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66 ACCOUNTING AND AUDITING PERSPECTIVES earlier application is permitted only when accompanied by the relevant amendments to Accounting Standard No. 27. ♦ Sale of assets held for rental: Entities that routinely sell items of property, plant and equipment that it has held for rental to others, shell transfer such assets to inventories at their carrying amount when they cease to be rented and are held for sale. The proceeds from the sale of such assets should be recognized as revenue in accordance with Accounting Standard No. 25, Income. Cash payments to manufacture or acquire such assets and cash receipts from rental and sale of such assets are to be included within operating activities in the statement of cash flows. Transitional provisions require the application of the amendments retrospectively (for periods commencing January 1 st 2010) and earlier application is permitted only when accompanied by the relevant amendments to Accounting Standard No. 27. 6.5. GENERALLY ACCEPTED AUDITING STANDARDS IN ISRAEL An auditor in Israel performs an audit in order to express an opinion as to whether the financial statements present fairly, in all material respects, the financial position of the company, the results of its operations, changes in stockholders’ equity and cash flows, in conformity with generally accepted accounting principles (GAAP) or IFRS (if a listed entity). In performing the audit, the auditor is required to comply with the Auditor’s Regulations (Auditor's Mode of Performance), professionally and prudently. Furthermore, the auditor is required to perform the audit independently and objectively. Various opinions regulate the conduct of an auditor and his mode of operation during the audit of financial statements in Israel. In addition, specific regulations exist with respect to audits, such as the requirements of the State Controller, municipalities and local authority auditors and auditor’s regulations, published in accordance with the Certified Public Accountants Law. The Institute of Certified Public Accountants in Israel regularly publishes guidelines for recommended auditing procedures to be applied by auditors including, inter alia, examining factors of corporate risk and focus on them. The Committee for Auditing Standards in Israel took significant steps towards general adoption of IFAC’s standards (except for minor adjustments due to the business environment and judicial developments in Israel). BDO Israel
BDO Israel DOING BUSINESS IN ISRAEL Israeli GAAS contain diverse principles and procedures. During 2010 and early 2011, the three following audit standards were published: Audit Standard No. 102, amendment to Audit standard No. 99 "Amending Audit Standard No. 90 concerning 'The Uniform Auditor's Opinion on the Financial Statements' ": Audit standard No. 102 amends the effective date for Audit Standard 99, thus it is effective for audits of financial statements issued on or after December 15, 2009. Audit Standard No. 103, Audit of internal control over financial reporting integrated with an audit of financial statements: Section 404 of the Sarbanes-Oxley Act (3) , requiring company management to assess and report on the effectiveness of the company's internal control, was demanded by Israeli legislation and regulations for specific entities, Israeli banks and credit card companies (2008), government companies (and their subsidiaries) ascending specific quantity thresholds (2009) and institutional parties (2010)]. Aspiring to set existing reporting and auditing internal control over financial reporting at the level defined under US GAAS, the Institute of Certified Public Accountants in Israel has concluded that, with respect to the above entities, it is appropriate to adopt the PCAOB standards for audits of internal control over financial reporting (PCAOB - Auditing Standard No. 5). Consequently, the Institute published Audit Standard No. 103, enforcing PCAOB's AS 5 with appropriate references to other Israeli GAAS (instead of the parallel US GAAS). Audit Standard No. 104, Audit of internal control components over financial reporting: This Standard was published along with the publication of Audit Standard No. 103. Standard No. 104 is designed to determine the way accountant's audit of internal control components over financial reporting for the year ended December 31, 2010 (excluding the audit of entities specified by Audit Standard No. 103). Such an audit is designed to identify the control components to be audited, in order to achieve a reasonable degree of assurance that these components are carried out effectively, in all material respects. (3) The act, among other things, established new provisions related to internal control over financial reporting. 67
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PREFACE This publication has been p
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7. INVESTMENT INCENTIVES AND TRADE
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8 THE ISRAELI ECONOMY IN 2010 The I
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1.2.4. Fiscal Developments 10 THE I
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12 THE ISRAELI ECONOMY IN 2010 1.2.
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14 THE ISRAELI ECONOMY IN 2010 Comp
Page 18 and 19: 16 ISRAEL - GENERAL OVERVIEW Israel
Page 20 and 21: 2.4. ISRAEL’S CURRENCY 18 ISRAEL
Page 22 and 23: Legal holidays in 2010 and 2011 are
Page 24 and 25: 22 OVERVIEW OF ISRAEL’S HIGH-TECH
Page 32 and 33: OVERVIEW OF ISRAEL’S HIGH-TECH IN
Page 34 and 35: 32 BUSINESS STRUCTURE The Companies
Page 36 and 37: 34 BUSINESS STRUCTURE with respect
Page 38 and 39: 36 BUSINESS STRUCTURE recommendatio
Page 40 and 41: 38 BUSINESS STRUCTURE TASE regulati
Page 42 and 43: 40 BUSINESS STRUCTURE ♦ Non-profi
Page 44 and 45: 4.2.2. Prerequisites 42 BUSINESS ST
Page 46 and 47: 44 BUSINESS STRUCTURE As mentioned
Page 48 and 49: 46 BUSINESS STRUCTURE 4.3. INSURANC
Page 50 and 51: 5.1.2. Distribution of Employees 48
Page 52 and 53: 50 BUSINESS ENVIRONMENT As of Janua
Page 54 and 55: 5.2. ANTITRUST LAW 52 BUSINESS ENVI
Page 56 and 57: 5.3. INTERNATIONAL TRADE 54 BUSINES
Page 58 and 59: 5.4. TRADE AGREEMENTS 56 BUSINESS E
Page 60 and 61: 5.5. PROPRIETARY RIGHTS 58 BUSINESS
Page 62 and 63: 60 ACCOUNTING AND AUDITING PERSPECT
Page 76 and 77: 74 INVESTMENT INCENTIVES AND TRADE
Page 108 and 109: 106 TAXATION Under the recent tax r
Page 110 and 111: 108 TAXATION (d) More than 50% of o
Page 112 and 113: 110 TAXATION 8.2.2.6. Dividends Rec
Page 114 and 115: 112 TAXATION (3) Location of fixed
Page 116 and 117: 114 8.2.3.4. Rental Income from Out
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116 TAXATION "Accommodating Year”
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118 TAXATION "Privileged Securities
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120 TAXATION 8.2.4.3. Tax exemption
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8.3.4. Sale of Stocks 122 TAXATION
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124 TAXATION 8.3.7.3. Setting-off C
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126 TAXATION ♦ According to the r
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8.5. TAXATION OF TRUSTS 128 TAXATIO
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8.6.1. Definitions: 130 ♦ Israeli
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132 5) Certain services rendered to
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8.8.6. Real Estate Companies 134 TA
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8.10. TAX TREATIES 136 TAXATION As
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138 Dividends % Interest % TAXATION
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140 FOREIGN EXCHANGE CONTROL AND PR
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10.3. ISRAEL LAND ADMINISTRATION OF
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11.2. KEY FIGURES FOR DECEMBER 31,
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Example A NIS Example B NIS APPENDI
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APPENDIX 2 Industrial enterprises m
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Ministry of Justice 29 Tsalch Adin
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Israel - US Binational Industrial R
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BRAZIL Embassy of Israel S.E.S Av.
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ECUADOR Embassy of Israel Av. La Co
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IVORY COAST (COTE D’IVOIRE) Embas
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PANAMA Embassy of Israel Edificio P
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THAILAND Embassy of Israel Ocean To
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REPUBLIC OF THE FIJI ISLANDS Embass
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