The Accountant - Autumn 2020

GOING DIGITAL?

w w w. m i a m a l t a . o r g

AUTUMN 2020

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www.kpmg.com.mt 2 © 2020 KPMG, a Maltese civil partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.

Contents

THE ACCOUNTANT AUTUMN 2020 THE ACCOUNTANT magazine is issued quartely.

04 PRESIDENT’S ADDRESS

Published by

07 MIA NEWS

EDITOR Maria Cauchi Delia DESIGN Petra Mangion Buontempo

11

UPCOMING CPE EVENTS

12

COVID-19 MADE ME DO IT - GOING DIGITAL

18

THE CHALLENGES OF STARTING UP A TECH COMPANY - BEYOND THE PRODUCT LAUNCH

ADVERTISING INQUIRIES theaccountant@miamalta.org

22 FAMILY BUSINESSES IN THE DIGITAL WORLD: INNOVATION AND DIGITAL

All correspondence, articles for publication and enquiries are to be addressed to:

24 THE CONCEPT OF CLOUD ACCOUNTING

The Editor MIA Services Limited Level 1, Tower Business Centre Tower Street, Swatar BKR 4013, Malta.

28 THE MALTA BUSINESS REGISTRY’S LEAP INTO BLOCKCHAIN 30 IT AUDITS; TODAY AND IN THE FUTURE 36 THE NEED TO LEAD AND NOT MICROMANAGE

The Institute does not necessarily concur with the views expressed in the articles published on this journal. Articles are published without responsibility on the part of the publishers or authors for loss occasioned in any person acting or refraining from action as a result of any view expressed therein.

38 MEET THE MIA TEAM 40 COUNTING CHUKKAS

All data provided within this magazine is accurate as at the date of writing.

The Accountant can also be found online at www.miamalta.org/the-accountant

President’s Address

PRESIDENT’S ADDRESS FABIO AXISA IT IS A VERY BUSY PERIOD FOR THE INSTITUTE, AS ALWAYS, WITH A SIGNIFICANT NUMBER OF INITIATIVES AND ONGOING PROJECTS. HOPEFULLY IN THE NEXT FEW WEEKS WE WILL WRAP UP OUR EFFORTS IN A NUMBER OF AREAS AND WE WILL BE ABLE TO ANNOUNCE AND DISSEMINATE A NUMBER OF CHANGES AND DEVELOPMENTS. I KNOW WE HAVE BEEN REFERRING TO SUCH CHANGES FOR SOME TIME NOW, BUT IT IS TIME TO DELIVER AND CONCLUDE – AND REST ASSURED WE WILL. I AM DISAPPOINTED THAT WE HAVE NOT HAD THE OPPORTUNITY TO ORGANISE LARGE-SCALE EVENTS FOR THE WIDER MEMBERSHIP BASE. I SUSPECT THAT THIS WILL REMAIN THE CASE DURING THE COMING FEW MONTHS. I MISS THE CONVERSATIONS WITH OUR MEMBERS AND I MISS OUR SUCCESSFUL LONG SOCIAL EVENTS. BUT WE ARE EFFECTIVELY UTILISING THE TIME TO DELIVER ON THE CHANGES WE WOULD LIKE TO IMPLEMENT AT THE MIA AND IN THE PROFESSION. ONE DAY WE WILL START ORGANISING OUR SOCIAL EVENTS AGAIN. BUT NOT YET. SOON. Institute’s stance on disciplinary matters In the last few weeks our Investigating Committee has been very active with the investigation of all known outstanding cases of a potentially disciplinary nature involving members, warrant holders or otherwise, who allegedly brought the profession or the Institute into disrepute for professional reasons in the course of practicing their profession. There is not one claim, recent court judgement, adverse media reference, alleged misbehaviour or other similar matter brought to our attention which is not being investigated in a steady, consistent, firm but fair manner, no matter who the member is.

We will not be strong solely with the small or weak, and neither will we be impressed by the fame, profile or standing of the specific member.

