Malta

As a member of the European Union (EU), Malta is subject to the accounting, auditing and financial reporting requirements established in EU Regulations and Directives as transposed into national laws and regulations. Malta has fully aligned its legal framework with the EU acquis Communautaire as it relates to the above areas.

The Maltese Companies Act 1995 outlines the basic requirements for financial reporting for all companies. These include requirements for the preparation of financial statements, mandatory audits, and the applicable accounting standards and auditing standards.

Accounting Framework

The Companies Act was amended in 2008 such that Maltese companies now apply IFRS as endorsed by the EU, not IFRS as issued by the IASB as was the case prior to 2008.

IFRS are required in the company accounts (both individual and consolidated) of all companies whose securities trade in a regulated market, of all banks, insurance companies, and some other supervised financial institutions. Additionally, larger companies deemed significant in the local economy must also apply EU-endorsed IFRS if they meet any one of the following criteria: (i) total assets more than €17,500,000; (ii) total revenue more than €35,000,000; (iii) average number of employees more than 250; or (iv) a shareholder owning 20% or more of the outstanding shares requests use of full IFRS as adopted by the EU.

All other entities that do not fall into the categories described above may apply General Accounting Principles for Small and Medium-sized Entities (GAPSME) developed by the Malta Institute of Accountants or full IFRS. The GASPME contain a number of differences from IFRS for SMEs.

Auditing Framework

The auditing framework for EU member states is outlined in Statutory Audit Directive 2006/43/EC as per the most recent Directive 2014/56/E. Maltese legislation transposes the EU directives through 2016 amendments to the Accountancy Profession Act 1979.

The Act requires that ISA as issued by the IAASB are to be applied for all audits. Only auditors that are certified by the Accountancy Board in accordance with the Accountancy Profession Act of 1979 are authorized to conduct statutory audits in Malta.

Additionally, banks, financial institutions, and insurance companies are required to follow directives and guidelines issued by the Malta Financial Services Authority under the Banking Act, Financial Institutions Act, and Insurance Business Act, respectively, in regards to the form and contact of annual accounts.

Professional accountants in Malta—referred to as warrant holders under applicable legislation—are regulated at the state level by the Accountancy Board established in 1979 under the Accountancy Profession Act. Professional accountants may also be voluntarily subject to the regulations of the national professional accountancy organization, the Malta Institute of Accountants (MIA), by becoming a member.

The Accountancy Profession Act 1979 stipulates that the Accountancy Board is responsible for: (i) issuing accountants’ warrants and auditors’ practicing certificates after receiving approval from the Ministry of Finance; (ii) the registration of firms of accountants and auditors; (iii) keeping a register of the above; (iv) operating a quality assurance review system; (v) dealing with cases leading to the suspension or withdrawal of warrants or practicing certificates; (vi) setting ethical requirements for professional accountants; (vii) establishing continuing professional development requirements for professional accountants; (viii) advising or making recommendations and expressing its views to the Minister; and (iv) such other functions arising from any law or as may be delegated to it by the Minister under the Accountancy Profession Act.

According to the Accountancy Profession Act, individuals who wish to practice in the accounting field must hold an accountants’ warrant issued by the Accountancy Board. In order to receive an accountants’ warrant and the designation of Certified Public Accountant (CPA), candidates must hold a Master’s degree in accounting from the University of Malta or attained a university degree and then complete a course of theoretical instruction recognized by the Accountancy Board, and complete three years’ of professional experience. Two other routes a candidate may pursue to receive an accountants’ warrant is obtaining the MIA—Association of Chartered Certified Accountants Joint Qualification or the Institute of Chartered Accountants in England and Wales Charted Accountant qualification, which have been deemed the equivalent of a Master’s in accountancy.

Individuals who wish to offer auditing services, must also hold an auditing practice certificate from the Accountancy Board. Individuals must follow the abovementioned requirements and at least two of the three years of their practical experience must be completed with an auditor or firm that is certified by the Accountancy Board in order to receive an auditing practicing certificate and the designation of Certified Public Accountant and Auditor. Individuals may hold more than one warrant or certificate issued by the Accountancy Board but may only practice in a particular accountancy field(s) if they hold the relevant practicing certificate. It is the only body recognized by the Accountancy Board such that individuals who successfully pass the MIA’s joint qualification scheme with the Association of Chartered Certified Accountants are permitted to receive the warrant and designation of CPA by the Accountancy Board provided the appropriate practical experience requirement have been met. Individuals who join MIA are subject to its ethical requirements and investigation and discipline procedures.

