GSL / Foreign Companies Audit / Audit Israel

Audit of an Israel company, financial statements, accounting, consulting in Israel

Israel is a developed country in the Near East, is bordered by the Mediterranean Sea, and attracts investors and businessmen with its vast economic connections, innovations in many promising areas of economy and excellent climate. Obligations to file financial statements and carry out audit of companies are fully met and controlled. An annual report presented to state authorities discloses all aspects of the company’s activity and all transactions in maximum detail.

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Service packages Legislation Tax System Audit Services
Preparation of management accounts (for banks)
from 1 000 USD
Preparation of annual financial statements and tax returns
from 5 000 USD
Preparation of audited financial statements (made under IFRS) for CFC purposes
from 1 500 USD
Consulting services
from 300 USD per hour

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General requirements

In Israel, all companies must file annual accounts in accordance with the Companies Law.

However, there are differences that depend on the form of incorporation of the enterprise:

I. An individual entrepreneur may keep accounting records of expenses, file simplified accounts, is allowed to not have an accountant on staff, but may not work with legal entities.

II. A private limited company must employ the accrual method of accounting, by using double-entry accounting, must have an accountant on staff and has the right to outsource accounting.

III. A public company must keep accounting records; financial accounting and reporting requirements are generally the same as those for private companies, the only difference being that a public company may offer its shares on an open market.

Once a year, a private limited company must prepare and file an annual report with the Ministry of Justice of Israel within 14 days after the annual general meeting of shareholders of the company.

A public company accounts to the Securities Authority, the stock exchange where the company’s securities are quoted, and to the Registrar of Companies in accordance with the requirements of the Companies Law, the Securities Law or any other law.

Accounts shall be filed electronically through the State Services Portal:

  • for private companies – with the Ministry of Justice,
  • for public companies – with the Securities Authority.

An annual report shall also be filed with the Tax Authority.

An annual report must contain:

  • the company’s name,
  • actual location address,
  • report on disposal of the authorized capital,
  • information on shares and list of shareholders,
  • list of directors of the company,
  • information on the person legally entitled to file an annual report with the state authority,
  • balance sheet,
  • profit and loss statement,
  • cash flow statement,
  • notes to accounts.

Furthermore, an annual report contains a detailed analysis of the results of the enterprise’s activity disclosing the main financial indicators, sources of the company’s financing and liquidity of the corporation.

Israel uses its own accounting standards. The International Financial Reporting Standards (IFRS) apply to companies that are in a group of companies and must file consolidated accounts.

Statements must be kept in the registered office of the company for at least 7 years after the date of their preparation to be checked by the company’s directors and shareholders.

An inactive company may decide at a general meeting that it is not required to prepare statements.

Audit of accounts

A company must appoint an auditor to audit its annual financial statements and express opinion on them.

An auditor shall be appointed at each annual general meeting and shall hold this position until the next annual general meeting.

Audit in Israel is a legal requirement to all companies, except for individual entrepreneurs and small private companies whose turnover is under 106 shekels (ILS) per year.

Time frame for preparation and submission of financial statements

Financial year is from 1 January to 31 December.

Annual accounts must be filed within 6 months after the date of the end of the reporting period, i.e. by 30 June, for all companies.

Liability for late filing of accounts

In the case of a delay in filing an annual report, sanctions apply: a penalty of 119 ILS and late payment fees.

Consolidated financial statements

Companies that have subsidiaries (where their ownership interest exceeds 50% of shares/stock) must prepare consolidated accounts in accordance with the International Financial Reporting Standards (IFRS).

A consolidated annual report shall contain:

  • auditors’ opinions,
  • consolidated statements of financial position,
  • consolidated profit and loss statements,
  • consolidated statements of comprehensive income,
  • consolidated statements of changes in share capital,
  • consolidated cash flow statements,
  • notes to consolidated financial statements.
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