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A number of cases will be referred to our Disciplinary Committee, an organ that is independent from the executive arm of the Institute, which executive arm encompasses our Investigating Committee. As much as is practicable, I will lead the work of the Investigating Committee as President, to ensure this work is attributed the maximum importance but also to carry responsibility for the difficult task of the committee. I have to say that the majority of the members concerned have collaborated tremendously and were keen to defend their membership of the Institute. The Chairman of the Disciplinary Committee has been reconfirmed at the Institute’s AGM and the Chairman will direct the proceedings once the Investigating Committee refers the specific cases in accordance with the Bye-laws of the Institute.

Without any prejudice to the actions which the Disciplinary Committee will deem fit, if

any, I would like to believe that a number of members will be suspended and a number will be expelled. But this is the prerogative of the independent Disciplinary Committee and I do not want to interfere, or be deemed to be interfering, in the Committee’s proceedings, nor prejudice the outcome of these proceedings.

We have also adopted changes to our Bye-laws to introduce more clarity as to what constitutes bringing the profession and the Institute into disrepute. Rest assured that the objective of these changes is to clarify the scope of what constitutes professional misbehaviour thus providing a concrete basis, which is beyond contestation, for taking action in certain cases.

Coronavirus developments We are now experiencing the second wave with its severe

President’s Address

implications. I urge our members to keep resorting to all health and safety precautions in a prudent manner to avoid problems for our profession and for our individual members.

I have to say that so far as a profession we have really fared well as I am informed of, and in certain cases I have witnessed, the robust arrangements at major firms, mid-tier and smaller firms, practitioners and also at other employers of accountants.

We need to continue utilising such measures to curb the impacts of this problem. As a profession we have switched once again to a predominantly online way of working in a seamless manner, modifying our working practices effectively in the process. We continue to react like a dynamic and determined profession.

We know the impacts of coronavirus on our profession are severe, financial and otherwise.

But this time I would like to focus on aspects which are not financial in nature. We must not underestimate the impact this challenge has on our wellbeing in general, taking into account physical, mental and emotional perspectives. The implications of the way we are living on us as human beings are profound.

We have changed our lifestyle and we have to manage and take care of our equilibrium as our psychological and internal equilibrium takes priority now.

Any member experiencing issues should remember that the Institute is here to support in any possible manner. We might not have a readymade solution for every matter but our willingness to help and to support is unlimited. Remember that you are not alone but you form part of the Institute.

I also expect the regulatory authorities to take cognisance of this situation. We will forcefully make the point that certain reporting timelines and deadlines need to be extended

and that any relief available, including the postponement of European Single Electronic Format (ESEF) requirements, should be utilised locally. We are in the process of making strong representations in this respect.

The profession’s processes for the current financial year will be impacted more severely than those for the preceding financial year as the onset of COVID-19 impacted our profession with effect from early March 2020, whereas I suppose that the entire financial reporting season for the year ending 31 December 2020 will be impacted in the circumstances. This cannot be overlooked by all stakeholders taking cognisance of the pressure the individual members of our profession will continue to experience.

Enhancing interaction between our members and stakeholders in our sector Our role as an intermediary between our members and stakeholders is very important and we dedicate a lot of effort to ensure this function operates effectively. We continue to engage with the MFSA on CSP matters, ESEF matters, circularisation by auditors of licenced entities, and other similar matters. We organise frequent meetings between our members and the MBR, Commissioner for Revenue, Malta Bankers’ Association and quite a number of other stakeholders to address practical challenges faced by our profession in the respective areas, such as the stance taken by the Registry on several matters, bank account opening, and fiscal developments.

We are giving small and medium sized practitioners and professional accountants in business a lot of importance in this respect. We are ensuring that their voice is heard and their angle is addressed in the major part of the Institute’s initiatives.

In a landmark activity, together with the Institute of Financial Services Practitioners and the Malta Institute of Taxation, we submitted proposals for the recent Government Budget process taking into account suggestions and recommendations put forward by representatives of our members. We will continue contributing to the national agenda on several counts as we firmly believe that this is one of our key objectives.

