background note on action plans · 2012-06-13 · background note on action plans . ......

Action Plan Developed by The Malta Institute of Accountants (MIA)

Status as of Date of Publication of 23

BACKGROUND NOTE ON ACTION PLANS Action Plans are developed by IFAC members and associates to address policy matters identified through their responses to the IFAC Compliance Self-Assessment Questionnaires. They form part of a continuous process within the IFAC Member Body Compliance Program to support the ongoing development and improvement of the accountancy profession around the world. Action Plans are prepared by members and associates for their own use based on the national frameworks, priorities, processes and challenges specific to each jurisdiction. As such, they will vary in their objectives, content and level of detail, consistent with their differing national environments and stages of development, and will be subject to periodic review and update. Refer to responses to the Part 1 Assessment of the Regulatory and Standard-Setting Framework Questionnaire and Part 2 SMO Self-Assessment Questionnaire for background information on each member and associate their environment and existing processes. These responses may be viewed at: http://www.ifac.org/ComplianceAssessment/published_surveys.php Use of Information Please refer to the Disclaimer published on the Compliance Program website. ACTION PLAN IFAC Member/Associate: The Malta Institute of Accountants Original Publish Date: April 2011 Last Updated: May 2012 Next Update: May 2013

http://www.ifac.org/ComplianceAssessment/published_surveys.php�


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GLOSSARY A.I.A. Associate of the Malta Institute of Accountants ACCA Association of Chartered Certified Accountants CPA Certified Public Accountant CPD Continuing Professional Development CPE Continuous Professional Education DAS Departmental Accounting EC European Commission ETC Employment and Training Corporation EU European Union EURES European Employment Services F.I.A. Fellow of the Malta Institute of Accountants FEE The European Federation of Accountants/Fédération des Experts Comptables Européens GAPSE General Accounting Principles for Smaller Entities I & D Investigation and Discipline IAASB International Auditing and Assurance Standards Board IAESB International Accounting Education Standards Board IAS International Accounting Standards IASB International Accounting Standards Board ICAEW Institute of Chartered Accountants in England and Wales IEIP International Education Practice Statements IEPS International Education Information Papers IES International Education Standards IESBA International Ethics Standards Board for Accountants IFAC International Federation of Accountants IFRS International Financial Reporting Standards IPSAS International Public Sector Accounting Standards IPSASB International Public Sector Accounting Standards Board ISA International Standards on Auditing ISQC International Standards on Quality Control ISRE International Standards on Review Engagements ISRS International Standards on Related Services M.I.A. Member of the Malta Institute of Accountants MIA The Malta Institute of Accountants PAO Professional Accountancy Organization QA Quality Assurance QAOC Quality Assurance Oversight Committee QAU Quality Assurance Unit SMO Statements of Membership Obligation SMP Small and Medium Practices


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Action Plan Subject: Statement of Membership Obligation (SMO) 1 - Quality Assurance (QA) Action Plan Objective: Continue to Use Best Endeavors to Ensure that Quality Assurance Reviews are Conducted in Accordance with

SMO 1, and that Adequate Training and Practice Support Tools are made Available by the Malta Institute of Accountants (MIA) to its Members to Assist them in Implementing and Maintaining Appropriate Systems of Quality Control

# Start Date Actions Completion Date

Responsibility Resource

Background:

Quality Assurance reviews are the responsibility of the Quality Assurance Oversight Committee (QAOC), a committee of the Accountancy Board falling under the direct responsibility of the Minister of Finance, Economy and Investment. The actual reviews are carried out by staff at the Quality Assurance Unit (QAU), reporting directly to the QAOC.

The Quality Assurance legislation was published in February 2006. However, the QA system became fully functional in April 2007 when the first reviews started to be carried out. Although the Institute had recommended that the Quality Assurance function should be completely independent of the Profession (hence not administered by the Institute), the MIA was instrumental in its setting up through establishing contacts with the Institute of Chartered Accountants in Ireland for the latter to assist in the necessary preparations and provide training to QAU staff. To date, the Chartered Accountants Regulatory Board (ICAI’s regulatory arm) still sits on the QAOC. The Quality Assurance system in Malta has been designed to be in compliance with the requirements of SMO 1.

The Accountancy Board has delegated the verification and monitoring of auditors’ compliance with Continuous Professional Education (CPE) Regulations to the MIA. That represents the Institute’s only direct involvement in the QA regulatory function. The Institute’s responsibilities however are mainly related to education and practice support initiatives to assist firms in aligning their methodologies with best practice and legal obligations. Relevant and focused training specifically targeted to Quality Assurance requirements constantly features on the Institute’s CPE Program. Practice Support initiatives taken by the Institute in the past include (i) the availability of practice aids to members, such as the International Standards on Auditing (ISA) (and more recently Clarified ISA) Audit Programs and International Standards on Quality Control (ISQC) 1 manuals, (ii) the publication of a list of Quality Assurance service providers, (iii) the publication of a number of Technical Pronouncements to help members and firms in carrying out specific engagements and (iv) the setting up of Technical Helpdesk in cooperation with Association of Chartered Certified Accountants (ACCA’s) Advisory Services Division.

