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Financial Reporting

1. IFRS 18 - Presentation and Disclosure in Financial Statements

The International Accounting Standards Board (IASB) is set to release IFRS 18 Presentation and Disclosure in Financial Statements in April 2024, replacing IAS 1 Presentation of Financial Statements 

The new standard will bring about significant changes to the presentation and disclosures in financial statements, with a primary aim of enhancing the reporting of financial performance. IFRS 18 will introduce three sets of new requirements:  

  1. Categorising the statement of profit or loss into Operating, Investing, and Financing categories along with two new required subtotals, being ‘Operating Profit’ and ‘Profit before Financing and Income Taxes’ 
  2. Disclosures about management defined performance measures (MPMs); and 
  3. Enhancing general requirements on aggregation and disaggregation of disclosures. 

IFRS 18 will be effective for annual reporting periods beginning on or after 1 January 2027, with early application permitted. Comparatives will require restatement. In light of the recent release of this standard, IFRS 18 is yet to be endorsed by the EU.  

Read more at: https://www.ifrs.org/news-and-events/news/2024/03/iasb-to-issue-ifrs-18-presentation-and-disclosure-in-financial-statements/ 

2. Proposed Changes to Business Combinations and Impairment

To enrich the quality of information available to investors, in March 2024 the IASB has published for public comment the Exposure Draft Business Combinations—Disclosures, Goodwill and Impairment. The Exposure Draft contains proposed amendments to IFRS 3 Business Combinations and IAS 36 Impairment of Assets. The proposed improvements to IFRS 3 seek to offer deeper insights into the rationale behind business combinations while safeguarding sensitive information that could compromise their acquisition objectives. The proposed amendments to IAS 36 are intended to improve the application of the impairment test of cash-generating units containing goodwill. 

Key features of the proposed amendments include mandating the disclosure of ‘acquisition date key-objectives’ and related targets for strategic business combinations and providing information on expected synergies for all material acquisitions. These enhancements represent a crucial stride towards fostering increased transparency and accountability in financial reporting, empowering stakeholders to make well-informed decisions.  

Among the proposed changes to IAS 36, the IASB has proposed to maintain the impairment-only approach for goodwill instead of reintroducing amortisation. The changes include further simplifications and clarifications made to the impairment test, including clarified guidance on how to allocate goodwill to cash generating units for impairment testing.  

The comment period for the Exposure Draft Business Combinations—Disclosures, Goodwill, and Impairment is open until July 15, 2024. 

Read more at: https://www.ifrs.org/news-and-events/news/2024/03/iasb-consults-on-proposals-to-improve-reporting-of-acquisitions/ 

3. UK GAAP - Amendments to FRS 102

The Financial Reporting Council (FRC) has issued amendments to UK GAAP as part of their commitment to regular revisions. While the changes affect the whole suite of standards, the main amendments primarily focus on updating FRS 102, the financial reporting standards applicable in the UK and Republic of Ireland. The main changes harmonise the principles applicable in terms of FRS 102 with those coming from IFRS for Section 20 Leases and Section 23 Revenue. 

In Section 20, the distinction between operating and finance leases from the lessee’s perspective has been removed. As a result, for lease accounting the FRC has adopted a balance sheet approach, aligning with IFRS. Furthermore, recognition exemptions have been introduced for short-term and low-value leases. 

In Section 23, FRS 102 now incorporates a simplified adaptation of the five-step approach model from IFRS 15. Similar to IFRS, this requires preparers to identify distinct promises of goods or services within a contract and recognise revenue as each promise is fulfilled. 

The amendments will in most cases be effective for accounting periods beginning on or after 1 January 2026. The FRC will be hosting a webinar to discuss the new standards on 15 May 2024.  

Read more at: https://www.frc.org.uk/news-and-events/news/2024/03/frc-revises-uk-and-ireland-accounting-standards/ 

4. Amendments to GAPSME

Delving into the local scenario, amendments have been introduced to the Accountancy Profession (General Accounting Principles for Small and Medium-Sized Entities) Regulations. The main objective of the changes includes clearing up uncertainties, fixing inconsistencies and typos, aligning the current regulations with concepts and rules found in other accounting and audit standards and implementing necessary adjustments following these amendments. 

The main proposed amendments to the current GAPSME framework include changes in the following sections: 

  • Amendments to Section 7 – Property, plant, and equipment, involving the introduction of new disclosure requirements for small entities. 
  • Amendments to Section 9 – Financial assets, financial liabilities and equity, introducing the measurement basis of Fair Value through Profit or Loss (FVTPL) at initial recognition, subject to the satisfaction of certain criteria, as well as addressing the treatment of hybrid (components of both equity and financial liability) financial instruments.  
  • Amendments to Section 11 – Intangible assets other than goodwill, excluding the treatment of cryptographic assets and tokens from the scope of this section.  
  • Amendments to Section 21 – Business combinations and goodwill, introducing the definition of a business together with revised paragraphs to enhance clarity in accounting for business combinations.  