We are in continuous discussion with the Government on the changes we would like to see in our profession and in our regulatory landscape, including the Accountancy Board. We have also met the recently appointed leader of the Opposition. We are communicating strong messages on behalf of our members and indicating that as a profession we expect the political class to mature. We would like the country to have a common front and consensus on financial services with a carefully pondered long-term financial services strategy, going beyond Coronavirus and the outcome of the Moneyval assessment.

Of course, above all, we need to address in a decisive manner our country’s reputational issue.

This is cardinal and there is no escaping; the view of your Institute is loud and clear.

Our behaviour in the marketplace I do understand the challenges we are facing as a profession in respect of the reputation of our marketplace, the level of influx of new work and the impact of COVID-19 on the level of our revenues, profitability or income levels. We are focusing on these challenges seeking ways of improving and addressing matters for our profession.

>>

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President’s Address

<< I am proud to see our profession exploring new service offerings, changing the way we work and adapting to a new world.

But I urge our members not to succumb to financial pressures and venture into ideas which are quite borderline though not strictly addressed by our Code of Ethics. We are noticing particularly aggressive behaviour in the area of recruitment and resource targeting within the marketplace, particularly by accountants who have become recruiters for their own accountancy firm but also for other competing firms in quite a strange (almost anti-trust) arrangement. In widening our profession’s service offering we need to respect the spirit and tradition of our profession, beyond paying lip service to the mere form of our regulatory requirements, ignoring substance and principles. We need to be very careful as to which mandates and which clients we accept. Our profession is one of the gatekeepers and this is the time to demonstrate

we are capable of frustrating the intentions of players wanting to penetrate our sector with malicious intents. We cannot just accept any work and any client; we have to understand the rationale of the business model of clients or businesses that employ us. Our guard and risk appetite must be set at high levels. Making money is important but our profession, our reputation and our marketplace come first.

We are proposing amendments to our Code of Ethics such that the outgoing auditor or accountant is protected in case of change in professional appointment. Outstanding fees due to the outgoing professional, covered by an agreed upon letter of engagement for services actually rendered, should be settled prior to a change in professional appointment and the incoming auditor or accountant will be precluded from accepting such new engagement unless outstanding fees are settled.

GET YOUR WORK RECOGNISED We are giving YOU the opportunity to have your work featured across different MIA platforms of communication. In order to apply, you are requested to fill out the following survey - bit.ly/GetRecognised What will this opportunity give you? You have the possibility of getting exposure on: Our website with 40,000 views per month Our social media platform with over 6,000 followers Our direct mailing list with 10,000 subscribers Our quarterly magazine distributed to 3,600+ members and also online!

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The MIA’s team The Institute has a strong diverse team, but I firmly believe we need to continue investing in and recruiting talent within the team. We are currently in the process of identifying candidates to join our team within the areas of technical and engagement with members. These are two areas which require enhancement to ensure our members are well served.

Our Council and Our Officers I would like to thank the present team of Council members who contribute and devote a lot of time, even personal time, to support the Institute and the profession. I want to mention specifically my fellow Officers – David, Noel and Franz – who make time for very regular meetings and with dedication drive the changes we would like to see and address the challenges the profession is facing. They support me incessantly and continuously, facilitating the Institute’s mission to deliver on its objectives, with strength, pride and resilience.

SCAN ME TO SUBMIT YOUR WORK

MIA News

INFO SESSIONS FOR MIA MEMBERS SEPTEMBER – NOVEMBER 2020 MIA PRESENTS PRE-BUDGET DOCUMENT The Institute took part in an inter-professional collaboration to present concrete measures for the government’s consideration ahead of the 2021 Budget. Following the coronavirus disruption, the national budget this year played an even more critical role in supporting the local economy.

The MIA teamed up with the Institute of Financial Services Practitioners (IFSP) and the Malta Institute of Taxation (MIT) for

this initiative, bringing together unequalled expertise in the area of finance. This was the first collaboration of its kind and roped in several MIA committees besides the MIA Council and management.