Useful links:

QAOC: http://finance.gov.mt/page.aspx?site=MFIN&page=qaoc

MIA Continuing Professional Development (CPD) Programme: http://www.miamalta.org/Calendar.aspx | List of QA service providers: http://www.miamalta.org/Page.aspx?pageid=75

(Access to Technical Pronouncements, Practice Support Services and the Technical Helpdesk is restricted to MIA Members and students.)

http://finance.gov.mt/page.aspx?site=MFIN&page=qaoc�

http://www.miamalta.org/Calendar.aspx�

http://www.miamalta.org/Page.aspx?pageid=75�


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Continue to Use Best Endeavors to Encourage QAOC to follow SMO 1

1. Ongoing Continue holding regular meetings with the Head of the QAU, the objectives of which are: (a) To discuss the adoption of SMO 1 and the

compliance of the Quality Assurance methodology therewith;

(b) To obtain feedback on issues and knowledge gaps identified in recent Quality Assurance visits for the Institute to assist its members in implementing and maintaining appropriate systems of quality control as required by SMO 1;

(c) Biennial Quality Assurance Workshop organized jointly by the MIA and the QAU. The scope of this workshop is to give an update to MIA members on recent developments in the regulatory and support arenas by the QAU and the MIA respectively.

Ongoing

(a) Held First Meeting in March 2012

(b) This Meeting Scheduled for July 2012

(c) Workshop Completed February 2012

Technical Director

Technical Officer

Head of QAU

Maintaining Ongoing Processes

2. Ongoing Ensure an adequate level of relevant and focused CPE training specifically targeted to Quality Assurance is made available to MIA members.

Develop and deliver a course on Clarified ISAs and ISQC1

> Ongoing

Course Completed and Delivered in March 2012

CPE & Relationship

Officer

Experienced lecturers and tutors


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3. Sep 2010 Updated audit programs written under the Clarified ISAs are made available to members in good time for 2010 audits commencing in January 2011.

Monitor developments in these audit programs and circulate updated audit programs.

Completed 2011

Ongoing

Technical Director

ACCA Advisory Services

4. Ongoing Ensure that the list of Quality Assurance Service Providers published on the MIA website at (http://www.miamalta.org/Page.aspx?pageid=75) is updated with any recent applications for inclusion on the said list.

Ongoing Technical Director

MIA Website

5. Ongoing Act on feedback received from the QAU on issues and knowledge gaps identified in recent Quality Assurance visits.1

Ongoing

Technical Director

Technical Officer

MIA sub-committees

6. Ongoing Better use of International Federation of Accountants’ (IFAC’s) Small and Medium Practices (SMP) Committee Guides on using ISAs in the Audits of Small- and Medium-Sized Entities and on Quality Control for Small- and Medium-Sized Practices.

Possible initiatives to be taken by MIA could include:

(a) Using the Guides as reference material in future courses on ISAs and ISQC 1;

(b) Tailoring the Guides to make them more adaptable to the local circumstances;

(c) MIA SMP Committee is considering the distribution of IFAC’s SMP Committee’s Guide to

Ongoing

Technical Director

Technical Officer

MIA auditing sub-committee

1 In satisfaction of its responsibilities under SMO 1, in addition to focused and targeted CPD the Institute assists its members in implementing and maintaining appropriate systems of

quality control also by publishing relevant Technical Pronouncements to assist members in carrying out relevant engagements in accordance with best practice guidelines issues by the MIA. Areas on which Technical Pronouncements have been issued lately include document retention, professional indemnity insurance, engagements to report on undertaking size declarations prepared for the purposes of financing under the Training Aid Framework and engagements to report on financial information submitted for public procurement tendering purposes.



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Using ISAs in the Audits of Small and Medium-Sized Entities.

Review of MIA’s Compliance Information

7. Jan 2011 Annually review responses to the IFAC compliance self-assessment questionnaires and update sections relevant to SMO 1. Once updated, inform IFAC compliance staff in order for them to republish updated information.


N/A


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Action Plan Subject: SMO 2 - International Education Standards (IESs) Action Plan Objective: Continue to Use Best Endeavors to Ensure Compliance with International Education Standards



Background:

Program of Professional Accounting Education and Admission to MIA Membership

Shortly after the 1965 merger between the Institute and the Corporation of Accountants, which gave birth to the Malta Institute of Accountants, the newly formed Institute embarked on an ambitious project which saw the setting up of an Examination Scheme. The first examination session was in fact held in 1967.

