The recent introduction of new EU legislation and changes in certain international standards give rise to new requirements for reporting and disclosure. The table below highlights the key areas and entities impacted by the various regulations and standards, and the effective date of the requirements. For more information refer to the dedicated pages via the links below.
|Area impacted by legislation||EU/international legislation**||Entities/group companies effected
||Effective date of requirements|
|Directors' Report||EU Accounting Directive||Yes
||Yes||reporting periods starting on or after the 1 January 2016|
|Transparency Directive||Yes*||No||reporting periods starting on or after 1 January 2017|
|GAPSME||EU Accounting Directive||No||Yes||reporting periods starting on or after the 1 January 2016|
|Audit Report||International Standards on Auditing
||Yes||Yes||reporting periods ending on or after 15 December 2016|
|EU Audit Directive/Regulation||Yes||No||reporting periods starting on or after 17 June 2016|
|Audit Committee Governance||EU Audit Directive/Regulation||Yes||No||reporting periods starting on or after 17 June 2016|
*The requirements effect large undertakings or parent undertakings of large groups, which are public interest entities (PIEs) with more than 500 employees.
** Above requirements have been transposed within the Maltese Companies Act (Cap. 386) and MFSA Listing Rules, as applicable.
EU Accounting Directive
New requirements are introduced for the directors report. A more comprehensive review of business is needed, including both financial and, where appropriate, non-financial key performance indicators relevant to the particular business together with additional explnations on amounts reported in the financial statements. A description of risks and uncertainties as well as an explanation of the financial risk management objectives, policies and exposures is also required. Auditors are also required to report on the directors report.
Inclusion of a non-financial statement containing information on the undertaking/group’s development, performance, position, and impact of its activities relating to, as a minimum, environmental, social, and employee related matters, respect for human rights, and anti-corruption and bribery matters.
EU Accounting Directive
GAPSME is the default framework for entities that meet the qualification criteria. Companies qualifying for GAPSME that wish to voluntarily adopt IFRSs as adopted by the EU as their financial reporting framework must do so (by opting out of GAPSME) through a resolution of the Board of Directors. All small and medium-sized companies – other than Public Interest Entities (“PIEs”) – qualify for GAPSME. PIEs include entities whose securities are listed, credit institutions and insurance principals. PIEs and large entities must adopt IFRSs as adopted by the EU as their framework.
International Standards on Auditing
The revised ISAs introduce a number of changes to auditor’s reports and these centre around three key aims: insight, transparency and improved readability. The ISAs have moved away from the standardised audit report and, in addition to the opinion, provide a wider range of information including a new section on going concern, and a statement with respect to the auditor's consideration of other information. The most significant innovation in ISA 701 is the introduction of ‘key audit matters’ for listed entities.
EU Audit Directive/Regulation
EU Audit Regulation widens the scope of the Key Audit Matters section to all PIEs and not only listed entities. Some other statements are also needed for PIEs including additional independence declarations and a statement indicating the date of the appointment and the period of total uninterrupted engagement;