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Public Companies
Public companies must issue the audited annual financial statements within three
months of the end of the year. In addition, public companies must issue quarterly
reports within two months of the end of each quarter (except the 4th quarter). These
quarterly reports must be reviewed by the independent auditors of the company.
Public companies must prepare the annual and quarterly financial statements in
accordance with International Financial Reporting Standards (“IFRS”). The Securities
Law also requires management to disclose a discussion and analysis of the results
of operations in annual and quarterly reports of public companies. Public companies
must also report on the effectiveness of their internal controls over financial reporting.
Audit Requirements
Under the Israeli Companies Law, 1999, Israeli companies and branches of foreign
entities must appoint an Israeli Certified Public accountant ("CPA") or an accounting
firm as the companies independent auditor. All the companies must file audited
financial statements with the Registrar of Companies. The auditor of the company
is appointed by the General Annual shareholder's meeting. The auditors audit the
financial statements of the company and signs the audit opinion (also referred to as
the "Auditor's report").
The auditor's report should include a statement that the financial statements present
fairly, in all material respects, the financial position of the Company and the results of
its operations in conformitywith the relevant generally accepted accounting principles
("GAAP").
Audited financial statements must also be filed with the tax authorities when filing
the annual tax return. Israeli auditing standards are prescribed by the Israeli Institute of
Certified Public Accountants ("ICPA") and are incorporated into the Auditors (Mode
of Performance) Regulations, 1973.
The ICPA publish the auditing standards which are mainly based on international
auditing standards.
Accounting Standards
Private Companies
Most of the Israeli private companies issue their financial statements in accordance
with accounting standards generally accepted in Israel ("Israeli GAAP"). According to
Israeli accounting standard issued in July 2006 by the Israeli Accounting Standards
Board, entities that are not subjected to the Israeli Securities Law are permitted (but
not required) to prepare their financial statements in accordance with IFRS.
In July 2010, the Israeli Accounting Standards Board issued an Israeli accounting
standard, according to which, small and medium entities are permitted (but not
required) to prepare their financial statements in accordance with IFRS for SMEs
commencing 1 January 2011.
The Israeli Companies Law, 1999 requires listed companies to file financial
statements in accordance with the Securities Law and requires unlisted
companies to file financial statements prepared in accordance with "generally
accepted accounting principles."