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For each accounting period, the company’s directors shall prepare individual accounts comprising the balance sheet as at the last day of the accounting period to which they refer, the profit and loss account for that period, the notes to the accounts and any other statements which may be required.
The Client Accounting team at CSB Group assists with co-ordinating companies’ statutory audits as required by the Companies Act (as well as other assurance engagements), and the drafting of audited financial statements for submission to the Malta Business Register.
Audit of Financial Statements
All limited liability companies registered or incorporated in terms of the Laws of Malta are required to prepare a set of audited financial statements every year and file them at the Malta Business Registry (MBR).
The audit of financial statements is to be carried out by a qualified person holding the relevant warrant issued by the Maltese Accountancy Board and needs to be performed in accordance with International Auditing Standards.
GAPSME & IFRSs
These financial statements need to be compliant with General Accounting Principles for Small and Medium Entities (‘GAPSME’). GAPSME is now the default accounting framework for SMEs in relation to financial reporting periods starting on or after 1 January 2016, unless a resolution is passed by the Board of Directors to the effect that International Financial Reporting Standards (‘IFRSs’) as adopted by the EU are to be used.
This might be the case if the company needs to comply with group accounting policies – meaning that if group companies are preparing financial statements according to IFRSs as adopted by the EU, it might be necessary to prepare IFRS financial statements for that company.
GAPSME superseded the previous GAPSE framework, widening thresholds and increasing eligibility.
How does one classify SMEs in terms of the rules?
An entity is considered to be small or medium, as applicable, if on the basis of two consecutive years it meets two of the three criteria set out in the table below.
|Balance sheet total||≤ €4,000,000||≤ €20,000,000|
|Total revenue||≤ €8,000,000||≤ €40,000,000|
|Average number of employees||≤ 50||≤ 250
Large and Public Interest Entities fall outside the scope of GAPSME, and are therefore obliged to prepare a full set of financial statements in accordance with IFRS (as adopted by the EU). Companies holding an MGA license are also obliged to prepare financial statements in accordance with IFRSs as adopted by the EU.
Companies are now obliged to enquire whether they fall within the GAPSME thresholds in order to benefit from simpler disclosure requirements.
Disclosure Requirements for Financial Statements
|Small entities||Medium entities|
|Balance sheet||Directors’ report
|Income statement||Balance sheet|
|Notes to financial statements||Income statement
|-||Statement of changes in equity
|-||Statement of cash flow
|-||Notes to financial statements
Small companies that are not PIEs are exempted from the requirement to prepare and to deliver to the MBR a directors’ report. Where the directors take advantage of the exemption from delivering the directors’ report to the MBR, together with the annual accounts, a declaration on the prescribed form in lieu of the directors’ report will need to be signed by the same directors to confirm that the company qualifies for the exemption.
If a company is incorporated between 1st of January and 30th June, then a company would need to have its first set of audited financial statements covering from the incorporation date up to 31st December of that year. If a company is incorporated between 1st July and 31st December, then the company’s first audited financial statements will cover from 1st July of the incorporation year to 31st December of the following year.
A company can also have its year end other than 31 December, but if this is not specified and the respective form filed at the MBR, the default will be 31 December.
Submission to the Malta Business Registry
The audited financial statements must be approved within 10 months from the accounting year end and must be filed with the Registrar of Companies within 10 months plus 42 days from the accounting year end.
Coordination Process of Company Audits
The process is initiated by obtaining the necessary quotation/s for confirmation by our clients. Through our collaboration with very reliable audit firms in Malta, we secure very favourable and competitive rates for our clients. At the same time, we ensure utmost quality to our clients.
Following the appointment of the chosen audit firm, we will facilitate the process to ensure a smooth and efficient audit is carried out with minimum inconvenience to our clients. The auditor will receive timely and accurate management accounts together with all the supplementary information that is required during the course of the audit.
We answer all the auditor’s queries, only going back to the client if there is the need, so that the audit is carried out on a timely basis, and the financial statements are filed within the stipulated deadlines.