The economic challenges and opportunities were separately discussed by members of the following MIA Committees: •

Digitalisation Committee

•

Direct Taxation Committee

•

Financial Services Committee

•

Gaming Committee

•

Indirect Taxation Committee

•

PAIB Advisory Group

•

SMP Advisory Group

The proposed measures took into consideration the pressures on Government revenues caused by the pandemic and recommended possible viable solutions to

stimulate business and create a favourable climate for the corporate community to operate in.

The Institutes discussed the proposals with the Commissioner for Revenue, Martin Gaerty, during a special briefing session. The Commissioner commended the initiative and provided constructive feedback on the proposed measures.

The document was formally presented to the Parliamentary Secretariat for Financial Services and Digital Economy, Clayton Bartolo during a meeting in which representatives of the three Institutes were present.

By offering insight and recommending practical solutions, the pre-budget document reinforces the importance of accountancy professionals to Malta’s economic development.

VIRTUAL AGM REVEALS MIA’S DIGITAL SIDE Like everything else this year, the MIA Annual General Meeting (AGM) was radically different from what members were used to, but unlike most other changes in 2020, this transition was seamless and wellplanned.

When it became clear that COVID19 would linger on into the Summer, the MIA took the responsible decision to migrate the 56th AGM online.

The AGM is an important event in the MIA calendar. Besides the election of Council members and resolutions on crucial decisions, during the AGM members have the opportunity to discuss any concerns as well as put forward recommendations regarding future actions to be taken by the Institute and the profession. With so much happening since the last AGM, the MIA wanted to retain this

two-way immersive experience for participants even if not convened in person.

There were over 450 active members present for the AGM and the President’s introduction was simultaneously streamed live on Facebook for everyone to follow.

The AGM also presented a series of resolutions which were open for the vote of the virtual floor making members’ voices heard digitally.

Using an easy-to-use tool, members took part in real-time and secure voting that delivered the results immediately.

Following the event, the feedback by members was extremely encouraging. The first e-AGM of the Institute required a lot of careful preparation, but the success of the occasion is confirmation that the Institute is up to the digital challenge.

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MIA News

MIA COMMITTEES AND FOCUS GROUPS

A PREVIEW OF WHAT THEY HAVE BEEN UP TO

Audit & Assurance Committee

International Standards on Auditing (ISA) are continuously being revised and therefore it is essential for practicing auditors to keep themselves abreast of these changes. Consequently, the Institute, through its Audit and Assurance Committee has embarked on a project to issue MIA Alert documents to highlight the latest ISA revisions. The first MIA Alert document was issued recently and focuses on ISA 540 (Revised) Auditing Accounting Estimates and Related Disclosures.

The document can be accessed by MIA members, through miamalta.org/e-library.

Other matters being tackled by the Audit and Assurance Committee, include: • a Fiscal Unit Consolidation Guidance for members, in collaboration with the Institute’s Direct Taxation Committee and the Financial Reporting Committee and with the involvement of the Commissioner for Revenue; and • a European Single Electronic Format (ESEF) Guidance for auditors highlighting the latest developments on how electronic financial statements will be audited. This work is being done through a working group established to address this, in collaboration with representatives from the Accountancy Board, the Malta Financial Services Authority (MFSA) and the Malta Business Registry (MBR).

Financial Services Committee

This Committee works closely with the Listing Authority to address crucial matters impacting the work of professional accountants in this particular sector. The latest technical release endorsed by this Committee, following relevant discussions with the MFSA, refers to ‘R4-3.2.7 of Part BI of the Investment Services Rules applicable to MiFID Firms’ for Basis Year 2020.

Once available, MIA members can access this document via miamalta.org/e-library.

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Young Members Group

As part of its remit to promote personal development through activities and focus on creating future-fit professional accountants, the Young Members Group organised a two hour webinar, entitled #Beyondaccounting #Goingdigital, focusing on digital tools and latest initiatives that may inspire practitioners to embrace this digital era.

The Young Members Group also created its own Facebook page to enhance its social media presence and create a space for young members to communicate.