After 35 years in the running of the MIA examination scheme, the Institute felt the need to strengthen its qualification and give it an international dimension and, in 2002, the Malta Institute of Accountants partnered with ACCA to set up the ACCA-MIA Joint Examination Scheme. The number of students reading for the Institute’s qualification increased from 416 in 2002, just before the MIA-ACCA Joint Examination Scheme was introduced, to 1,198 as at the date of this action plan.

To qualify through the Joint Examination Scheme, students need to succeed in fourteen examinations in various subjects including management accounting, financial accounting and reporting, financial management, audit and assurance, ethics, business analysis, taxation and corporate and business law, with the examinations on the latter two subjects being set on Maltese taxation and company law.

The University of Malta has been offering a full-time Bachelor of Accountancy (Hons.) course. This course will not be offered again as from the Academic year starting October 2012. The University of Malta will be replacing this course with a Masters in Accountancy and will be available to students enrolling for courses commencing October 2012 and later. The Masters in Accountancy programme includes more extensive advanced course content, financial services legislation, risk management, business ethics and corporate governance. It will also include a number of elective units that did not feature in the Bachelor of Accountancy (Hons.)

The Accountancy Profession Act of 1979 lays out that a license to practice in the profession shall only be granted to a person if (amongst others) he has completed a University final level qualification or equivalent examination level, recognized by the Accountancy Board. The MIA-ACCA Joint Scheme has been recognized as an equivalent qualification to the Bachelor of Accountancy (Hons.) course and will now be recognized as a qualification equivalent to the Masters in Accountancy.

Both the Masters in Accountancy and the MIA-ACCA Joint Scheme routes lead to an accountancy qualification which entitles the holder to be admitted as an Associate Member of the Institute (see below) and to be awarded a Certified Public Accountant license by the Ministry of Finance, Economy and Investment after the relevant experience requirements have been met.

The MIA has three tiers of membership, namely:

Associate: synonymous to ‘entry level’ membership. An individual can apply to become an Associate of the Institute only if he or she is fully qualified, and is thus in possession of a relevant Professional Accountancy Qualification, but has not yet obtained the necessary practical experience. An Associate may use after his name the initials A.I.A. or AIA (representing the words “Associate of the Malta Institute of Accountants”).


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Member: an individual can apply to become a Member of the Institute only if he or she is fully qualified (hence in possession of a relevant

Professional Accountancy Qualification), and has obtained the necessary practical experience*. A Member may use after his name the initials M.I.A. or MIA (representing the words “Member of the Malta Institute of Accountants”).

Fellow: an individual who has been a Member of the Institute for five years is automatically upgraded to Fellow. A Fellow may use after his name the initials F.I.A. or FIA (representing the words “Fellow of the Malta Institute of Accountants”).

*For more details visit: http://www.miamalta.org/mediacenter/PDFs/1_Guidance%20Notes%20Practical%20Experience%20Requirements.pdf and http://www.miamalta.org/Page.aspx?pageid=69

Program of Continuing Professional Education

The Institute had also felt that, because of increased pressures on Members to keep abreast with developments in international standards and in the international scene at large, the Institute had to make available sufficient training opportunities to help members in that regard. Which is why the Institute started running its own Continuous Professional Education (CPE) courses. Undertaking CPE was voluntary up to the year 2000 though compliance with CPE requirements was eventually made mandatory as from calendar year 2001.

The Institute’s CPE Regulations were thoroughly revised in 2007 and 2011, with the new and currently applicable regulations being effective as from calendar year 2012. The Regulations can be downloaded from the following link:

http://www.miamalta.org/MediaCenter/PDFs/1_CPE%20Regulations%202011.pdf

The Institute’s CPE Regulations require all Members, irrespective of whether they are engaged in public practice or in business, to carry out at least 120 hours of CPE over a three-year rolling period, 75 hours of which must be structured (i.e. verifiable). In addition, the 75 hours structured CPE must be carried out as follows:

At least thirty (30) hours of structured CPE must be carried out in those areas qualifying as Core Competencies in the previous section; The balance of forty-five (45) hours of structured CPE must be carried out in those areas qualifying as either Core or Professional Development

Competencies in the previous section. The mix of structured CPE between Core and Professional Development Competencies is left to the Member’s discretion and will depend on the exigencies of his or her roles and responsibilities.

On an annual basis Members are required to carry out at least 25 hours of CPE, at least 20 of which must be structured. There is no minimum requirement for CPE to be carried out in Core or Professional Competencies on an annual basis.

