Technical News

Accountancy Profession Act (CAP. 281) – Publication of amended Directive Numbers 1, 2, 3 and 4

The Accountancy Board, with the approval of the Minister for Finance, issued in terms of the Accountancy Profession Act (Cap. 281) and the Accountancy Profession Regulations 2009 amendments to the following Directives:

  • Directive Number 1 Accountancy Profession (Continued Professional Education),
  • Directive Number 2 Accountancy Profession (Code of Ethics for Warrant Holders),
  • Directive Number 3 Accountancy Profession (Annual Return and Registration Fees), and
  • Directive Number 4 Accountancy Profession (Quality Assurance).

The Directives have been amended to reflect the changes brought about by the New Audit Directive altough some other clarifications were also included. The directives may be viewed by accessing the website of the Accountancy Board.

Amendments to the Companies Act (Cap. 386)

Directive 2013/34/EU of the European Parliament and of the Council regarding annual financial statements of companies was transposed in Maltese law by means of Legal Notice 289 of 2015 entitled “Accountancy Profession (General Accounting Principles for Small and Medium-Sized Entities) Regulations, 2015”, and amendments to the Companies Act, 1995. The changes will affect financial reporting periods beginning on or after 1 January 2016. Attention is drawn to the following two changes consequent to the provisions of the new Directive:

  • The exemption from the preparation of consolidated accounts previously granted by article 172 of the Companies Act in the case of eligible Financial Holding companies has been removed. The Registrar of Companies will therefore not be able to grant any exemption for financial periods commencing on or after 1 January 2016.
  • The possibility for certain companies to extend the period allowed for laying accounts before the general meeting will no longer be available.
  • The relative statutory notices, Form U and Form U (1), may no longer be submitted to the Registrar for the said financial periods.

Amendments to IASs mandatory for annual periods beginning on or after 1 January 2017

Amendments to IAS 7 Statement of Cash Flows

Earlier this year the International Accounting Standards Board (the Board), responsible for IFRS Standards, issued amendments to IAS 7 Statement of Cash Flows. The improvements to disclosures require companies to provide information about changes in their financing liabilities and come as a response to requests from investors for information that helps them better understand changes in a company’s debt. The amendments will help investors to evaluate changes in liabilities arising from financing activities, including changes from cash flows and non-cash changes (such as foreign exchange gains or losses). The improvements are part of the Board’s Disclosure Initiative—a portfolio of projects aimed at improving the effectiveness of disclosures in financial reports.

IASB issues narrow-scope amendments to IAS 12 Income Taxes

The amendments, Recognition of Deferred Tax Assets for Unrealised Losses (Amendments to IAS 12), clarify how to account for deferred tax assets related to debt instruments measured at fair value. IAS 12 provides requirements on the recognition and measurement of current or deferred tax liabilities or assets. The amendments clarify the requirements on recognition of deferred tax assets for unrealised losses, to address diversity in practice. Entities are required to apply the amendments for annual periods beginning on or after 1 January 2017 altough earlier application is permitted. The amendments to the Standard follow on from a recommendation by the International Financial Reporting Interpretations Committee (the Interpretations Committee).

ISA 250 (Revised), Consideration of Laws and Regulations in an Audit of Financial Statements

In July 2016, the International Ethics Standards Board for Accountants (IESBA) introduced new requirements to the Code of Ethics for Professional Accountants (the IESBA Code) addressing non-compliance with laws and regulations (NOCLAR), which becomes effective on 15 July 15 2017.

In response to the new requirements addressing NOCLAR in the IESBA Code, the IAASB has made limited amendments to ISA 250 (Revised) and other International Standards. These amendments address actual or perceived inconsistencies of the scope of laws and regulations and approach to identifying and dealing with NOCLAR. This enables the IAASB’s International Standards to continue to be applied effectively together with the IESBA Code and clarifies and emphasizes key aspects of the revised IESBA Code in the IAASB’s International Standards. The IAASB’s International Standards comprise the International Standards on Auditing, the International Standards on Review Engagements, the International Standards on Assurance Engagements, and the International Standards on Related Services.

ISA 250 (Revised) becomes effective for audits of financial statements for periods beginning on or after 15 December 2017, with a similar effective date for standards for other services.

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