Small and Medium Practitioners (SMP) Advisory Group

The SMP Advisory Group continues to focus on its objective of identifying the needs of this particular MIA membership category and ensuring that timely and relevant action is taken by the Institute to address and obtain clarity on matters encountered by these practitioners in the course of their work. During the past months, the Institute facilitated several meetings where members of this focus group were given the opportunity to discuss matters of concern with relevant responsible authorities. Meetings and information sessions were held with the Commissioner for Revenue, MBR, the MFSA and the Malta Bankers’ Association, amongst others.

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Local News

MIA MEETS PN LEADER BERNARD GRECH The Institute paid its first visit to PN Leader Bernard Grech since his election to discuss issues of national concern.

President Fabio Axisa said that Malta’s reputation is the major challenge faced by the country, and accountancy professionals are on the forefront of the effort to repair it.

“The Institute is not satisfied with the current regulatory infrastructure,” said Mr Axisa, explaining MIA proposals to strengthen the Accountancy Board. “As the voice of the biggest profession in Malta, we insist on the highest standards and expect the regulators to operate with complete autonomy.”

Discussing professional misconduct, Fabio Axisa pointed that the absolute majority of MIA members uphold the highest standards but are disproportionately targeted.

Mr Axisa was accompanied by Vice President David Delicata, Secretary Noel Mizzi, and CEO Maria Cauchi Delia. The PN delegation included MPs Claudio Grech and Kristy Debono, as well as election candidate and fellow professional Graham Bencini.

The two delegations discussed the threat of losing US correspondence banking and agreed on the pressing need of a national plan that looks beyond Moneyval.

Bernard Grech said that the Nationalist Party wants national consensus on a financial services strategy and encouraged the Institute to help shape the agenda.

LOCAL APPOINTMENTS KPMG in Malta is pleased to announce that André Zarb has taken the helm as the new Senior Partner. Tonio Zarb will return to a client-facing role as Partner within the Advisory function while Anthony Pace has been appointed as Head of Tax. Furthermore, Ariane Azzopardi, Claudine Borg Azzopardi and Curt Gauci have been promoted to Directors.

Andre Zarb Senior Partner

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Anthony Pace Head of Tax

Ariane Azzopardi Director Quality and Risk Management

Claudine Borg Azzopardi Director People and Change, Advisory

Curt Gauci Director Digital Solution, Advisory

Upcoming online events

UPCOMING CPE EVENTS JANUARY - FEBRUARY 2021 ACHIEVE YOUR 2021 CPE HOURS FROM ONE OF OUR CPE SESSIONS VISIT OUR WEBSITE AT MIAMALTA.ORG/EVENTS

JANUARY 2021 14/01/2021 | The Legal Concept of Fortuitous Event 20/01/2021 | The 5-step Model of Revenue Recognition 21/01/2021 | Do you Lead or Micromanage?

26/01/2021 | Preparing for Changes to ISA 540 on Auditing Accounting Estimates 27/01/2021 | Recent developments in the FinTech industry and tax implications 28/01/2021 | VAT Considerations in the Immovable Property Industry

FEBRUARY 2021 11/02/2021 | Aspects of the Criminal Code relevant to Accountants 12/02/2021 | Budgeting and Forecasting â&#x20AC;&#x201C; Linking Strategy with Uncertainty 23/02/2021 | Financial Instruments Under IFRS And GAPSME - Session 1 24/02/2021 | Employment Law Basics, a Practical Approach 25/02/2021 | Financial Instruments Under IFRS And GAPSME - Session 2

VAT PACKAGE - SPECIAL OFFER* 02/02/2021 | VAT Introductory Course: Session 1 09/02/2021 | VAT Introductory Course: Session 2 16/02/2021 | VAT Introductory Course: Session 3 08/04/2021 | Advanced VAT Course: Session 1 15/04/2021 | Advanced VAT Course: Session 2

*Interested participants need to book for this course by not later than 1st February 2021 to benefit from this one time offer. We are offering a special discounted price if you book for the whole course.