Courses, conferences, seminars, organized technical discussion meetings, web-based learning activities, service on technical committees, lecture preparation and lecturing, and reading for a relevant post tertiary course are types of activities that typically count as structured CPE.

The CPE Regulations also provide for permanent and temporary exemptions. Members who are on Maternity leave, Seriously ill, Pursuing full-time study, not in employment, that is neither gainfully employed nor self-employed, working in a non-accountancy related position are not required to carry out any CPE. Temporary exemptions are available for members who are suffering from a serious illness, nursing mothers and members on a career break.

http://www.miamalta.org/mediacenter/PDFs/1_Guidance%20Notes%20Practical%20Experience%20Requirements.pdf�


http://www.miamalta.org/MediaCenter/PDFs/1_CPE%20Regulations%202011.pdf�


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Continue to Use Best Endeavors to Ensure that the Best Quality Individuals are Attracted to the Accountancy Profession

8. Feb 2009 Continue undertaking initiatives aimed at attracting top quality individuals to the study of accountancy by, amongst others: Visiting secondary and post-secondary schools to

promote the accountancy profession and the qualification routes leading to a qualification in accountancy

Participating in the annual National Learning Expo organized by the Ministry of Education which is attended by the vast majority of students who are in their last two years of secondary education.

Participation in the annual Jobs and Training Fair organized by the Employment and Training Corporation (ETC) in collaboration with the European Employment Services (EURES). The aim of this activity is primarily to provide general information on vacancies and guidance to jobseekers who are looking for employment and/or seeking to further their studies both locally and in other European countries.

Ongoing

School visits conducted in March 2012

Participated in National Learning Expo in March 2012

May 2012 participated in Jobs and Training Fair

Technical Director MIA President

Technical Officer

Continue to Use Best Endeavors to Ensure that Competence Requirements for Audit Professionals are in Line with IES 8

9. Ongoing Continue to use best endeavors to encourage the Accountancy Board to put in place rules on the awarding of practicing certificates in auditing which are at least as stringent as those in IES 8.

Ongoing Technical Director N/A

10. Apr 2011 Use best endeavors to ensure that the knowledge content of the education and development program for audit professionals involved in transnational audits, as prescribed in local accountancy profession legislation, covers the subject areas required to be covered by IES 8.

Completed 2011

Technical Director Head of Quality Assurance Unit


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Maintaining Ongoing Processes – International Education Standard (IES) 1

11. Ongoing Ensure that entry requirements to be met for an individual to enroll with the MIA-ACCA Joint Examination Scheme are proportionately stringent to provide a sound educational background which is commensurate to the demanding nature of an accountancy qualification.

Ongoing Secretary General ACCA Head of Qualifications

12. Ongoing Provide regular feedback to the Department of Accountancy on the appropriateness and continued relevance of entry requirements necessary for a student to enroll for a full time Masters in Accountancy Programme.

Ongoing Technical Director Head, Department of Accountancy

Maintaining Ongoing Processes – IES 2

13. Ongoing Ensure on an ongoing basis that students sitting for the MIA-ACCA Joint Examination Scheme acquire enough advanced professional accountancy knowledge to enable them to function as competent professional accountants in an increasingly complex and changing environment.

Ongoing Secretary General ACCA Head of Qualifications

14. Ongoing Ensure on an ongoing basis that the Institute’s qualification appropriately addresses the content requirements as per IES 2.

Ongoing Secretary General ACCA Head of Qualifications;

MIA Education Coordinator

15. Ongoing Publish news of IESs, International Education Practice Statements (IEPSs) and International Education Information Papers (IEIPs) in the MIA quarterly journal the Accountant and in the MIA’s bi-weekly newsletter the Inform when relevant to the local circumstances.

Ongoing Journal editor

Newsletter editor

IFAC website – news section


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16. Ongoing Provide feedback to the Department of Accountancy on whether the syllabus content in respect of the Masters in Accountancy course appropriately addresses the content requirements as per IES 2.


Maintaining Ongoing Processes –IES 4

17. Ongoing Ensure on an ongoing basis that the Institute’s qualification appropriately addresses the content requirements as per IES 4.

Ongoing Secretary General ACCA Head of Qualifications;


18. Ongoing Provide feedback to the Department of Accountancy on whether the syllabus content in respect of the Masters in Accountancy course appropriately addresses the requirements of IES 4.


Maintaining Ongoing Processes –IES 5, 6 and 7

19. Ongoing Ensure on an ongoing basis that MIA’s practical experience requirements, its system of assessment of professional capabilities and competence prior to admission to MIA, and its continuous professional education requirements and training are kept in line with the relevant IES.

