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    Friday 18 January 2019

    SME financial reporting: the Maltese perspective

    Malta has a new default accounting framework for small and medium-sized entities

    In August 2015, the General Accounting Principles for Small and Medium-Sized Entities (GAPSME) in Malta replaced the General Accounting Principles for Smaller Entities (GAPSE).

    GAPSME can be applied for financial reporting periods beginning on or after 1 January 2016 and is the default accounting framework for small and medium-sized entities (SMEs) in Malta. However, through a board resolution, SMEs may still opt to prepare their financial statements in accordance with international financial reporting standards (IFRS).

    GAPSME: applicability

    GAPSME applies to entities which satisfy two of the three eligibility criteria listed in Table 1 below. It cannot be applied by large and public interest entities (PIEs), which must prepare their financial statements in accordance with IFRS.

    Table 1

     

    Small

    Medium

    Balance sheet total (€)

    ≤ 4 million

    ≤ 20 million

    Total revenue (€)

    ≤ 8 million

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    ≤ 40 million

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    Average number of employees  

    ≤50

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    ≤ 250

    GAPSME presents a simplified financial reporting framework with limited disclosures for these companies. In fact, small companies are only required to prepare a balance sheet, an income statement and notes to the financial statements. A statement of changes in equity, a statement of cash flows and a directors’ report are only required by medium-sized entities.

    Small groups, which do not exceed any two of the three thresholds in Table 2 below, are exempt from preparing consolidated financial statements.

    Table 2

     

    Net

    Gross

    Balance sheet total (€)

    ≤ 4 million

    ≤ 4.8 million

    Total revenue (€)

    ≤ 8 million

    ≤ 9.6 million

    Average number of employees  

    ≤50

    What next?

    GAPSME’s success in Malta will ultimately depend on its take up by SMEs. Since GAPSME has simplified the financial reporting obligations of these entities, a large number of qualifying companies are expected to apply this reporting framework. However, we need to wait and see the outcome in the years ahead.

    For more information, contact:

    Manuel Castagna
    Nexia BT, Malta
    E: manuel.castagna@nexiabt.com

    Michelle Vassallo Pulis
    E: michelle.pulis@nexiabt.com

    T: +356 2163 7778
    www.nexiabt.compage16image50832 page16image50992 page16image51152

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