The proposed amendments are scheduled to come into effect on the 1st of May 2024. For further details and guidance, please refer to an upcoming technical article which will be published on our website. 

Read more at: https://legislation.mt/eli/ln/2024/41/eng  

5. Proposals to Update the IFRS for SMEs Accounting Standard.

The IASB has agreed that amendments made to full IFRS accounting standards relating to lack of exchangeability between two currencies and disclosure requirements for supplier finance arrangements should also be made to the IFRS for SME standards.  The IASB has therefore published for public comment an Addendum to the Exposure Draft Third edition of the IFRS for SMEs Accounting Standard. 

The proposals reflected in the exposure draft would update IFRS for SMEs Accounting Standard and reflect improvements tailored to SMEs. 

Read more at: https://www.ifrs.org/news-and-events/news/2024/03/iasb-consults-on-supplementary-proposals-to-update-the-ifrs-for-smes-accounting-standard/ 

6. FASB – Accounting for Government Grants

The FASB has launched a project focusing on government grants, addressing the scope, recognition, measurement, and presentation requirements under US GAAP. Following feedback, the FASB is considering integrating specific provisions from IAS 20 Accounting for Government Grants and Disclosure of Government Assistance. This is reflective within the tentative board decisions which have been reached to date, which include decisions on the recognition and presentation requirements for government grants.  

In line with IAS 20, the tentative decisions taken so far indicate that grants will only be recognised when it’s probable that the entity will both meet the grant conditions as well as receive the government grant in question. Grants related to income will be presented in the income statement when the grant-related costs are incurred. On the other hand, grants related to assets will be recognised as part of the asset’s cost. 

Read more at: https://www.fasb.org/projects/current-projects/accounting-for-government-grants-400612 



1. Proposed revisions to Quality Management Standards and ISA’s in response to new definitions in the International Code of Ethics for Professional Accountants

In response to the new definitions for publicly traded and public interest entities within the International Code of Ethics for Professional Accountants (Including Independence Standards) made by the International Ethics Standards Board for Accountants’ (IESBA), the IAASB introduced a consultation process on proposed narrow scope amendments, the aim of which is to achieve convergence with the new definitions in the IESBA code.  

The aim of these proposed revisions is two-fold: 

  1. To update the definitions and requirements within the IAASB standards to reflect the newly introduced definitions of publicly traded and public interest entities (PIEs) within the IESBA Code.  
  2. To extend the applicability of existing requirements for listed entities to address the increased expectations of stakeholders with respect to the audits of PIEs.  

The revisions proposed by the IAASB include an extension to the scope of entities included under the Quality Management Standards and the International Standards on Auditing, meaning these will now be subject to engagement quality reviews, the provision of transparency within the auditor’s report on specific audit areas, including communication with those charged with governance with respect to their responsibility on the financial reporting process.  

The IAASB is currently in the process of obtaining feedback on the Exposure Draft in relation to such Narrow Scope Amendments, the deadline of which falls on 8 April 2024.  



2. Proposed changes to the ISA 240 standard on auditors’ responsibilities relating to fraud

On 6 February 2024, the IAASB issued proposed revisions and amendments to International Standard on Auditing (ISA) 240: The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements, which aims to significantly enhance the auditor’s responsibilities in relation to fraud as delineated in the current existing standard. Such proposed revisions were brought about to address the recent corporate failures occurring worldwide.  

A revised standard in relation to fraud would better clarify and enhance the auditor’s responsibilities when performing audit procedures in relation to fraud or suspected fraud, which in turn should significantly improve public confidence in financial statements. 

In the words of IAASB chair Tom Seidenstein: “While many participants in the financial reporting ecosystem, particularly management and those charged with governance, have a role in preventing fraud, our standard focuses on the key role that auditors play. While auditors are not policemen, they can and must play a role in identifying and responding to material misstatements of the financial statements due to fraud and communicating their work to users. This proposed standard is an important step forward”.  

The proposed revisions to ISA 240 include: 

  1. Clarification on the auditor’s responsibilities relating to fraud in an audit; 
  2. Emphasized professional skepticism to possible fraud 
  3. Improved processes for risk identification and assessment of risks of material misstatement due to fraud; 
  4. Clarified response to fraud or suspected fraud identified during the audit;  
  5. Improving ongoing communication with management and those charged with governance in relation to fraud;  
  6. Increased transparency on auditor’s responsibilities and other procedures related to fraud; and  
  7. Enhanced audit documentation requirements on fraud procedures carried out.  

Feedback in relation to the proposed revisions to ISA 240 is to reach the IAASB by no later than 5th June 2024. 

The Malta Institute of Accountants will also be hosting an online CPE session in relation to The auditor’s responsibility relating to fraud in line with ISA 240, which will be held on 25 April 2024. Bookings may be made through their website.   



3. New video series launched to better understand the ISA for LCE

A three-part video series was launched by the IAASB to assist stakeholders to better understand, implement and use the new standard for audits of smaller and less complex entities.  

Within these video series, one can find: 

  • Objectives, benefits and distinguishing features of the new standard compared to the full suite of ISA’s 
  • Details with respect to the conditions under which the new standard can be applied 
  • An in-depth understanding of the new standard’s design principles, structure and content layout. 