Ongoing Secretary General MIA Education Committee

Technical Director


20. Ongoing Ensure on an ongoing basis that the Knowledge content and skills requirements prescribed in IES 8 are appropriately addressed in:

(a) the MIA-ACCA Joint Scheme Qualification; and (b) the Institute’s CPE program.

Ongoing Secretary General

Technical Director

ACCA Head of Qualifications;


MIA CPE & Relations Officer

Experienced


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lecturers/tutors





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Action Plan Subject: SMO 3 - International Standards, Related Practice Statements and other Papers issued by the International Auditing and Assurance Standards Board (IAASB) Action Plan Objective: Continue to Use Best Endeavors to Assist with the Implementation of IAASB Pronouncements



Background:

International Standards on Auditing (ISAs) and International Financial Reporting Standards (IFRS) have been entrenched in the Maltese Companies Act since its enactment in 1995. The Institute’s members have been required to comply with ISAs and IFRS (then International Accounting Standards (IAS)) even before their entrenchment in the Companies Act. It was in fact on the Institute’s initiative and insistence that these international standards were given the status of national legislation.

The definition of “Generally Accepted Auditing Standards” was slightly amended in 2008 to cater for the eventual adoption of ISAs by the EU as contemplated by Article 26 of the Statutory Audit Directive. However, as there have been no ISAs adopted by the EU to date, all statutory audits have to be carried out in accordance with ISAs as issued by the IAASB.

Having been influential in the adoption of ISAs in Malta in the early nineties, the Institute’s responsibilities today mainly revolve around assisting members with the implementation of the Clarified ISAs and other pronouncements issued by the IAASB. In that regard the Institute is primarily involved in the following initiatives:

(a) The MIA regularly provides training on ISAs and more recently Clarified ISAs as part of its own CPD programme;

(b) The MIA issues Technical Pronouncements to help members and firms in carrying out specific engagements, very often of an assurance nature;

(c) The MIA has set-up a Technical Helpdesk with the help of ACCA’s Advisory Services Division to provide amongst others technical assistance on the implementation of ISAs to MIA members; and

(d) The MIA creates awareness on international standards proposed by the IAASB from time to time, and on International Standards on Auditing in general, primarily through the Institute’s quarterly journal ‘the Accountant’ but also through its bi-weekly newsletter ‘the Inform’.

Continue to Use Best Endeavors to Assist with the Implementation of IAASB Pronouncements

22. July 2010 Create awareness on the main changes to ISAs following the completion of the Clarity Project as part of the MIA CPE training program

Completed 2011

CPE & Relationship Officer

Technical Director

John Selwood

Institute of Chartered Accountants in England and Wales (ICAEW)


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23. Sept 2010 Participate in the IAASB ISA Implementation Monitoring SMP Survey:

Identify potential participants and seek their confirmation to participate in the survey

Follow-up with reminders as necessary Ensure replies to Part One of the survey are filed

by 30 September 2011 Ensure replies to Part Two of the survey are filed

by October 2012

Ongoing

Oct 2012

Technical Director

Joanne Moores, Jon Grant (IAASB)

Members of the MIA SMP Committee

Technical Officer

24. Jan 2011 Organize comprehensive training on Clarified ISAs for members to obtain detailed knowledge of the Clarified ISAs and hence assist them in the implementation of the new standards.

Completed 2011


Technical Director

Experienced lecturers/tutors

25. Mar 2011 Issue a Technical Pronouncement on the applicability of IAASB standards on review engagements, assurance engagements and on related services to the various requests for auditor’s attestations.

Q1 2013 Technical Director

MIA Auditing Steering Committee

26. Jan 2010 Create awareness on the IAASB exposure drafts on International Standards on Related Services (ISRS) 4410 (Revised) Compilation Engagements and International Standards on Review Engagements (ISRE) 2400 (Revised) Engagements to Review Historical Financial Statements through the Institute’s journal, newsletter and through inclusion in the Institute’s CPD Program.

Completed April 2011

Technical Director

CPE and Relationship Officer

27. Jan 2011 Participate in the IAASB’s consultation process by filing the Institute’s comment letters on:

• Proposed ISRS 4410 (Revised), Compilation Engagements

• Proposed ISRE 2400 (Revised), Engagements to Review Historical Financial Statements

Completed

May 2011

Technical Director

Technical Director


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28. Feb 2011 Organize follow-up training on Clarified ISAs giving members the opportunity to discuss implementation issues they have faced in their first adoption of Clarified ISAs. Event name: Moving up the Learning Curve of the Clarified ISAs

Completed March 2012

CPE and Relationship Officer

Technical Director

John Selwood


29. Ongoing Develop a program for responding to IAASB Exposure Drafts that have a direct impact on the local profession, through participation on the various Fédération des Experts Comptables Européens (FEE) organs (particularly FEE Council and the FEE Auditing Working Party) and on the IFAC SMP Committee, as well as through direct submission of comment letters.