Auditors in Malta do not appear to be subject to an independent audit oversight. Auditors are regulated at the state level by the Accountancy Board established in 1979 under the Accountancy Profession Act of 1979. Auditors may also be voluntarily subject to the regulations of the Malta Institute of Accountants (MIA) by becoming a member.

The Accountancy Profession Act stipulates that the Accountancy Board is responsible for: (i) issuing auditors’ practicing certificates after receiving approval from the Ministry of Finance; (ii) the registration of firms of auditors; (iii) keeping a register of the above; (iv) operating a quality assurance review system; (v) dealing with cases leading to the suspension or withdrawal of practicing certificates; (vi) setting ethical requirements for auditors; (vii) establishing continuing professional development requirements for auditors; (viii) advising or making recommendations and expressing its views to the Minister; and (iv) such other functions arising from any law or as may be delegated to it by the Minister under the Accountancy Profession Act. The Accountancy Board is a member of the International Forum of Independent Audit Regulators.

The Accountancy Board works in close cooperation with the MIA, which was founded in 1942 and is a voluntary membership organization that provides professional guidance, technical support, and continuing professional education to professional accountants in Malta. Individuals who join MIA are subject to its ethical requirements and investigation and discipline procedures.

The Malta Institute of Accountants

The MIA was founded in 1942 and is a voluntary membership organization uniting over 2,500 professional accountants. The institute provides professional guidance, technical support, and continuing professional education to professional accountants in Malta. It is the only body recognized by the Accountancy Board such that individuals who successfully pass the MIA’s joint qualification scheme with the Association of Chartered Certified Accountants are permitted to receive the warrant and designation of Certified Public Accountant by the Accountancy Board. Individuals who join MIA are subject to its ethical requirements and investigation and discipline procedures.

In addition to being a founding Member of IFAC, MIA is also a member of Accountancy Europe (formerly known as the Federation of European Accountants).

Under the Accountancy Profession Act of 1979, ISQC 1 is adopted by law and the Accountancy Board is responsible for establishing and maintaining a quality assurance (QA) review system.

The Board has established a Quality Assurance Oversight Sub-Committee to assist in this role that reports directly to the Board. The actual reviews are carried out by the staff of the Board’s Quality Assurance Unit.

The QA review system has been operational since 2007 and the Malta Institute of Accountants affirms that the system is in compliance with the requirements of SMO 1.

The scope of mandatory QA reviews extends to professional work of individuals and firms holding an auditing practicing certificate. QA reviews utilize a risk-based methodology and visits are done every three years for audit firms of public interest entities and every six years for all others. More information on the Accountancy Board’s QA review system can be found here.

ISQM 1 & 2 are adopted and effective for audits of financial statements.

Current Status: Adopted

Initial professional development requirements for all professional accountants in Malta are established in the Accountancy Profession Act of 1979. The law outlines specific educational, professional competence, and practical experience requirements. Accountancy education is provided by the University of Malta.

The law also requires that professional accountants maintain the appropriate level of professional competence by engaging in continued professional development (CPD). The Accountancy Board, the accountancy profession regulator, has established CPD requirements for professional accountants that are in line with IES 7–8 and monitors CPD fulfillment through the MIA.

MIA is responsible for organizing and providing CPD training and has also established its own mandatory CPD requirements in line with IES 7–8 for its members. Nevertheless, the overall extent of incorporation of IES at the jurisdictional level remains to be established.

Current Status: Partially Adopted

Under the requirements of the Companies Act 1995, all companies in Malta are subject to mandatory audits. The Companies Act also stipulates that ISA as issued by the IAASB are to be applied in all audits.

Current Status: Adopted

The Accountancy Profession Act of 1979 stipulates that the Accountancy Board is responsible for issuing ethical standards for all professional accountants (warrant holders) in Malta. To this effect, the Board issues the Code of Ethics for Warrant Holders as a mandatory requirement for all professionals in the jurisdiction.

The Code, last amended in 2016, is based on the 2009 IESBA Code amended in certain areas to reflect additional requirements contained in the EU regulations.

The Malta Institute of Accountants (MIA), a voluntary membership organization, requires that its members follow the Accountancy Board’s Code of Ethics.

