The government has launched a consultation paper on GAPSE - the General Accounting Principles for Smaller Entities - which is intended to establish a leaner financial reporting framework for small entities, thus reducing their costs.

Parliamentary Secretary Tonio Fenech said this was the realisation of a year-long project which involved considerable input and a lot of hard work from all those concerned, particularly the Accountancy Board in consultation with the Malta Institute of Accountants.

"Twelve months down the line, I am pleased to say we have our a financial reporting framework that can be adopted by smaller less complex entities in the drafting of their general purpose financial statements, thus clearly reducing the costs of financial reporting for small companies.

"Adequate financial statements are required by an array of users, such as creditors, providers of finance, fiscal revenue authorities, and other users who are not in a position to demand reports tailored to meet their particular information needs. However for small companies the obligations imposed by International Financial Reporting Standards went beyond these understandable needs and imposed a compliance cost which in today's realities out way the benefits or disclosure needs of the mentioned users."

Mr Fenech said companies falling within the scope of GAPSE will now have the option to apply these reporting principles, in lieu of IFRS, for financial periods beginning on or after 1 January 2008

"This relaxation of accounting principles does not mean a lowering of the overall accounting standards. To the contrary, it seeks to give the users of financial statements of SMEs more relevant accounting information" he stressed.

He looked forward to any recommendations from interested stake holders, accountants, bankers, lawyers and the public. The consultation is up to February 15.