MIA 2014 SMP Forum
On 23 May, the MIA’s Small and Medium Sized Practices (SMP) Advisory committee held its fifth SMP Forum that for the second time running, was presented as a full-day event. Unlike 2013 when the event was free for MIA members, this year participation was against a fee, despite which 78 delegates turned up (2014: 100). This is considered to be relatively high for an event of this nature and indicates that this formula has worked well.
The event, which was held at the Westin, brought together a wide array of speakers who covered a broad range of topics that were of interest to SMPs. The forum was addressed by the Institute’s President Ms Maria Micallef and Mr William Spiteri Bailey, MIA SMP Advisory Committee Chair and MIA Officer. The SMP Committee members together with MIA technical staff developed the programme that was sub-divided into five sessions, with the first session featuring two concurrent workshops.
Actions taken by the mia since the 2013 SMP forum
Ms Micallef emphasised that SMP and SME matters are key priorities for the MIA and that the Institute continued to engage extensively with SMPs, through its technical staff and the SMP Committee.
Single Accounting Directive
The Accounting Directive that needs to be transposed by all Member States is going to effect the local profession in a profound manner. The MIA was always receptive to the need of having an alternative accounting framework to IFRS which has over these past years become increasingly burdensome on small companies which may add little value (if at all) to a small company. The MIA through its own resources had in fact developed an alternative accounting framework – GAPSE – which is more suited to SMEs and better reflects their realities. The possibility is being considered to see how best to adapt this framework to cater for the directive requirements.
The Directive contemplates that financial statements may not need to be audited and Member States have to ‘opt in’ if they require the entities within the small regime to have their financial statements audited. Local Government policy to date has always been to retain the existing audit regime. Locally a technical working group has been set up by the Accountancy Board in which our Institute is actively participating to ensure a proper and effective transposition. A number of main policy decisions have to be taken before the Directives are transposed into our National law. Naturally being a matter of policy it is the Government of the day that needs to make the decisions required however care should be taken to avoid the risk that the quality of financial statements and reporting as proposed for the micro and small groups will deteriorate over time. This should be of concern not only to accountants but to capital and credit providers including banks, credit rating agencies and suppliers. The MIA is organising meetings with relevant stakeholders to obtain clarity on the policies that will underpin Malta’s adoption of the Directive.
One of the hallmarks of our profession is its ability to stand for trust and integrity. The MIA Ethics Committee strives to promote and preserve the integrity of the profession in dealing with issues of professional ethics, including auditor independence. One of the initiatives that has been taken is the publication of a series of articles about Ethics in the Institute’s journal authored by the Ethics Committee Chair, Mario Galea.
Audit policy reform
The audit reform proposals were adopted by the European Parliament on 3rd April 2014. The legislation approved includes a Directive, which contains a series of new and amended requirements governing every statutory audit in the European Union, and a Regulation, which contains a series of additional requirements that relate only to the statutory audits of PIEs. Key elements of the Regulation, among others, include mandatory firm rotation for PIEs and a restriction on provision of non-audit services to PIE audit clients. The final form of the audit directives when transposed into our law will depend upon a number of member state options. What is clear is that, however they unfold, the resulting impact will be transformational both for business as a whole and for the accountancy world in particular.
Other audit and assurance initiatives
During 2013 and 2014, the MIA has organised a number of events on audit and assurance. In 2013 during a joint event with ICAEW, we explored the potential of non-audit assurance services. Many of our members remain unaware of the potential of assurance and we think that there is untapped potential in this space for audit firms of all sizes. The market demand, along with regulatory and technical developments, has increased the opportunities for SMPs to provide non-audit assurance services to their clients.
Recently the MIA also organised an event designed to understand the shortcomings identified by the Quality Assurance Unit (QAU) during its monitoring visits to audit practices. The event was planned out by the SMP Committee and was very well attended. In this regard the Accountant is featuring a series of articles, authored by the ACCA technical team, which highlight some of the common audit problems encountered by practitioners.
Representation on FEE’s SMP Forum
During 2013 and 2014, the SMP Committee Chair, William Spiteri Bailey, attended for a series of meetings in Brussels. The FEE SMP Forum was set up to better respond to member bodies’ needs and assist them in delivering value to their SMPs and ensure that SMPs issues and interests are well considered and that their voice is better heard at EU level. The SMP Committee Chairman is representing the MIA and the interests of local SMPs on this Forum.
MIA Journal, web portal and smartphone app
MIA recently unveiled a new web portal and smartphone application that complements our recently revamped publication, the Accountant. Together, the new website and the smartphone application offer readers the opportunity to browse each issue of the MIA Journal from anywhere, on any device and at any time.
On 17 October 2013 a delegation of 25 MIA members, all Small and Medium Practitioners flew over to Brussels for a one-day familiarisation visit that was sponsored by the European Parliament. A total of four meetings were scheduled for what proved to be a very busy day. The group visited the Permanent Representation of Malta to the EU, the European Federation of Accountants, the European Parliament and the European Commission offices.
Following the keynote addresses, delegates proceeded to one of the two concurrent workshops, a series of presentations on audit reporting and a panel discussion on company liquidations. In the former workshop session, Mr Mark Abela, MIA Technical Director gave delegates an update on the European and International initiatives on audit reporting, namely the audit directive, the PIE audit regulation and the IAASB auditor reporting project. Mr Paul Giglio, audit partner at Mazars and Mr Manuel Castagna, audit partner at Nexia BT, both of them SMP Committee Members, gave delegates an account of how ISA 700, Forming an Opinion and Reporting on Financial Statements, ISA 705, Modifications to the Opinion in the Independent Auditor’s Report and ISA 706, Emphasis of Matter Paragraphs and Other Matter Paragraphs in the Independent Auditor’s Report, should be applied in practice.
In the workshop about company liquidations Mr Neville Cutajar, managing director and partner, 3A, moderated a panel discussion made up of the following panel members, Mr Stephen Balzan, Tax Partner, EMD Malta, Dr Kris Borg, Advocate, Dr Kris Borg & Associates and Mr Joseph Caruana, Registrar of Companies, MFSA. Delegates reconvened for the remaining plenary sessions, which took them through IT and HR matters of interest to the profession such as cloud services, data integrity, data security, disaster recovery programmes and business continuity as regards IT and certain aspects of employment relations law, in particular those relating to conditions and termination of employment and harassment, all along referring to recent Industrial Tribunal case law.
The last two plenary sessions consisted of a session on the prevention of money laundering that provided delegates with an outline of the 4th AML Directive and presented actual court cases related to money laundering and funding of terrorism; and a session on EU funding that outlined the EU funded support measures administered by the Malta Enterprise, namely COSME, Erasmus for Young Entrepreneurs and Eurostars as well as the current EU funded schemes such as the BOV JEREMIE Financing Package (an initiative established by the EU and Member States by using a part of the European Regional Development Funds) and newly launched schemes such as the BOV Start Plus, the first CIP (Competitiveness and Innovation Framework Programme) Guarantee agreement to support financing for start-ups and micro-enterprises in Malta.
The feedback gleaned from each session has been discussed by the SMP Advisory Committee Members.