Accounting Regulation in Malta

Abstract

This paper considers the development of accounting rules in Malta, and traces the changing de jure requirement of a ‘true and fair view’ (TFV) in national legislation. This is done in three phases. The initial phase discusses financial reporting issues arising from the then ambiguous TFV wording in the Companies Act 1995. The changing TFV wording is compared to the UK Companies Act 1948 and to the European Community Directives being the basis of national company legislation. Due to the ever-increasing conflicts between IFRS and national legislation, ways how the local accounting profession has applied the TFV principle are then illustrated. The impact on the audit reports, arising from implementation of the IAS Regulation (1606/2002/EC) is discussed in the second phase. It is found that the IAS Regulation brought about a lack of clarity as to the applicable regulatory financial reporting framework for listed entities. In the third phase, the practical difficulties and issues that led to the recent development of a national financial reporting standard for smaller entities are examined in an international context. The possible implications of a second de jure imposition of a TFV, in this national standard, are put forward.

Notes

The Accountancy Board, a Government body appointed in terms of the Accountancy Profession Act, has legal control of the profession in Malta and has the technical support of the MIA.

In May 1954, Government appointed the Commission. Its purpose was to draft a modern bill with reference to commercial partnerships and companies, and a report on its main general features (Muscat, 2007).

The Third Schedule laid out general presentation and disclosure provisions in relation to the balance sheet and the profit and loss account.

Some sections in the Commercial Partnerships Ordinance (c. 168) are still applicable.

The Board changed the name of the standard to IFRS for Private Entities in May 2008. In January 2009 the name was changed again to IFRS for Non-publicly Accountable Entities, but at its April 2009 meeting the Board ‘definitively’ completed the circle by reverting to ‘the IFRS for SMEs’.

Therefore, the applicability of the provisions of the Third and Fourth Schedules (similar amendments were made to the CA provisions on consolidated accounts) were removed except for certain minimal disclosures such as, for example, disclosure of the number of employees.