MIA representatives on FEE and the IFAC SMP Committee

30. Ongoing Create awareness on IAASB standard setting initiatives. Ongoing Journal editor

Newsletter editor

the Accountant journal

the Inform newsletter

31. Ongoing Ensure the continued availability of audit programmes written under the Clarified ISAs to assist members in implementing and documenting compliance with Clarified ISAs.



MIA Administrative Staff

32. Ongoing Ensure the continued availability of a Technical Helpdesk Service to MIA members which addresses technical queries on IFRS, ISAs and the Code of Ethics.






N/A


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Action Plan Subject: SMO 4 - International Ethics Standards Board for Accountants (IESBA) Code of Ethics for Professional Accountants

Action Plan Objective: Continue to Use Best Endeavors to Incorporate the IESBA Code and to Promulgate Same with the Institute’s Members and on a National Level



Background:

The Malta Institute of Accountants (MIA) has direct responsibility for the implementation of a Code of Ethics which all Members are required to follow. The first MIA Code to be based on the recommendations and guidelines made by the International Federation of Accountants (IFAC) dates back to 1992. That Code stipulated that the rules contained therein were mandatory on members, who were therefore liable to disciplinary action if found in breach of the rules contained in the Code. Upon the Institute’s insistence, the Accountancy Board adopted the MIA Code of Ethics in 1996.

The following sets out the main amendments that have since been affected to the original Code.

The MIA Code of Ethics was re-published in 1998, and adopted by the Accountancy Board in 1999.

The Institute’s Code was significantly revised in 2004. The revisions were necessary to incorporate:

the most recent revisions to the IESBA Code of Ethics; and the principles stemming from the European Commission’s Recommendation on Statutory Auditors’ Independence following Malta’s accession

to the European Union on 1 May 2004.

The 2004 version of the MIA was adopted by the Accountancy Board in November of that year.

As part of its ongoing processes to review and incorporate international standards, the MIA had considered the necessary changes stemming from the June 2005 version of the International Ethics Standards Board for Accountants’ Code of Ethics and had in fact commissioned a report identifying differences between the MIA Code of Ethics (November 2004) and the IESBA Code of Ethics for Professional Accountants. In view of:

the minor differences identified between the two versions; the significant changes to the IESBA Code which were already being discussed when the abovementioned report was commissioned, which

would therefore require extensive changes to the MIA Code of Ethics; and the limited technical resources that the Institute had at the time the MIA Ethics Committee had recommended to revise the Code of Ethics only

once to incorporate the major changes which was at the time already in sight.

The process to revise the MIA Code to incorporate the revised IESBA Code clarifying the requirements for all professional accountants and significantly strengthening the independence requirements of all auditors, started in 2010. This process was concluded in April 2012 when the MIA Council approved the revisions to the Code of Ethics. The amended Code was approved by the Accountancy Board on 5 May 2012. The Code will now be presented to Cabinet for endorsement ahead of official publication.


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Continue to Use Best Endeavors to Incorporate the Provisions of the IESBA Code of Ethics in the MIA Code of Ethics, and to Encourage its Adoption by the Accountancy Board

34. Jan 2010 Continue to raise awareness with the Institute’s members on major forthcoming changes to the MIA Code of Ethics resulting from the latest revision to the IESBA Code of Ethics (primarily Independence I and Independence II) through amongst others: Articles and news updates in the Institute’s quarterly

journal the Accountant and in the MIA’s bi-weekly newsletter the INform;

Organising information sessions as part of the MIA CPE training program.

Ongoing

Q3 2012

Journal editor

Newsletter editor

Technical Director

Heather Briers,

MIA Ethics Committee

35. Jul 2010 Incorporate the provisions in the latest (revised July 2009) version of the IESBA Code of Ethics effective 1 January 2011, into the MIA Code of Ethics.

Completed Jan 20112

Technical Director

(Draft Code not yet published)


36. Jul 2010 Use best endeavors to encourage the Accountancy Board to adopt the revised MIA Code of Ethics and transpose same in relevant legislation applicable to all warrant holders independently of MIA membership.


MIA Representatives on the Accountancy Board

37. Jul 2010 Incorporate further provisions stemming from the European Commission’s Recommendation on Statutory Auditors’

Completed March 20123

Technical Director

FEE Ethics Subgroup on Independence

2 The transposition of the provisions of the IFAC Code of Ethics into the Institute’s Code of Ethics was completed by the MIA Ethics Committee in January 2011. The following

variations from the IFAC Code, brought forward from the currently applicable version of the MIA Code, are being retained: (i) definition of PIE; (ii) differentiation between the terms warrant holder and professional accountant, with the latter referring to an accountant who is not necessarily a warrant holder; (iii) retaining the requirement to communicate with the existing accountant in the case of audit engagements; (iv) cooling off periods when a member of the audit team is moving to an audit client and vice versa, as required in the EC Recommendation; and (v) prohibition on the auditor to hold the position of company secretary.

