and Medium-Sized Entities) (Amendment) Regulations, 2024

Suppliment tal-Gazzetta tal-Gvern ta’ Malta Nru. 21,200, 1 ta’ Marzu, 2024 B 231

L.N. 41 of 2024

ACCOUNTANCY PROFESSION ACT

(CAP. 281)

Accountancy Profession (General Accounting Principles for Small

and Medium-Sized Entities) (Amendment) Regulations, 2024

IN EXERCISE of the powers conferred by article 8(1)(a) of the

Accountancy Profession Act, the Minister responsible for finance, on

the recommendation of the Accountancy Board, has made the

following regulations:-

(1) The title of these regulations is the Accountancy Citation and

Profession (General Accounting Principles for Small and Medium- commencement.

Sized Entities) (Amendment) Regulations, 2024, and these regulations

shall be read and construed as one with the Accountancy Profession

(General Accounting Principles for Small and Medium-Sized Entities)

Regulations, hereinafter referred to as the "principal regulations".

(2) These regulations shall come into force within two (2)

months from the date of their publication in the Gazette.

In regulation 3(1) of the principal regulations the definition Amends

regulation 3 of

"the Act" shall be substituted by the following new definition

the principal

regulations.

"the Act" means the Accountancy Profession

"Cap 281.

Act;

In the proviso to regulation 4 of the principal regulations, Amends

the words "ending on or prior to 31st December 2015," shall be regulation

the principal

substituted by the words "beginning on or before 1st January 2015,". regulations.

Regulation 5 of the principal regulations shall be amended Amends

regulation 5 of

as follows

the principal

regulations.

(a)

sub-regulation (1) thereof shall be amended as

follows

(i) in sub-paragraph (ii) of paragraph (a) thereof

the word "total" shall be deleted;

(ii) in sub-paragraph (ii) of paragraph (b) thereof

the word "total" shall be deleted.

(b)

in paragraph (b) of sub-regulation (2) thereof the

word "total" shall be deleted;

(c)

in sub-regulation (3) thereof the word "total" shall be

deleted.

The Schedule to the principal regulations shall be amended

as follows

(a) in paragraph 1.2 of Section 1 thereof the words "and

cash flows (in relation to the latter where applicable, that is for

medium-sized entities) of the entity" shall be substituted by the

words "and (where applicable, that is for medium-sized entities)

cash flows of the entity";

(b)

Section 3 thereof shall be amended as follows

(i) sub-paragraph (c) of paragraph 3.2 thereof shall

be substituted by the following new paragraph

"(c) the ability to generate cash and cash

equivalents, as regards medium-sized entities only";

(ii) in paragraph 3.4 thereof the words "Where the

period considered by management in making its assessment

of the entity’s ability to continue as a going concern has

been limited to a period of less than twelve months from

the balance sheet date, that fact shall be disclosed." shall be

substituted by the words "The period considered by

management in making its assessment of the entity’s ability

to continue as a going concern shall not be less than twelve

months from the balance sheet date.";

(iii) in sub-paragraph (a) of paragraph 3.5 thereof

the word "at" shall be substituted by the word "by";

(iv) immediately before paragraph 3.21 thereof the

words "The elements of financial statements" shall be

substituted by the words "The elements of financial

statements";

(v) in paragraph 3.36 thereof the numbers "3.36"

shall be substituted by the numbers "3.35" wherever they

occur;

(c)

Section 4 thereof shall be amended as follows

(i)

paragraph 4.1 thereof shall be amended as

follows

-

the proviso to paragraph 4.1 thereof shall

be substituted by the following new proviso

"Provided that medium-sized entities shall

prepare additional statements as provided for in

paragraphs 4.30 and 4.33 of these Principles:";

-

immediately after the proviso thereof, as

amended, there shall be added the following new

proviso

"Provided further that in respect of the

statements referred to in paragraphs 4.1(a) and (b),

4.30 and 4.33, an entity may use titles for the

statements other than those used in these Principles.";

(ii) in sub-paragraph (b) of paragraph 4.6 thereof

the words "were the amounts able to be determined" shall

be substituted by the words "had the amounts been able to

be determined";

(iii) in sub-paragraph (f) of paragraph 4.8 thereof

the numbers "17.18" shall be substituted by the numbers

"17.17";

(iv) in paragraph 4.16 thereof the words and

numbers "paragraphs 4.16 and 4.17" shall be substituted by

the words "paragraphs 4.17 and 4.18";