4. Release of high-level summary of Prohibitions in The IESBA Code for Audits of PIEs

In March 2024, the International Ethics Standards Board for Accountants (IESBA) issued an overview of prohibitions within the IESBA Code, particularly covering independence for audits of public interest entities (“PIE’s”). 

The summary is intended to highlight non-assurance services, interests, relationships, as well as situations that bear on independence and are strictly prohibited for audits of PIEs.  

As specifically stated in the summary:  

“If the service, interest, relationship or circumstance creates a threat that cannot be eliminated, or if safeguards are not available to reduce the threat to an acceptable level, the firm is required to decline or terminate the service, interest, relationship or circumstance, or end the audit engagement”. 

The summary further provides a list of prohibitions in relation to: 

  • Non assurance services provided by a firm or network firm that may create a self-review threat 
  • Other prohibitions applicable to firms or network firms 
  • Other prohibitions applicable to individuals within a firm or network firm 
  • Other prohibitions applicable to firms, network firms or audit team members 
  • Other prohibitions applicable to firms or network firms, or audit team members or their immediate family members 

The summary should be read in addition to the Code and should not be treated as a substitute for it. 






1. EFRAG – ESRS Technical Explanations

In the final quarter of 2023, EFRAG introduced its ESRS Q&A Platform to gather and address technical inquiries, aiding preparers and stakeholders in implementing the European Sustainability Reporting Standards (ESRS). Responses to these technical inquiries can come in the form of either Implementation Guidance or Technical Explanations. 

During the first quarter of 2024, EFRAG released the first and second set of technical explanations. The technical explanations released are organised by cross cutting (ESRS 1 General Requirements and ESRS 2 General Disclosures) and topical standards (Environmental, Social, and Governance) in line with the published ESRS in the interest of ease of reference. EFRAG plans to publish a compilation of all explanations issued on a quarterly basis. This approach is designed to improve the accessibility of the explanations provided. 

Read more at:  

First set: https://efrag.org/news/public-485/EFRAG-ESRS-Question-and-Answer-Platform-releases-first-set-of-technical-Explanations  

Second set: https://efrag.org/news/public-492/EFRAG-releases-second-set-of-technical-Explanations-on-ESRS 

2. EFRAG’s public consultation on two exposure drafts on sustainability reporting standards for SME’s

EFRAG has initiated a public consultation process on the Exposure Draft ESRS for listed SMEs (ESRS LSME ED) and the Exposure Draft for the voluntary reporting standard for non-listed SMEs (VSME ED).  


The objective of this ED is to define reporting requirements that match the scale and complexity of activities, as well as the capacities and characteristics of LSMEs. This initiative aims to facilitate improved access to finance for LSMEs.  


EFRAG has also devised a voluntary sustainability reporting standard specifically for non-listed SMEs. This Exposure draft proposes a user-friendly reporting mechanism intended to assist non-listed micro, small, and medium sized enterprises (non-listed SMEs) in promptly fulfilling requests for sustainability information from various business counterparts, including banks, investors, or larger companies to which they supply goods or services. The goal is to facilitate their engagement in the transition towards a sustainable economy by offering an efficient and proportionate reporting solution. 

Read more at: https://www.efrag.org/News/Public-479/EFRAGs-public-consultation-on-two-Exposure-Drafts-on-sustainability-r#:~:text=EFRAG%20is%20pleased%20to%20announce,through%20the%20online%20consultation%20questionnaires. 

3. IESBA launches public consultation on New Ethical Benchmark for Sustainability Reporting and Assurance

The International Ethics Standards Board for Accountants (IESBA) has recently introduced two new Exposure Drafts (“ED’s”) addressing additions and proposed revisions to the International Code of Ethics for Professional Accountants (including International Independence Standards) (the “Code”) on sustainability reporting and use of the work of external experts. These exposure drafts were developed in close collaboration with the IAASB and include: 

  1. The International Ethics Standards for Sustainability Assurance (including International Independence Standards) (“IESSA”) ED, and ethics standards for sustainability reporting. These aim to provide a clear framework of expected behaviours and ethics provisions to be used by all sustainability assurance practitioners, including professional accountants involved in sustainability reporting.    

The aim of these standards, while promoting increased confidence from both the public and institutions with respect to sustainability reporting and assurance, is: 

  • to reduce greenwashing  
  • to enhance the quality of sustainability information

2. Using the Work of an External Expert ED – The proposal includes three new sections to the code and proposes an ethical framework designed to offer direction in assessing whether an external expert possesses the necessary competence, capabilities and objectivity to use the experts’ work as intended. The proposals also incorporate measures to assist in applying the Code’s conceptual framework when utilizing the work of an external expert. 

Feedback on Using the Work of an External Expert ED and on the Sustainability ED is to reach the IAASB by 30th April 2024 and 10th May 2024 respectively.  





John Debattista


Janis Hyzler

Audit Leader

Neville Saliba

Financial Reporting Senior Team Leader

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