Amendments to the Accountancy Profession (General Accounting Principles for Small and Medium-Sized Entities) Regulations (GAPSME) – 2024 update

The 2024 amendments to the Accountancy Profession (General Accounting Principles for Small and Medium-Sized Entities) Regulations (GAPSME) are designed to enhance the clarity, consistency, and effectiveness of financial reporting for small and medium-sized enterprises (SMEs) in Malta. These changes address specific areas within the existing framework to better align with international standards and clarify certain regulatory requirements.

Key amendments:

1. Property, plant, and equipment: A new disclosure requirement is introduced for small entities that choose to use the revaluation method for property, plant, and equipment. Small entities are now required to disclose the basis of the valuation, including the significant assumptions underlying the valuation models and techniques. Previously applicable only to medium-sized entities, this amendment ensures that small entities also provide more transparent financial information, aligning GAPSME with other international accounting standards.

2. Financial assets, liabilities, and equity:

• • Fair value through profit or loss (FVTPL): An amendment introduces an option for companies to designate any financial assets or liability to be measured at FVTPL at initial recognition if any of the following criteria are met:
    • It eliminates or significantly reduces a measurement or recognition inconsistency (sometimes referred to as “an accounting mismatch”), or
    • A group of financial assets, financial liabilities or both is managed, and its performance is evaluated on a fair value basis.
  • Dual components of financial instruments: The amendment clarifies the correct approach when allocating the liability and equity components of financial instruments, reducing the risk of inconsistent accounting treatments across different entities.

3. Intangible assets: Cryptographic assets and tokens are now explicitly excluded from the reporting requirements for intangible assets. This exclusion acknowledges that the current regulations do not adequately address the unique nature of these digital assets, necessitating different reporting considerations.

4. Business combinations and goodwill: Various clarifications have been made regarding business combinations, especially those under common control. These include the application of specific paragraphs to such combinations, substitutes for book values in certain scenarios, and the interchangeable use of terms like “consolidated reserves” and “equity.” These amendments aim to eliminate ambiguity and ensure consistent reporting practices.

While the 2024 amendments do not alter the fundamental reporting requirements, they provide necessary clarifications, ensure alignment and introduce new options for preparers. Overall, these updates promote best practices, prevent inconsistencies, and enhance the quality and usefulness of financial statements.

This article provides an overview of the recent amendments to the GAPSME Regulations. For detailed guidance and interpretation, please refer directly to the GAPSME Regulations or consult a professional. If you require further assistance or have specific questions, our team is available to offer additional support.