Accountancy in Malta - regimented and patronising

Imagine my shock when I received this from a public auditor with a modest practice that has grown slowly, but steadily, over a stretch of 30 years since graduating:  “Franco Debono seems to think that only Gonzi harbours cliques and oligarchies without realizing that they in fact rule his roost.  Tonio Fenech is hardly different:  two such cliques dictate banking (mainly MFSA and BoV) and accounting." Later, verbally, he added: “unfortunately, I belong to an accounting profession which continually patronises me."

I decided to delve deeper into this matter, considering the profession's fast expansion in consonance with the growth of Malta's financial services sector.  In brief, he remarked that before Labour was returned to government in 1971, the accounting/auditing market in Malta had been totally dominated/monopolised by a British mediocre firm called ' Turquand Youngs '.   The Labour government soon got rid of it, replacing it with a sprinkling of local externally-qualified accountants, formerly in its employ.  Instead, today, we have an oligopoly of 4 colossal firms (all carrying foreign names), intent on choking the smaller ones (mostly sticking to local names).

“It is chiefly through the Accountancy Board that they wield their aggressive power.  They manipulate the Minister such that this regulatory Board is appointed solely from among their acquiescent staff complement" he concluded.

I consulted a handful of practising accountants on this matter.  Here is a gist of how they assess the prevailing situation:

1.  The Accountancy Board connives at the improper practice of having a firm's accounting function performed by another member of their staff, a colleague of the auditor.

2.  It imposes regulations applicable uniformly to all sizes of clients whether, say, a huge bank or just a midget retailer with two employees.  It copycats procedures suitable for international corporations and forces them, blind-foldedly, on local exempt private firms.  "Put up your charges to the client" was an advice given to a complainant.

3.  In so doing, the Board disregards, indeed violates, a recent EU directive requiring accountants to relieve SMEs and micro-firms of a part of their on cost.

4.  All warrant holders, whatever their size or maturity, are obliged to spend a considerable number of hours each year earning enough 'credits' from attendance at seminars, often unrelated to the profession and for which they have to pay handsomely.  The description given is ' Professional Development Competence '.  Next week, for instance, a seminar entitled ' Turning Conflict into Cooperation' (costing 45 euros) is awarded 3 CPE hours.  My interviewees all agree that such seminars should be free and optional on members with more than 10 years experience after qualification.  These seminars have become farcical in that some accountants habitually pay up, possibly make present for the opening few minutes and then slip out quietly.

5.  Another unnecessary burden on small-scale auditing firms is indemnity insurance, the premium for which has a floor which penalizes them.  Whoever can conceivably sue an auditor of a tiny exempt private company?

6.  Worst of all, there is the inane Quality Assurance charge on top of its inherent implicit insult directed at the mature auditors in being treated like undergraduates.  Not based on or related to turnover, this charge hurts only the small auditors.

The Labour Party is urged to look into this malaise among accountants in its forthcoming manifesto.  Let the profession be truly Maltese as it became after 1971.

Maynard