MIA Holds Seventh Biennial Conference
On 6 and 7 November 2014, the Malta Institute of Accountants held its eight biennial conference entitled Defining new frontiers – Turning vision into value.
This Conference assumed a particular importance in view of the recent accounting and auditing reforms that have been approved by the EU, which reforms will affect the Maltese business sector profoundly. The new developments in audit and accounting are not the only ones, and other changes in tax, prevention of money laundering and public sector accounting are also expected to effect the local accountancy profession. The conference coincided with Malta’s 10th anniversary of EU membership and for Accountants, the EU poses a twofold challenge: firstly, they need to understand how the key forces emanating from the EU will shape the future around us. Secondly, they need to assess how these changes and developments will impact the profession.
The conference featured some 47 participants, including 9 keynote speakers, 7 of which were foreign participants.
During Session 1 foremost subject matter experts on accounting, financial reporting, audit, tax and public sector accounting highlighted the main European legislative initiatives that will affect the profession in the years ahead and debated the effect that these initiatives will have on the Accountancy profession.
Afterwards delegates could attend for one of three concurrent thematic workshops:
Workshop 2.1 discussed the audit policy reforms including FEE’s guidance, the affect that the audit reform would have in Malta and the UK’s experience.
Workshop 2.2 discussed alternative sources of financing for SMEs that will continue to be a critical issue for policy makers and business leaders in the coming months given the vital role SMEs play in driving economic recovery.
Workshop 2.3 discussed the future of tax, namely EU tax policy and International tax reforms.
Session 4 discussed family Business and succession planning, the progress achieved by the Government’s Family Business Act Committee and the impact that the proposed legislation will have on Maltese family businesses.
Session 5 envisaged the role that an Accountant could play as a trusted business advisor. This forward looking session explored potential areas, along with regulatory and technical developments, that could increase the opportunities for practitioners from large and smaller firms to provide new services.
Session 6 updated delegates on the accounting directive transposition exercise and government’s position on the principles and the member state options underpinning the application of the accounting directive in Malta. The impact that the changes will have on the financial statements of SMEs was also discussed.
The final session discussed ways in which Accountants can best reconcile their work commitments to their private lives and manage stress in their daily tasks.
MIA Comment Letter To IESBA
On 11 November 2014, the Institute commented on IESBA Exposure Draft (ED), Proposed Changes to Certain Provisions of the Code Addressing the Long Association of Personnel with an Audit or Assurance Client. The MIA emphasised the strategic importance of consistency between these proposed provisions and the new EU audit legislation as far as possible. The Institute believes that IESBA needs to consider the revised statutory audit directive and the Regulation (537/2014) on specific requirements regarding statutory audit of public-interest entities in all its initiatives.
The Institute thinks that the proposed enhancements to the general provisions in section 290 provide useful guidance for identifying and evaluating familiarity and self-interest threats created by long association. However we maintain that the Board should limit the application of this section to senior personnel alone and not to the entire audit team.
The kind of relationship that develops between a smaller firm and its SME client is such that it is one where the auditor is also a trusted advisor. In these cases we don’t think that familiarity is entirely a bad thing. Furthermore the smaller audit firm may not have enough partners to achieve a meaningful rotation. Finally we believe that these measures as currently laid out could would impose a high level of bureaucracy on the smaller firm since it would need to have sophisticated mechanisms in place for identifying the treats to independence. We are not convinced that these firms need to have such mechanisms because of the nature of their audit engagements. For these reasons we think that the Board ought to better distinguish between the large and the small firms and that further guidance on SMPs would be in order.
As regards rotation periods, the Institute believes that there should not be a difference between the rotation periods that are specified in the Regulation 537/2014 and the IESBA Code. A related point is the rotation requirements should apply to Key Audit Partners as defined in article 2.16 of the revised statutory audit regulation (2006/43/EC).