3 The project had been delayed by a few months because the FEE gap analysis entitled “Statutory Audit Directive and EC Recommendation on Statutory Auditor’s Independence in

the EU and Comparison with the independence Section of the International Code of Ethics for Professional Accountants”, that originally should have been published in October 2011, was published in December 2011.


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Independence where the latter are stricter than the equivalent provisions in the IESBA Code and publish final revised MIA Code of Ethics.

Comparison,



38. Ongoing Ensure that further updates and training on the practical implementation of the MIA Code of Ethics (revised) are included in the Institute’s future CPE training program.









N/A


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Action Plan Subject: SMO 5 - International Public Sector Accounting Standards (IPSASs) and other IPSASB Guidance Action Plan Objective: Use Best Endeavors to Promote Compliance with IPSAS



Background:

With the exception of a number of public sector entities and local councils, most of which adopt IFRS in the preparation of their general purpose financial statements, the government’s accounting system is still run on a cash basis. However Government has started introducing the concept of accrual accounting within the Public Service by setting up the Accrual Accounting Working Group. This Working Group is chaired by Treasury and other members include representatives from MITA and the Internal Audit and Investigations Department as observers.

The practice of issuing Accrual Accounting Financial Statements for internal appraisal has continued on a yearly basis since 2003. The primary objective is to obtain an accurate picture of the financial situation of each department when compiling the yearly financial statements under the accrual accounting methodology, which are currently being produced for internal consumption only.

Work done to date includes:

a. Drafting and approval of the Malta Government Accounting Standards and Guidelines (MGAS) that are based on IFRS (MGASs have been published on www.gov.mt/documents).

b. Accrual Accounting training applicable to employees whose work is related to the finance functions within Departments and Ministries. More than 450 employees attended these training sessions.

c. Publication of revised inventory, debtors and creditors procedures and other accrual accounting circulars (available at http://finance.gov.mt/page.aspx?site=TRS&page=amcucirculars).

d. A Project Board, chaired by the Accountant General was established in 2008 with the objective of replacing the current Departmental Accounting System (DAS) which is viewed as being obsolete.

e. The long term accounting training course leading to “A” standard, which commenced in 2006, was completed. About 100 participants successfully completed the training programme, with about 5% successfully sitting for the “A” Level Accounting examination.

The changeover to the accrual accounting methodology is continuing. The focus has been to increase the quality of the accrual accounting data being compiled by the various ministries and their respective departments. The Accounting Methodology & Compliance Unit within the Treasury Department of the Ministry of Finance, Economy and Investment, is primarily responsible for collecting and checking accrual accounting returns submitted by government departments on a quarterly basis (see http://finance.gov.mt/page.aspx?site=TRS&page=accmethcontrol).

A Higher Diploma in Public Accounting and Finance, which is being held under the auspices of the Institute of Public Administration and Management and the Faculty of Economics, Management and Accountancy, was launched in scholastic year October 2010 – June 2011.

The initiative, which is restricted to civil servants already working in the public sector and which was initially proposed by the Ministry of Finance and Investment, will at the end of the three year study programme offer a new position in the public service, that of Manager (Accounting and Finance). Lectures are given by lecturers engaged in the Department of Accountancy and professional accountants working in the public sector.

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More information on the Higher Diploma can be obtained from the following link: http://www.um.edu.mt/ipam/programme/UHDPAFPTE-2010-1-O

Moreover, as from scholastic year October 2012 – June 2013, students reading for the Masters in Accountancy course will also have the option to apply for an elective credit in public sector accounting.

Use Best Endeavors to Promote Compliance with IPSAS

41. Apr 2011 Use best endeavors to persuade government to introduce accrual accounting for ministries and other governmental organizations still running on a cash-based accounting system, and promote specifically use of IPSASs as the national public sector accounting framework, by formally raising the matter during the forthcoming bi-annual meeting with the Minister of Finance, the Economy and Investment.

Completed

Jul 2011

Technical Director Minister of Finance the Economy and Investment

Permanent Secretary at the Ministry of Finance the Economy and Investment

42. Apr 2011 Encourage the Department of Accountancy to incorporate IPSAS within the Higher Diploma in Public Accounting and Finance syllabus.

May 2012 Technical Director Head, Department of Accountancy

43. May 2012 Encourage the Department of Accountancy to incorporate IPSAS in the Masters in Accountancy, Public Sector Accounting elective credit.

