Financial Reporting: IFRS in Malta

IFRS for Accounting

Since 2005, almost all the world enterprises have agreed to the official adoption and transition to IFRS. Companies from almost all countries have decided to use International Financial Reporting Standards as a basis for keeping financial documentation. Since then, the number of states implementing new financial standards has rapidly increased.

Accordingly, accountants and financial specialists need to learn how to work with IFRS international reporting. And also understand the nuances of transformation and consolidation of financial reporting according to international standards to be a valuable specialist in the enterprise.

Who Needs International Financial Reporting Standards?

A set of financial statements according to IFRS Malta includes a statement of financial condition, total income (or two separate statements – a statement of profit and loss, a statement of other total income), a statement of cash flows, and a statement of equity.

Reporting prepared under International Financial Reporting Standards and successfully provided by FCHAIN Malta is necessary for the following:

• Counterparties of the company who can estimate financial indicators before making economic decisions.
• Investors who decide to invest funds in existing projects.
• State structures control certain spheres of activity.

What Are International Financial Reporting Standards?

IFRS is a whole system of documents that includes: International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), and Interpretations of International Accounting Standards (IIAS) – they reveal the essence of the standards and ensure uniformity in their application.

The current IFRS contains about 60 financial standards, which include:

• financial reporting;
• inventory accounting procedure;
• accounting policy, changes in accounting estimates;
• calculating income taxes;
• accounting of fixed assets, and others.

Typical Problems of Transition to IFRS Standards

Each IFRS financial statement and its implementation is closely related to difficulties and accompanying troubles. The first problem faced by companies wishing to transition to new financial standards is the psychological factor of specialists. Differences between the international and national standards lead to the need for psychological restructuring of employees.

The second problem is the transformation of financial reporting into IFRS, especially for countries with undeveloped financial markets. And Financial Chain Corporation has access to all the necessary resources, materials, and guidance to help your company.

Benefits of International Financial Statements For Business 

What benefits do companies receive when switching to IFRS?

• The opportunity to enter the world stock markets and take cheaper loans from foreign banks.
• Reduced costs of preparing reports (especially when it comes to the consolidation of reports of companies from different countries).
• More transparent, understandable, and easily comparable financial reporting.
• Reliable information about the company’s financial position, which users highly value with investment opportunities (business owners, investors, creditors, regulatory authorities, etc.).

It is easier for the company’s management to trace the connection between the data in the report and real events and to make effective decisions based on the IFRS balance sheet.

Ways to Implement IFRS International Standards

The primary solution, in this case, is the development of targeted programs and training courses for specialists in accounting and other financial departments. Existing options for transition to IFRS are the following:

• accept IFRS as they are;
• adopt international standards with the possibility of their “limited modification”;
• develop national financial reporting standards, harmonizing them with IFRS as much as possible.