Update On The Transposition Of The Accounting Directive
The Accounting Directive transposition working group set up under the auspices of the Accountancy Board has recently concluded its discussion of the Member State Options (MSO) available to Malta when adopting Directive 2013/34/EU (the Accounting Directive). The Accounting Directive replaces the 4th [78/660/EEC] and 7th [83/349/EEC] Accounting Directives on individual and consolidated accounts. Transposition into local laws is required by 20 July 2015. Its effective date is for accounting periods commencing on 1 January 2016 or commencing on a later date within calendar year 2016 as decided by a Member State.
In view of the wide ranging effects of the Accounting Directive, besides representatives of the accountancy profession, it was considered that active participation during the transposition process by representatives of a wide range of stakeholders from the private and the public sectors was imperative.
The transposition WG includes representatives of the Accountancy Board, Malta Institute of Accountants, Malta Bankers Association, National Statistics Authority, Malta Financial Services Authority, University of Malta, Ministry for Finance, Ministry for Economy, Commissioner of Revenue. It has been meeting regularly over the past year to consider and advise the Accountancy Board on the options available to Malta within the Single Accounting Directive for different size categories of undertakings and groups as well as Public Interest Entities, taking into account the specific conditions and needs of the Maltese economy. The group has successfully concluded its discussions and adopted a common position on the Member State Options that are available to Malta.
At the same that the transposition meetings were being held, the EC was implementing supporting measures to facilitate the transposition, including transposition workshops in Brussels that were attended by the Chair of the transposition WG, and of the Accountancy Board Mr Charles Rapa.
The Government will now adopt a position on the 90 MSO available in the Accounting Directive.
GAPSE – General Accounting Principles for Smaller Entities
When GAPSE was enacted in 2009, the accounting rules and thresholds were largely aligned with those for ‘Medium’ sized entities at the time.
The new prescriptive accounting rules for Small Entities require GAPSE to be reviewed and amended because with the coming into force of the Directive, the GAPSE provisions applicable to Small Entities would no longer remain consistent with EU legislation. It would also need to be reviewed for consistency with the revised accounting rules for Medium-Sized Entities.
The ‘Single Accounting Directive’ also includes in its Chapter 8 a section on the audit requirement, though Recital 43 clarifies that despite constituting a “significant administrative burden”, Member States are not prevented from maintaining an audit requirement for small entities “taking into account the specific conditions and needs of small undertakings and the users of their financial statements”. The Maltese Government is currently considering the application of this MSO by evaluating the effect of different alternatives on the Maltese economy.
MIA Updates Its CPE Regulations
The Institute recently published its updated CPE Regulations. These CPE Regulations lay down the rules and guidelines on CPE with which all Members must comply with effect from calendar year 2015.
These Regulations are identical in all material respects to the Accountancy Board CPE Scheme which was also recently published and which applies to all warrant holders as per Directive Number 1, issued under the Accountancy Profession Act, except for paragraphs 10.1, 12.3 and 13.1 which refer to different submission forms depending whether the individual is a warrant holder. MIA members who are also warrant holders may follow these Regulations and satisfy both the MIA and the Board’s CPE requirements after considering the different submission forms.
Summarising the previous version of the Regulations to a concise version,
Redefining the term Retired Member,
Changes in the annual CPE requirements and the removal of the 3-year rolling period,
Clarifying and increasing the topics that fall under Core competencies,
Redefining the term Professional Development competencies,
Clarifying what qualifies as structured CPE,
Changing the criteria required for web-based learning to qualify as structured CPE, and
Removal of transitional arrangements which are no longer applicable.
These Regulations comply with the redrafted International Education Standard 7 (IES 7) Continuing Professional Development as published by the International Federation of Accountants (IFAC). Members are urged to log on to the MIA’s website and understand the amended Regulations.
New MIA Members
Ms. Diane Baldacchino
Mr. Kenneth Bugeja
Ms. Claire Vella Bonello
Mr. Antoine Sacco
Ms. Audrey Ann Vella
Ms. Emily Zammit
Ms. Amy Grech
Mr. Edward Fenech
Mr. Christian Bonello
Mr. Jesmond Cutajar
Mr. Patrick Debattista
Mr. Joseph M. Gouder
Mr. Roderick A. Micallef
Mr. Andre Parnis
Mr. Mark Tabone