22/04/2021 | Advanced VAT Course: Session 3

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Going Digital

COVID-19 MADE ME DO IT - GOING DIGITAL REPRESENTATIVES FROM THE BIG 4 AND MID-TIER FIRMS IN MALTA, WERE ASKED TO CONTRIBUTE TO THIS ISSUE BY SHARING THEIR EXPERIENCE ON HOW THEIR WORKFORCE EMBRACED DIGITAL, FOLLOWING THE COVID-19 OUTBREAK.

Which remote initiative helped your firm engage in team building?

“ ” “” At RSM Malta, we care for our employees and we firmly believe that no employee is an island. In servicing clients, we work together in teams, which in turn create bonds and lasting relationships. We top our professional experiences with activities by a highly active Social Committee managed by employees.

COVID-19 challenged the traditional and physical ways of going about this. Physical and social

distancing meant that we had to depend more on digital channels to communicate, collaborate and relate. We were not discouraged by this.

A series of digital alternatives kicked off soon after the pandemic hit our shores. We switched to a busy calendar of social digital events, including morning digital fitness group classes, cooking classes and games nights. This series of remote get-together events helped us connect irrespective of our geo-location.

Vladimiro Comodini, Partner

What was the first thing the firm deployed to react to these challenging times?

As a leading professional services firm, Deloitte adopts a number of digital tools and platforms. With the onset of COVID-19, the firm was able to rapidly deploy these tools and platforms in order to allow business continuity in a remote working environment. This enabled us to continue to serve our clients with minimal disruption and to be able to support them during these challenging times, while safeguarding the well-being of our people, which remains a key priority.

Mark Alden, Chief Executive Officer and Partner

What situation would you have never expected Grant Thornton to face?

It was difficult for us to imagine the challenges brought about by the COVID19 pandemic. Even though we boast a reliable digital infrastructure within our firm, we could have never imagined that it would become our working backbone within such a short period. We made a seamless transition to a working-from-home scenario while keeping close to our clients and our colleagues. We also launched a learning and development platform.

Michael Mifsud, Senior Manager, People and Culture

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Going Digital

What was the most difficult aspect of having your workforce rely more on technology?

“” “” Luckily at EY, many of the tools required to make the shift to remote work were in place for some time before COVID-19 hit, and our people were already familiar with these tools. The technology helped us to communicate constantly and, in some cases, processes have become even more efficient as a result of remote working. We witnessed some stellar work from our IT department with a smooth transition. Within this period, we have been learning how to overcome challenges together, organising learning sessions on remote working tools, sharing wellbeing tips, delivering relevant webinars, as well as sharing learning sources on virtual working and continuing our dialogue electronically.

Ronald Attard, Managing Parner

What was the key learning that PwC shall pursue going forward, in terms of digitising the workforce?

Investing in our people’s skills, transformation and digital literacy have always been our priorities to ensure that our workforce is agile and adaptable.

COVID-19 accentuated the need for collaborative work methods and digital learning processes and continued to reinforce our upskilling momentum. Teams working closely together, sharing experiences, iterating and innovating whilst working from home or remotely have become a reality.

Our focus on upskilling, through a blended approach, continues.

Lisa Pullicino, Human Capital Partner

In what way did Mazars ensure that employees are kept aware of the latest changes/routines in the company?

With the outbreak of the pandemic, from the second week of March, Mazars shifted to home working with relative ease. As in most other firms, virtual meetings with clients and staff became a daily event. Virtual lunches were organised where teams would join from their own homes to share ideas, concerns and frustrations over a home lunch, rather than in the office canteen.

We also managed to carry out induction courses online, while the office social committee was successful in organising various digital events,

including a virtual team building day. We were also able to communicate and launch a complete firm rebranding. Sub-groups were created within the various divisions of Mazars, where teams could communicate amongst themselves and coordinate the conclusion of work assignments.

The Mazars HR team was busy ensuring all staff members were contacted for a weekly one-toone chat, primarily to gauge their morale and provide encouragement were necessary.

Paul Gigilio, Partner Mazars Malta, Taxation and Assurance 13

Going Digital

How were KPMG employees motivated to remain productive, whilst keeping a work life balance?