The MIA indicates that it is supporting the Accountancy Board to draft an update of the Code of Ethics for warrant holders to include new standards in the 2016 IESBA Code of Ethics that became effective in July 2017. The Accountancy Board is reviewing the changes and once approved, the revised Code of Ethics will become mandatory to all warrant holders and members of the MIA.

Current Status: Partially Adopted

Malta’s government is responsible for the adoption of public sector accounting standards. Since 2013, the government has been working toward the transition to accrual-basis IPSAS and the Ministry of Finance supported the use of IPSAS as a proxy for the future European Public Sector Accounting Standard requirements. Government accounting is still done on cash-basis but as of 2016, five IPSAS are in draft form and under consideration for adoption by the government.

The government intends to work toward full-IPSAS adoption and implementation with the following timeline: (i) by December 2017, IPSAS-based financial information will be produced for the Ministry of Finance as a first pilot; (ii) a number of pilot roll-outs at other ministries will be undertaken by December 2018; and (iii) full implementation of IPSAS-based accounting will be rolled out to 57 ministries/departments by December 2019.

Current Status: Partially Adopted

Under the Accountancy Profession Act of 1979, the Accountancy Board is responsible for investigating and disciplining (I&D) all warrant holders, while the Malta Institute of Accountants (MIA) is responsible for I&D of its members in regards to misconduct and failure to comply with membership rules. The MIA and the Accountancy Board will carry out joint I&D proceedings when the person is both an MIA member and a warrant holder.

According to the law, the Accountancy Board may establish an Investigative Sub-committee and a Disciplinary Committee to impose administrative fees during cases of professional misconduct. The law outlines cases in which a license may be suspended or cancelled by the Accountancy Board after the Disciplinary Committee has presented its findings.

The MIA’s statue and bylaws stipulate that an Investigations, Disciplinary, and Appeals Committees be established to carry out the institute’s disciplinary proceedings.

As presented by the MIA, both organizations’ I&D mechanisms are substantially in line with the SMO 6 requirements although there exist some areas for improvement such as the composition of MIA’s Disciplinary Committee and liaising and linking the results of Accountancy Board’s QA reviews with MIA’s I&D procedures.

Current Status: Partially Adopted

Malta first adopted IFRS in 1995. Since 2008, Maltese companies have been required to apply IFRS as endorsed by the EU.

IFRS as adopted by the EU are required in the company accounts (both individual and consolidated) of all companies whose securities trade in a regulated market, of all banks, insurance companies, and some other supervised financial institutions. Additionally, larger companies deemed significant in the local economy must also apply EU-endorsed IFRS if they meet any one of the following criteria: (i) total assets more than €17,500,000; (ii) total revenue more than €35,000,000; (iii) average number of employees more than 250; or (iv) a shareholder owning 20% or more of the outstanding shares requests use of full IFRS Standards as adopted by the EU.

All other entities that do not fall into the categories described above may apply IFRS or the General Accounting Principles for Small and Medium-sized Entities (GAPSME) developed by the Malta Institute of Accountants in consultation with the Accountancy Board and added as amendments to the Companies Act. GAPSME differ from IFRS for SMEs.

Current Status: Adopted

Relevant Organizations

• Accountancy Board
• Association of Chartered Certified Accountants
• Central Bank of Malta
• International Forum of Independent Audit Regulators 
• Malta Financial Services Authority
• Malta Institute of Accountants
• Ministry of Finance

Relevant Legislation

• 2016 Amendments to the Accountancy Profession Act 1979
• Code of Ethics for Warrant Holders, 2016
• Companies Act 1995
• Financial Institutions Act
• Insurance Business Act
• MIA Disciplinary Regulations for Non-Payment of Dues
• MIA Statue and Bylaws

Relevant Publications

• Accountancy Board, Quality Assurance Guidance.
• Department of Treasury, Government of Malta, “IPSAS Related Documents”, n.d.
• EU Audit Legislation Database, “Malta”, 21 Sept. 2016.
• Camilleri, Noel, A Case Study of IPSAS Implementation in Malta, 2 Feb 2016.
• IFRS Foundation, “IFRS Application Around the World?Jurisdictional Profile: Malta,” 16 June 2016.
• MIA, CPE Programme 2017, n.d.
• MIA, SMO Action Plan, May 2024.
• MIA and HSBC Bank, “IPSAS, EPSAS and EPSAP: The European and Maltese contexts”, n.d. Presentation.
• PricewaterhouseCoopers, Towards a new era in government accounting and reporting, July 2015.