LOCAL UPDATE & MIA NEWS
The Accountancy Board launches GAPSE
From L to R: Simon Flynn, Hon. Tonio Fenech and Joseph Zammit Tabona
During a press conference held on 17 December 2007 at the Malta Stock Exchange, which was addressed by the Parliamentary Secretary within the Ministry of Finance the Honourable Tonio Fenech, the Chairman of the Accountancy Board Mr Joseph Zammit Tabona and the MIA President Mr Simon Flynn, Honourable Fenech launched an exposure draft of the General Accounting Principles for Smaller Entities (GAPSE).
Addressing journalists present at the press conference, Mr Zammit Tabona said “Practitioners in Malta have been applying IFRS for the last 12 years, and these are now increasingly addressing complexities which go far beyond the accounting ambit of small and medium sized entities pertinent to Malta. Furthermore IFRS require detailed disclosures which may not be of direct relevance to the users of financial statements of SMEs. This, along with EU pressures to simplify the business environment, prompted the Accountancy Board to review accounting reporting requirements and commissioned the Malta Institute of Accountants to consider a number of alternatives and to come up with a set of accounting rules which are more relevant to the size of business entities in Malta.”
GAPSE is the result of an 18 month process which started in April 2006 and which resulted in the issue of an exposure draft in December 2007. The consultative document has an exposure draft period of sixty days during which the Profession, interested stakeholders and the public at large can put forward their comments. The Accountancy Board is inviting comments on any aspect of the proposed GAPSE however it is particularly soliciting answers to the questions set out in the invitation to comment accompanying the exposure draft. Mr Zammit Tabona concluded that once the exposure period is over the document would be issued by way of another Directive to the Accountancy Profession Act.
Mr Flynn recalled how the Institute had been looking into other alternatives prior to proposing a locally drafted set of accounting principles. The first assignment of the MIA SME Reporting Task Force was to look into the currently applicable 3rd and 4th Schedules to the Companies Act, 1995 and make recommendations to the Accountancy Board on any enhancements that might be necessary in order to make these a reasonable alternative to IFRS for small and medium sized entities. Nevertheless the Task Force encountered difficulties in recommending ‘upgrades’ to the current requirements so as to make them a standalone accounting framework. These difficulties were primarily attributed to the fact that the European Union’s 4th and 7th Directives, from which the Companies Act 3rd and 4th Schedules spin off, were never meant to establish an accounting framework but simply determine minimum presentation and accounting policy requirements by which preparers of financial statements are meant to abide.
The MIA President also explained how the Task Force considered the staff draft of an IFRS for SMEs which was issued by the IASB in September 2006 and how the MIA felt that it did not achieve the objective of simplified accounting and disclosure for local small and less complex entities. Finally, the Institute had expressed the view that a standalone local accounting standard for use by smaller and less complex entities needed to be drawn up and recommended that the UK Financial Reporting Standard for Smaller Entities (FRSSE) should be used as a model in this regard. Ten months down the line, Mr Flynn referred to the proposed GAPSE as a robust product – a standalone set of accounting principles that presents major simplifications in measurement and disclosures contained in financial statements of smaller and less complex entities.
Honourable Fenech expressed satisfaction in the realisation if this project and referred to Government’s ongoing commitment towards fostering and facilitating economic growth by ensuring that businesses can focus at creating and generating wealth, and as much as possible reduce the burden of regulation and the costs associated therewith. “And the proposed GAPSE is a necessary component of such a framework and is targeted at Small and Medium Enterprises,” he added.
Hon. Fenech continued by saying that companies falling within the scope of GAPSE will now have the option to apply these Principles, in lieu of IFRS, for financial periods beginning on or after 1 January 2008. He stressed the point that the application of GAPSE is not mandatory on any company, whatever the size. GAPSE is an option which can be availed of by companies falling below pre-defined thresholds which can be said to be in line with similar EU criteria.
In fact, once issued as final, GAPSE may be applied by an entity that does not exceed the limits of two of the following criteria:
balance sheet total: €500,000;
total revenue: €1,000,000; and
average number of employees during the reporting period: 10.
GAPSE may also be applied by a subsidiary that is consolidated in the financial statements of a group, provided that all the relevant conditions in section 2 of the proposed GAPSE are satisfied.
Honourable Fenech concluded by inviting all interested stakeholders, accountants, bankers, lawyers and the public at large to put forward any comments on the exposure draft thus helping to shape up this first ever Maltese financial reporting framework and ensuring that it is a framework that is acceptable by as vast a range of stakeholders as possible and that it adequately addresses issues, transactions, events and conditions prevalent in SMEs. He finally augured that a good number of interested stakeholders will get involved in this process.
The exposure draft, which is open for public comment until 15 February 2008, can be downloaded from the Accountancy Board website www.accountancyboard.gov.mt, or from the MIA website www.miamalta.org
From L to R: The Prime Minister Dr. Laurence Gonzi, the IFAC President Fermin del Valle
and
MIA President Simon Flynn, addressing the Forum
2007 IFAC SMP Forum held in Malta
The International Federation of Accountants (IFAC) Small and Medium Practices (SMP) Forum, held in St. Julian’s on 30 October 2007, stimulated interesting and constructive debates and exchange of ideas as to what IFAC and the international profession’s response should be on a range of issues currently facing SMPs and small- and medium-sized entities (SMEs). Over 120 delegates from 37 countries attended this year’s forum, which was cohosted by the Malta Institute of Accountants.
The guest of honour, the Prime Minister Honourable Dr. Lawrence Gonzi, welcomed delegates to the forum. Dr. Gonzi’s message was clear – that the burden of regulation on SMEs needs to measured so as to ensure the conditions are right for them to grow and prosper.