May 2012 Technical Director Head, Department of Accountancy


44. Ongoing Publish news on IPSAS in the MIA journal the Accountant and in the MIA’s bi-weekly newsletter the Inform when relevant to the local circumstances.

Ongoing Journal editor

Newsletter editor

IFAC website – news section




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Action Plan Subject: SMO 6 - Investigation and Discipline (I & D) Action Plan Objective: Use Best Endeavors to Promote Compliance with International Public Sector Accounting Standards (IPSAS)



Background:

The MIA has responsibility for investigating and disciplining its members for misconduct and failure to meet the rules whereas the Accountancy Board has general responsibility for investigating and disciplining Certified Public Accountant (CPA) license holders. The two bodies can carry out joint investigations and disciplinary procedures when the person under investigation is both an MIA Member and a CPA license holder.

Use Best Endeavors to Incorporate the Requirements of SMO 6 into the Institute’s I&D Mechanism

46. Apr 2011 Review the Institute’s Investigations and Disciplinary mechanisms and ensure these are substantially in line with the requirements in SMO 6.

Ongoing Completed

Apr 2011

Secretary General

N/A

47. Ongoing Continue to use best endeavors to make the Institute’s members, as well as the general public, aware of the MIA I&D mechanism so that issues they wish to raise may be forwarded to the Institute’s Secretary General in a seamless manner.

Ongoing Secretary General

http://www.miamalta.org/MediaCenter/PDFs/1_STATUTE%20AND%20BYE-LAWS.pdf




N/A

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Action Plan Subject: SMO 7 - International Financial Reporting Standards (IFRS) Action Plan Objective: Continue to Use Best Endeavors to Assist with the Implementation of IFRSs



Background:

International Financial Reporting Standards (IFRS) have been entrenched in the Maltese Companies Act since its enactment in 1995. The Institute’s members have been required to comply with IFRS (then IAS) even before their entrenchment in the Companies Act. It was in fact on the Institute’s initiative and insistence that these international standards were given the status of national legislation.

Since coming into force in 1995, all limited liability Companies in Malta have been required to prepare annual financial statements in accordance with “generally accepted accounting principles and practice”, which term was defined in article 2(4) of the Companies Act as adherence to “International Accounting Standards as may be issued from time to time by the International Accounting Standards Board”. This definition was subsequently amended by virtue of Act No. IX of 2008, and “generally accepted accounting principles and practice” is now defined in Legal Notice 19 of 2009 as follows:

• For financial reporting periods commencing on or before 31 December 2007, adherence to International Accounting Standards, International Financial Reporting Standards and related Interpretations issued or adopted by the International Accounting Standards Board.

• For financial reporting periods commencing on or after 1 January 2008, adherence to international accounting standards as adopted by the European Commission in accordance with the provisions set out in Article 3 of the Accounting Regulation 1606/2002.

• For entities that meet the relevant eligibility criteria therein, compliance with “generally accepted accounting principles and practice” may also be achieved by adherence to General Accounting Principles for Smaller Entities (GAPSE).

As a result of the aforementioned amendments, unless a company is eligible, and elects, to apply GAPSE in respect of the relevant financial period, all financial statements covering financial reporting periods starting on or after 1 January 2008, and authorized for issue on or after 16 January 2009 shall be prepared in accordance with IFRSs as adopted by the EU.

Having been influential in the adoption of IFRSs in Malta in the early nineties, the Institute’s responsibilities today mainly revolve around assisting members with the implementation of IFRSs as adopted by the EU. In that regard the Institute is primarily involved in the following initiatives:

• The MIA regularly provides training on IFRSs as adopted by the EU as part of its own CPD programme;

• The MIA has set-up a Technical Helpdesk with the help of ACCA’s Advisory Services Division to provide amongst others technical assistance on the implementation of IFRSs to MIA members; and

• The MIA creates awareness on IFRSs and exposure drafts issued by the International Accounting Standards Board (IASB) from time to time primarily through the Institute’s quarterly journal ‘the Accountant’.


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Continue to Use Best Endeavors to Assist with the Implementation of IFRSs

49. Ongoing Include relevant training on IFRSs as part of the Institute’s CPE Program.

Ongoing CPE & Relationship Officer

Technical Director

Experienced lecturers

50. Jan 2009 Maintain e-library identifying differences between IFRS and IFRSs as adopted by the EU for Members’ and Students’ reference.


MIA Website

EFRAG Status reports


51. Ongoing Notify MIA Members of all IFRSs and exposure drafts issued by the IASB from time to time.

Ongoing Journal editor the Accountant journal – IFRS, IAS, ISA Update (regular feature)







N/A

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background note on action plans · 2012-06-13 · background note on action plans . ......

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