(v) in the first paragraph numbered as 8 of item

4.22 of Section 4 thereof the numbers "10.15" shall be

substituted by numbers "10.17";

(vi) paragraph 4.22 thereof shall be amended as

follows

-

the first paragraphs numbered as 12, 13

and 14 thereof shall be substituted by the following

new paragraphs

"12. Interest payable and similar charges

(with a separate indication of the amount

payable to the subsidiaries);

Profit or loss before tax for the

period and, or year;

Tax on profit or loss before tax;";

-

immediately after point 14 thereof as

amended, there shall be added the following new

point

"15. Profit or loss after tax for the period

and, or year";

(vii) in the second paragraph numbered 10 of item

4.22 thereof the numbers "10.15" shall be substituted by the

numbers "10.17";

(viii) in paragraph (h) of paragraph 4.25 the words

"other provisions." shall be substituted by the words "other

provisions:" and immediately after there shall be added the

following new proviso

"Provided that if an entity elects not to

deliver to the Registrar its profit and loss account in

terms of the first proviso of sub-article (2) of article

183 of the Companies Act, this disclosure shall be

made at least in the notes.";

(ix) in paragraph 4.34 thereof the words "‘cash at

bank and in hand’." shall be substituted by the words ""cash

held at call with banks and in hand".";

(x) in sub-paragraph (c) of paragraph 4.38 thereof

the words "investing or financing." shall be substituted by

words "investing or financing activities.";

(xi) in paragraph 4.39 thereof the words "cash flows

and relate to the acquisition" shall be substituted by the

words "cash flows related to the acquisition";

(d)

Section 5 thereof shall be amended as follows

(i) in paragraph (b) of item 5.5 thereof the numbers

"3.21 – 3.36" shall be substituted by the numbers "3.21 –

3.35";

(ii) the sub-title "Accounting Policies" in paragraph

5.10 thereof shall be deleted;

(iii) in sub-paragraph (c) of paragraph 5.15 thereof

the numbers and letter "5.15(b)" shall be substituted by

numbers and letter "5.14(b)";

(e)

Section 6 thereof shall be amended as follows

(i) immediately after sub-paragraph (c) of paragraph

6.1 thereof there shall be added the following new

paragraph

"For avoidance of doubt, this provision is

deemed to compliment and not modify the definition

of "revenue" set out in regulation 5(2)(b).";

(ii) in paragraph 6.4 thereof the words "gross

inflows of economic benefits include amounts collected"

shall be substituted by the words "gross inflows of

economic benefits exclude amounts collected";

(f)

Section 7 thereof shall be amended as follows

(i) sub-paragraph (a) of paragraph 7.1 thereof shall

be substituted by the following new sub-paragraph

"(a) are held for use in the production or

supply of goods or services, for rental to others

(unless they meet the definition of investment

property in paragraph 8.1), or for administrative

purposes; and"

(ii)

item 7.30 thereof shall be amended as follows

-

in sub-paragraph (a) thereof the words

"debited or credited to equity; and" shall be

substituted by the words "debited or credited to

equity;";

-

in sub-paragraph (b) thereof the words

"that would have been necessary)." shall be

substituted by the words "that would have been

necessary);";

-

immediately after paragraph (b), as

amended, there shall be added the following new

paragraph

"(c) the bases of the valuation, including

the significant assumptions underlying the

valuation models and techniques.";

(iii) in paragraph 7.32 thereof the numbers and letter

"7.26(f)" shall be substituted by "7.27(f)", and the numbers

and letter "4.7(a)" shall be substituted by the numbers and

letter "4.8(a)";

(iv) paragraph 7.33 thereof shall be amended as

follows

-

in sub-paragraph (a) thereof, immediately

after the words "made during the year;" there shall be

added the word "and";

-

sub-paragraph (b) thereof shall

be

substituted by the following new sub-paragraph

"(b) whether an independent valuer was

involved.";

-

sub-paragraph (c) thereof shall be deleted;

(g)

Section 9 thereof shall be amended as follows

(i)

paragraph 9.1 thereof shall be amended as

follows

-

sub-paragraph (a) thereof shall

be

substituted by the following new sub-paragraph

"(a) Investments

in

subsidiaries,

associates and joint ventures as defined in

Section 10; and";

-

sub-paragraph (b) thereof shall

be

substituted by the following new sub-paragraph

"(b) Finance leases as defined in Section

14;";

-

paragraphs (c) to (g) thereof shall be

deleted;

(ii) the sub-title to paragraph 9.16 thereof shall be

substituted by the following new sub-title

"Measurement of financial assets and financial

liabilities at recognition";

(iii) paragraph 9.16 thereof shall be substituted by

the following new item

9.16 When a financial asset or financial liability

is recognised initially, an entity shall measure it at its

fair value, in addition to in the case of a financial

asset or financial liability not classified as held for

trading subsequently measured at fair value,

transaction costs that are directly attributable to the

acquisition or issue of the financial asset or financial

liability.

