initiation of green and sustainability reporting in 2025 are high on ICPAC’s agenda. Addressing the needs of SMEs and smaller accountancy firms is equally significant, and this includes introducing a local reporting framework and ensuring the practical application of review engagement standards for assurance.

ICPAC deploys its resources to cover all areas to the best of its ability, by engaging in consultations with all related stakeholders, drafting proposals and reports, launching new initiatives, offering member support and training and maintaining an open channel for feedback to strengthen the profession's reliability and effectiveness.

In your view, how have global trends in finance and regulation influenced the accounting profession locally, and how is the sector aligning its standards with international best practices?

The accountancy profession is directly linked to international standards regarding the reporting of financial statements and audit. Beyond this, it actively monitors and adapts to evolving compliance directives and regulation in areas such as anti-money laundering (AML), sanctions, taxation, reporting, etc.

Over the last several years, the profession has found itself confronting developments emanating from the international sphere, including the surge in AML and sanctions compliance, banking requirements, inflation and warfare in Europe and the Middle East. Additionally, the introduction of sustainability measures and related reporting, along with the necessary audit and assurance processes, has imposed further demands. These factors collectively impact the sector by influencing client relationships, increasing operational costs, and challenging firms to maintain their viability as sustainable businesses.

What benefits do you believe the establishment of a single Supervisory Authority will bring to the professional services sector on the island, particularly in terms of transparency and oversight? Do you agree or disagree with this initiative and what are your non-negotiables regarding its implementation?

Before I answer, allow me to ask what is meant by the term “Single Supervisory Authority”? Unfortunately, given the public discussion, it appears to have no solid and clear definition, as it varies among users. If the question refer to a Single Supervisory Authority for Anti-Money Laundering and Sanctions, established as a public authority to supervise, coordinate and oversee the whole of the financial services sector, then our response is overwhelmingly positive!

Currently, there are plenty of AML competent authorities pursuant to the specific law, which need a superior, overarching umbrella, ensuring that they exercise their duties in the appropriate manner, uniformly and in adherence with the respective laws. Such a development will enhance the overall compliance front, reduce possible imbalances and further improve the effectiveness of the work of the individual authorities via the application of common approaches and exchange of information. ICPAC proposed this solution several years ago, describing this new supervisory authority as the National Financial Services Authority. Similar arrangements are found in other European countries and other jurisdictions with the relevant business models. In addition, introducing the above proposal will be in line with the latest EU AML Directive and will also be within the remit of the new EU AML Authority (AMLA).

With the rapid digital transformation of accounting processes through AI and automation, how do you foresee these technologies impacting traditional accounting roles and what steps is ICPAC taking to prepare professionals for this shift?

Accounting has undeniably become a digital profession! It has moved far beyond traditional manual and paper-based methods to embrace sophisticated computerised systems. The rapid development of digital tools, office automation and AI is supplementing the way the profession operates. As seen in the past, many traditional roles will inevitably be transformed by these technological advancements.

However, this shift also brings new opportunities for current professionals and even more for the next generation of accountants. New skills and knowledge sets will be required, requiring a transition from the current modus operandi to the next one. To prepare for this shift, ICPAC has been proactive on multiple fronts. Initiatives include expanding our educational outreach into schools to inform future accountants about the potential of the profession, ongoing training programmes for our members, and a thorough examination of the implications for work quality and professional objectives. Moreover, ICPAC places significant emphasis on the ethical and governance dimensions of digital transformation.

Cyprus is known as an international business hub. What do you see as ICPAC’s role in maintaining the country’s reputation and attracting global investors? What unique advantages does Cyprus offer and how can the sector leverage these further?

The accountancy profession is deeply embedded in the economy, playing a vital role in supporting businesses and investors. As such, ICPAC and its members are pivotal in reinforcing Cyprus' reputation as a credible and attractive international business hub.

To achieve this, ICPAC's core responsibilities include: (a) proposing enhancements to the country's business, legal and regulatory frameworks; (b) collaborating with the Government, the House of Representatives, professional bodies and economic stakeholders to achieve strategic objectives; (c) presenting a positive and appealing image of Cyprus to foreign investors, thereby facilitating the establishment and operation of their ventures; (d) executing its role as a competent authority and regulator, ensuring the highest standards of quality and professionalism among its members; and (e) providing education, training and guidance to its members and the broader business community in its areas of expertise. Cyprus’ greatest asset in this effort is its human capital – an invaluable resource for drafting and implementing laws, formulating strategies and advancing the nation's best interests.

Given the evolving landscape of tax regulation and compliance, what challenges and opportunities do you anticipate for accounting professionals in Cyprus over the next few years?

The current landscape is continuously evolving, with the pace of change accelerating significantly in recent years. It could be said that the past decade has marked an era of heightened compliance, a trend that is expected to persist in the coming years. I anticipate that further measures and initiatives will be introduced in the international tax arena, as well as within the broader compliance framework, adding to the existing obligations faced by professionals.

However, every challenge presents an opportunity; there may be fertile ground for those who wish to specialise in high-impact areas, adapt to the demands of AI and digital technology, expand their service offerings to meet new needs in finance, advisory and digital sciences, or implement strategies to keep their businesses healthy, relevant, agile and cost-efficient.

(Original photo by TASPHO)

This interview first appeared in the November edition of GOLD magazine. Click here to view it.