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        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

        page16image28648

        ≤ 40 million

        page16image30056

        Average number of employees  

        ≤50

        page16image32936

        ≤ 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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