An arrangement involving a financial asset or a

financial liability constitutes, in effect, a financing

transaction if payment is deferred beyond normal

business terms or is financed at a rate of interest that

is not a market rate. If an arrangement constitutes a

financing transaction, an entity shall measure the

financial asset or financial liability at initial

recognition at the present value of future payments

discounted at a market rate of interest for a similar

debt instrument. Accordingly, an entity shall measure

all of its financial instruments at initial recognition at

cost (equivalent to transaction price and fair value),

comprising purchase price and for instruments that

are not held for trading subsequently measured at fair

value, transaction costs that are directly attributable

to the acquisition of the instrument. Transaction costs

do not include debt premiums or discounts, financing

costs or internal administrative or holding costs.";

(iv) paragraph 9.17 thereof shall be amended as

follows

-

in sub-paragraph (c) thereof immediately

after the words "reliably measured" there shall be

added the words "and derivatives that are linked to

and must be settled by delivery of such equity

instruments";

-

immediately after sub-paragraph (c)

thereof, as amended, there shall be added the following

new sub-paragraphs

"Notwithstanding

the

above

and

paragraph 9.29, an entity may, at initial

recognition, irrevocably designate any financial

asset or any financial liability as measured at

fair value through profit or loss ("FVTPL")

when doing so results in more relevant

information, because either

(i)

it eliminates or significantly

reduces a measurement or recognition

inconsistency (sometimes referred to as

"an accounting mismatch") that would

otherwise arise from measuring assets or

liabilities or recognising the gains and

losses on them on different bases; or

(ii) a group of financial assets,

financial liabilities or both is managed and

its performance is evaluated on a fair value

basis, in accordance with a documented

risk management or investment strategy,

and information about the group is

provided internally on that basis.

Provided that an entity that prepared

its financial statements under the

requirements of these regulations for

financial years ended on or before 31st

December 2022, is allowed to apply the

irrevocable designation referred to above

solely to financial instruments initially

recognised on 1st January 2023 or

thereafter.

Provided further that when pursuant

to the entity’s accounting policy choice,

financial assets classified as held for

trading and available-for-sale financial

assets are not subsequently measured at

fair value, each category shall be measured

at cost or amortised cost using the effective

interest method, whichever is applicable

taking cognisance of the debt or equity

nature of the instrument. For avoidance of

doubt, the application of cost or amortised

cost using the effective interest method is

not an accounting policy choice.";

-

The words "Financial assets that are

designated as hedged items are subject to measurement

under the hedge accounting requirements. All financial

assets except those measured at fair value through

profit or loss are subject to review for impairment (vide

paragraph 9.21). After initial recognition, an entity

shall measure derivative instruments that are assets at

their fair values. The carrying amount of quoted

financial assets that are classified as current assets and

are not measured at fair value, is the lower of cost and

fair value less costs to sell." shall be substituted by the

words "Financial assets that are designated as hedged

items are subject to measurement under the hedge

accounting requirements. All financial assets except

those classified as held for trading and subsequently

measured at fair value are subject to review for

impairment (vide paragraphs 9.21-9.28). After initial

recognition, an entity shall measure derivative

instruments that are assets at their fair values. The

carrying amount of quoted financial assets that are

classified as current assets and are not measured at fair

value, shall be the lower of cost and fair value less

costs to sell.";

(v) in sub-paragraph (b) of paragraph 9.19 thereof

immediately after the words "Dividends on an available-for-

sale equity instrument are recognised in profit or loss when

the entity’s right to receive payment is established." there

shall be added the words "For the purpose of recognising

foreign exchange gains and losses under Section 18, a

monetary available-for-sale financial asset is treated as if it

were carried at amortised cost in the foreign currency.

