Institute of Accountants welcomes new draft principles for SMEs

The Malta Institute of Accountants has welcomed the views expressed by Finance Minister Tonio Fenech on the General Accounting Principles for Smaller Entities (GAPSE).

Speaking at the inauguration of a new accounting and audit firm earlier this week, Mr Fenech said GAPSE will be issued in the coming weeks and, once finalised, will give smaller and medium-sized entities the option not to have to apply full international financial reporting standards (IFRS) when preparing their financial statements. This will relieve such entities of some of the burdens placed upon them by IFRS, which are becoming increasingly complex and aimed at larger companies.

The institute had been commissioned by the Accountancy Board to look into possible alternatives to the current standards and handed in a finalised draft of GAPSE last December. The draft was then launched for public comment by Mr Fenech.

GAPSE is a robust yet simplified set of accounting and reporting principles that may be applied by small and medium-sized entities in the preparation of their annual financial statements. It is expected to result in the information presented in financial statements being more relevant to the size of the company, more understandable to those who rely on them and more timely to prepare.

GAPSE will also ensure that the increasing cost of preparing financial statements will be contained, the institute said. It hopes to see the final version issued in the last quarter of this year, giving companies the option to apply it from 2008.

The institute said it echoes Mr Fenech's comments that this will be a major step in continuing to strengthen public confidence in local financial reporting.

The GAPSE draft issued in December 2007 can be viewed on the institute's website at www.miamalta.org.