Amendments to the Accountancy Profession Act and to the Companies Act were the main item of Wednesday’s House of Representatives debate.

The Parliamentary Secretary in the Finance Ministry Tonio Fenech piloted the debate and from the onset set out to differentiate some of the accountancy terms that were relevant to the bill. Mr Fenech said that it is important that one notices the difference between who owns a company and who manages a company. For instance, with regard to companies listed on the Stock Exchange, the persons who own the company are the shareholders themselves.

Mr Fenech pointed out that there is a distinction between the role of an accountant and that of an auditor. It is worthwhile mentioning that although all auditors are accountants, not all accountants are auditors. To be eligible to practice as an auditor, an accountant needs to obtain a practicing certificate.

The accountant has to satisfy the Accountancy Board that s/he has adequate experience in the practice of accountancy for an aggregate period of three years. The studies undertaken at a tertiary level are the same for both accountants and auditors. While many are following the BA(Hons) Accountancy course at the University of Malta, others are following other recognised courses such as the ACCA and courses by foreign universities.

Unlike the accountant, the auditor is responsible to the public in general. The directives of the European Union are making sure that there is segregation between the relationship of an accountant with a company and the relationship between an auditor and a company. In broad and simple terms, an accountant prepares the accounts whilst the auditor verifies the accounts.

Mr Fenech said that there is need of more persons undertaking the accountancy profession, notwithstanding the fact that the accountancy profession is the most warranted profession in Malta. The financial sector, he said, is expanding in Malta thanks to the operators (the accountants and auditors) who are the main promoters in seeking to bring about competitiveness through changes in the laws that are required.

Mr Fenech said that government has set up a quality assurance team which has a supervisory role on the auditors’ workings. He said that there has been a positive response from this team so far.

One of the objects of the bill, Mr Fenech added, is to bring in line our national legislation with the obligations of the European Union set out in the directives relating to the accountancy profession.

The independence of the auditor is of utmost importance, said Mr Fenech. The amendments being proposed seek to ensure that the auditor adheres at all times to the rules on professional ethics and independence set out in the code of ethics and other regulations of the Accountancy Profession Act. In order to achieve this independence, the auditor is being protected in the performance of his duties. For instance the divergence of ideas between the auditor and the management of a company cannot be a justifiable reason for ending the auditor’s term of employment with the same company. To ensure there is a certain degree of transparency, if an auditor charges more than his audit fee, he has to specify in the invoice what the other fees are.

During his speech, Mr Fenech took the opportunity to thank the Accountancy Board and the Malta Institute of Accountants for their hard work.

Opposition deputy leader Charles Mangion said that there is a consensus on the amendments being proposed. It is true, Dr Mangion said, that the demand of employees within the accountancy sector is growing. Notwithstanding the growth in this regard, Dr Mangion said that we have to address the fact that about 42 per cent of school leavers are unskilled. The figure is shocking as it makes this large amount of school leavers unemployable.

The quality of life and the standard of living has always improved from World War II.

However, Dr Mangion said, we must reduce the bureaucracy involved between entities of various types and government departments.

Bureaucracy means more costs are involved and more time is used inefficiently. It is time that an analysis is drawn of the responsibilities of every entity.

Dr Mangion ended his contribution to the debate by repeating that the opposition agrees with the amendments being proposed.

In his winding up speech, Mr Fenech said that it is not true that 42 per cent of students leaving secondary schools are illiterate as Dr Mangion was saying. Mr Fenech said that 70 per cent of students finishing secondary level education continue their studies either at University, MCAST, a technical institute or some other training.

The bill was given a second reading and passed to committee stage.