Accordingly, for such a financial asset, exchange differences

resulting from changes in amortised cost are recognised in

profit or loss and other changes in carrying amount are

recognised in equity. For available-for-sale financial assets

that are not monetary items under Section 18 (such as, equity

instruments), the gain or loss that is recognised in equity

includes any related foreign exchange component.";

(vi) in paragraph 9.23 thereof the words "The

reversal shall not result in a carrying amount of the

financial asset that exceeds what the amortised cost would

have been had the impairment not been recognised at the

date the impairment is reversed." shall be substituted by

words "On the date the impairment is reversed, the reversal

shall not result in a carrying amount of the financial asset

that exceeds what the amortised cost would have been had

the impairment not been recognised.";

(vii) in paragraph 9.24 thereof the words "because its

fair value cannot be reliably measured" shall be deleted;

(viii) in paragraph 9.29 thereof immediately after the

words "Financial liabilities that are designated as hedged

items are subject to the hedge accounting requirements."

the following words shall be added

"For avoidance of doubt, when pursuant to the entity’s

accounting policy choice, financial liabilities classified as

held for trading (excluding derivatives) are not subsequently

measured at fair value, these liabilities shall be measured at

amortised cost using the effective interest method.";

(ix) in paragraph 9.36 thereof, after the words "or

gives the holder the right to require the issuer to redeem the

instrument at or after a particular date for a fixed or

determinable amount, is a financial liability." there shall be

added the words "The entity shall assess the terms of the

instrument to determine whether it contains both a liability

and an equity component. Such components shall be

classified separately as financial liabilities, financial assets

or equity instruments in accordance with the requirements of

this paragraph. The entity shall allocate the initial

recognition amount between the liability and equity

component by assigning to the equity component the residual

amount after deducting from the fair value of the instrument

as a whole the amount separately determined for the liability

component in accordance with the requirements of paragraph

9.16.";

(h)

Section 10 thereof shall be amended as follows

(i) in paragraph 10.1 thereof the numbers "22.14"

shall be substituted by the numbers "22.19";

(ii) in sub-paragraph (b) of paragraph 10.3 thereof

the words "of which it is a shareholder or member under a

statute or an agreement" shall be deleted;

(iii) in paragraph 10.11 thereof immediately after

the words "jointly controlled entities at cost" there shall be

added the words ", comprising its purchase price and any

directly attributable cost";

(iv) in paragraph 10.14 thereof the numbers "10.22"

shall be substituted by the numbers by "10.24";

(v) paragraph 10.30 thereof shall be substituted by

the following new paragraph

"10.30

For

investments

in

subsidiaries,

associates and jointly controlled entities accounted

for under the equity method, an investor shall present

and disclose its share of the profit or loss of the

investees separately on the face of the income

statement.";

(i) in sub-paragraph (b) of item 11.1 of Section 11

thereof the words "from other rights and obligations." shall be

substituted by the words "from other rights and obligations:" and

immediately after there shall be added the following new

proviso

"Provided that for the purposes of this section,

cryptographic assets and tokens shall not be considered as

intangible assets.";

(j)

Section 12 thereof shall be amended as follows

(i) in sub-paragraph (b) of paragraph 12.1 thereof

the words "measured under the cost model in accordance

with paragraph 8.5 of these Principles" shall be deleted.

(ii) in paragraph 12.23 thereof the words

"individual items of income or expenditure, emanating"

shall be substituted by the words "individual items of

income or expenditure emanating";

(k)

Section 14 thereof shall be amended as follows

(i) in paragraph 14.12 thereof the numbers "11.12 -

11.15" shall be substituted by the numbers "11.12 - 11.16";

(ii) in paragraph 14.25 thereof the numbers "14.2"

shall be substituted by the numbers "14.23";

(l) in paragraph 15.4 of Section 15 thereof, the words

"The cost of an item of self-constructed inventory is its cost at

the date when the construction or development is complete.",

shall be substituted by the words "The cost of a self-constructed

inventory item is its cost at the date when the construction or

development is complete.";

(m) in sub-paragraph (b) of paragraph 16.21 of Section 16

thereof the word "paragraph" shall be substituted by the word

"paragraphs";

(n) in paragraph 17.19 of Section 17 thereof the numbers

and letters "17.18(a), 17.18(b), 17.19(a) and 17.19(b)(ii)" shall

be substituted by the numbers and letters "17.18(a), 17.18(b)(i)

and 17.18(b)(ii) respectively.";

(o) in paragraph 18.18 of Section 18 thereof the numbers

"18.16" shall be substituted by the numbers and letter "18.16(a)";

(p)

Section 20 thereof shall be amended as follows

(i) paragraph 20.5 thereof shall be substituted by

the following new item

"20.5 An entity shall disclose the name and

registered office of that entity which draws up the

consolidated financial statements of the smallest body

of entities of which it forms part as a subsidiary.";