The forum provided a unique opportunity for representatives from IFAC member bodies, regional accountancy bodies, other non-member professional accountancy organisations, and other international organisations to discuss a number of pressing issues currently facing many, if not most, of IFAC’s membership. While a global forum, the focus for the event was Central Asia, North Africa, Eastern Europe, and the Mediterranean.
The forum program featured a broad range of speakers and topics, including recent international developments, the work of the IFAC SMP Committee and MIA in the area of SMPs/SMEs, standard setting, initiatives aimed at providing practical support to SMPs, and ways in which SMPs can support their SME clients. Speakers included the chairs of the International Auditing and Assurance Standards Board and the International Ethics Standards Board for Accountants, as well as representatives from the World Bank and the International Accounting Standards Board (IASB).
The forum’s overarching aim was to contribute towards the development of IFAC’s strategy for assisting SMPs around the world. In support of this, the forum had five primary objectives:
To discuss how best to accommodate SME/SMP issues in the setting of standards for auditing and assurance, accounting and ethics;
To contribute to key IFAC SMP Committee initiatives, including implementation guides and web-based resources;
To discuss how SMPs can best contribute to the development of SMEs;
To identify other priorities for action by the IFAC SMP Committee; and
To facilitate networking and dialogue between relevant interested parties.
Recommendations from the forum, many of which arose from the interactive breakout discussion group sessions, will be discussed at the SMP Committee’s next meeting in São Paulo, Brazil on January 23-24, 2008. These recommendations included:
Seeking new ways to increase the current low level of participation of SMPs and SMEs in the international standard-setting process, both before and after exposure of new or revised standards;
Increasing implementation assistance for SMEs and SMPs to help them converge on international standards (implementation guides and other tools, web-based resources etc); and
Investigating how IFAC, its member bodies, and regional organisations can increase the capacity of SMPs to support SMEs.
Copies of the forum speeches, presentations and discussion group reports may be downloaded from the IFAC website at http://www.ifac.org/SMP/index.php#Resources.
ACCA and MIA renew partnership to develop Maltese profession
ACCA (the Association of Chartered Certified Accountants) and the Malta Institute of Accountants have reinforced their long- standing partnership which will continue to develop the accounting profession on the island.
The two professional bodies will sign a contract renewing their Joint Examination Scheme programme at a ceremony in London on 16 January 2008. The document will be signed by MIA secretary general Noel Zerafa and ACCA managing director – learning & technical policy, Clare Minchington.
The continuation of this long-standing partnership will see both professional accountancy bodies renewing their commitment to promoting and supporting the highest standards of professionalism in accountancy and finance in Malta, and in supporting young Maltese students in pursuing a successful career.
Clare Minchington said: “This is an important development for both organisations and this agreement will ensure that the needs of students, and employers are fully met on Malta as we continue to work together to ensure that our joint exams produce finance professionals who can meet the needs of Maltese businesses.”
Noel Zerafa said: “This agreement with ACCA builds upon and solidifies the arrangements already in place. It witnesses the level of confidence that ACCA has in the Malta Institute of Accountants and its students. It also ensures that students qualifying from the Joint Examination Scheme receive a high level standard of education that is pitched to an internationally recognised syllabus. The MIA looks forward to keep on working closely with ACCA and augurs that this relationship will strengthen in the years to come, for the benefit of students and the Maltese Accountancy Profession.”
NEW MIA MEMBERS AND UPGRADES
AIA
Carlos Camilleri
Shaun Paul Camilleri
Amanda Farrugia
Dorianne Mifsud
Marvic Portelli
Joanne Theuma
MIA
Nadia Camilleri
Sergei Cutajar
Valerie Farrugia
Aldo Ellul
Gordon Gauci
Josette Vella
Upgrades
Edward J. Licari
Ernestino Riolo
MEMBERS’ NEWS
Brian Tonna & Co. is Malta Member of Newly-Merged International Accountancy Group
The Boards of Nexia International and SC International, two leading worldwide networks of independent accountancy, tax and business advisers, have agreed to merge, making the combined group the ninth largest provider of audit and advisory services in the world.
To be known as Nexia International, the enlarged group will have a combined turnover of over US$2.2 billion, with 599 offices represented in 97 countries, and over 23,000 employees world-wide. The enlarged network will enhance Nexia International’s service offering and provide it with crucial additional resources to meet growing client demands.
Outside of the US market, Nexia International will be the seventh largest group globally with combined fee income of $1779.2 million for 2006.
In Malta, Nexia International is represented by Brian Tonna & Co., who, being the member firm of SC International, is now the sole representative of the merged group.
Commenting on the merger, managing partner of Brian Tonna & Co, Brian Tonna said ‘The combined resources and access to Nexia methodologies will help to further strengthen our position in the local market and to provide our clients with added value derived from our international association.’
More information can be sought from www.nexia.com and www.briantonna.com
Appointment of new Partners at Deloitte
Deloitte has recently announced the admission of two new Partners within the local firm. Sarah Curmi and David Delicata have taken up full responsibility as partners with Deloitte in Malta with effect from 1 January 2008.
Sarah leads the audits of a number of public and private entities engaged in a variety of industries. She has significant audit experience in the financial services industry particularly in the insurance and banking sectors. Over the years she has been heavily involved in the internal training programs for audit staff and has also lectured on accounting and auditing standards both within Deloitte and at CPE activities organised by the Malta Institute of Accountants.
David is a partner within the audit function. David has led several audit and related assignments covering a wide range of national and international clients operating in different fields. David is an in-house trainer on International Financial Reporting Standards and auditing techniques and has in the past lectured students in preparation for their professional accounting examinations.
“We are very pleased to announce the admission of Sarah and David as partners of the firm," said Paul Mercieca.
Sarah Curmi
David Delicata