(ii) in sub-paragraph (b) of paragraph

6 thereof immediately after the words "of

guarantees of any kind" there shall be added the

words "with an indication of the total for each

category";

(iii) sub-paragraph (a) of paragraph

20.10 thereof shall be substituted by the

following new sub-paragraph

"(a) the amount of the emoluments

granted in respect of the financial year by

reason of their responsibilities; and"

(q)

Section 21 thereof shall be amended as follows

(i) in paragraph 21.1 thereof immediately after the

words "of these Principles." there shall be added the

following words: "This Section shall also be applied to any

transaction or other event that meets the definition of a

business combination.";

(ii) paragraph 21.2 thereof shall be substituted by

the following new paragraph

"21.2 A business is an integrated set of

activities and assets that is capable of being

conducted and managed for the purpose of providing

goods or services to customers, generating

investment income (such as dividends or interest) or

generating other income from ordinary activities. A

business combination is the bringing together of

separate entities or businesses into one reporting

entity. The result of nearly all business combinations

is that one entity, the acquirer, obtains control of one

or more other separate businesses, individually

referred to as "the acquiree". The acquisition date is

the date on which the acquirer effectively obtains

control of the acquiree. Control is defined in

paragraph 10.3 of these Principles.";

(iii) in paragraph 21.4 thereof, the words "All

business" shall be substituted by the words "Save as

provided for in paragraph 21.18, all business";

(iv) in paragraph 21.12 thereof the words "in

accordance with paragraph 12.11 – 12.13 of these

Principles." shall be substituted by the words "in

accordance with paragraphs 12.11 – 12.13 of these

Principles.";

(v) paragraph 21.18 thereof shall be substituted by

the following new paragraph

"21.18 The book values of shares held in the

capital of an entity included in the consolidation may

be set off against the corresponding percentage of

capital of the acquiree, provided that the entities in

the business combination are ultimately controlled by

the same party both before and after the business

combination, and that control is not transitory

Provided that the requirements in paragraphs

18 and 21.19, shall also apply in the case of a

combination of businesses under common control

Provided further that if the business

combination under common control has not resulted

in the acquirer holding shares in the capital of an

entity, the acquirer may apply paragraph 21.18 in its

financial statements and

(a) the consideration paid shall be

used as a substitute for the book values of

shares held in the capital of the acquiree;

and

(b) the percentage ownership of

net assets shall be used as a substitute for

the percentage of capital

Provided further that entities

electing to apply paragraph 21.18 to

business combinations under common

control shall not apply paragraph 21.4 to

such business combinations.";

(vi) paragraph 21.19 thereof shall be substituted by

the following new paragraph

"21.19 Any difference arising under paragraph

21.18 shall be added to or deducted from

consolidated reserves, as appropriate. For the

avoidance of doubt, the terms consolidated reserves

and equity are interchangeable in this respect.";

(vii) in paragraph 21.20 thereof immediately after the

words "the acquirer shall disclose the following" there shall

be added the words "in the consolidated financial

statements";

(viii) in paragraph 21.22 thereof the numbers and

letter "4.7(c)" shall be substituted by the numbers and letter

"4.8(c)";

(ix) in paragraph 21.23 thereof the words "The

application of the method described in 21.18" shall be

substituted by the words "When an entity applies the

method described in paragraph 21.18";

(r)

Section 22 thereof shall be amended as follows

(i) in paragraph 22.1 thereof, the words "An entity

which controls one or more entities is required to prepare

consolidated financial statements." shall be deleted;

(ii)

paragraph 22.2 thereof shall be amended as

follows

-

the words "Entities that

prepare

consolidated financial statements may apply this

Section if, and only if, the group does not exceed the

limits of at least two of the three following criteria on

the balance sheet date of the parent:" shall be

substituted by the words "Entities that are required, or

that elect, to prepare consolidated financial

statements may only apply these regulations if the

group does not exceed the limits of at least two of the

three following criteria on the balance sheet date of

the parent:".

-

in sub-paragraph (a) thereof the word

"total" shall be deleted; and

-

the proviso thereof shall be deleted;

(iii) in paragraph 22.17 thereof the numbers "4.25"

shall be substituted by the numbers "4.23";

(s) in the title of Section 23 the words "Section 23

Discontinued operations and assets held for sale" shall be

substituted by the words "Section 23: Discontinued operations

and non-current assets held for sale".

€0.72