“ ” “” Those of us that perform leadership roles know that leadership is more of an art than a science.

It is deeply personal, and also interpersonal.

During these months, we focused on maintaining motivation and productivity by: •

Maintaining social connection despite physical distance. With a dramatic decline in face-to-face contact, we implemented strategies to increase social connection among our people.

•

Developing our leaders to lead remotely. We focused on developing a toolkit for leaders and to coach them into developing the skills needed to manage their teams from a distance.

•

Choosing not to delay decisions and acting quickly. People look for proactive action when threatened. This helped build trust and provided reassurance that Leaders are acting swiftly.

Claudine Borg Azzopardi, Director, Advisory Services - People and Change Has BDO Malta been impacted positively by remote working? What was the main positive aspect?

From a business perspective, the most positive aspect about remote working has been our people finding new ways of working efficiently from home, maintaining similar, and in some cases, better productivity levels through outstanding technology and teamwork. This has also created a stronger bond between our people and teams. Needless to say, many employees are thrilled to recover hours of wasted time in commuting to work.

Mark Attard, Chief Executive Officer and Partner

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Advertorial

CAPITAL MARKETS: A WORLD OF OPPORTUNITY FOR BUSINESSES When advising the Board or your clients on financing requirements and solutions how often do you consider recommending a public issue and listing on the stock exchange?

Additional corporate governance requirements install further control, checks and balances which promote operational efficiency and give better peace of mind to all stakeholders.

There has been a substantial rise in Market Listing in recent years however there remains a large number of financial professionals and advisory firms who are yet to become fully acquainted with the benefits of Capital Markets. A growing number of CFO’s and Financial Controllers have managed to master what has been an unintentionally well-kept ‘secret’ - that there are significant advantages for listed entities that go well beyond the raising of finance.

Whilst the Main Market remains very popular with Issuers, gone are the days when a capital market solution was only available to more established companies. With the advent of Prospects MTF, an alternative market for SME’s requiring smaller amounts of financing, and IFSM, a wholesale exchange for professional investors, there are now various solutions which should ensure that there is far more accessibility for companies contemplating capital market solutions.

Consider the following factors:

Foreign companies can also avail themselves of a variety of listing solutions and opportunities that make Malta an attractive jurisdiction for an international listing solution.

Bank financing and capital markets financing are not mutually exclusive. Indeed, they work very well side by side and ensure that a business can maximise its financing solutions.

Financing through a bond issue generally entails a one-off capital repayment at the end of the bond term, eliminating the need to repay capital in annual instalments over the term of the bond.

There is a myriad of reasons as to why one should consider a listing on the stock exchange. At Calamatta Cuschieri we are always available to help you understand the opportunities that this sector has to offer.

An equity issue is a perfect solution for an exit or a partial exit for some or all of the shareholders. It is an optimal solution when business partners want to go their own way but there is not sufficient liquidity to buy out shareholders. It is also an optimal solution for second and third-generation businesses which are seeking exit solutions.

A listing status is a branding opportunity which brings prestige, recognition and new business opportunities, while it enhances the value of the business.

The requirement to include independent executive directors on the board provides a perfect opportunity to onboard different subject matter experts who will add value to the business.

This article was issued by Patrick Mangion, Head of Capital Markets at Calamatta Cuschieri. For more information visit, www.cc.com.mt. The information, view and opinions provided in this article are being provided solely for educational and informational purposes and should not be construed as advice or tax or legal advice.

This article is a paid advertorial by Calamatta Cuschieri for the Autumn issue.

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Moneyval

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Start-ups

THE CHALLENGES OF STARTING UP A TECH COMPANY - BEYOND THE PRODUCT LAUNCH Author: Alexander Borg

MITA’s four-year stint accelerating early stage start-ups reveals some lessons learned by tech entrepreneurs as they cope with the challenges of widening their skill set to include governance and insights about how Covid-19 is accelerating the digitalisation of offline businesses where start-ups will have an important role to play.

In 2016, the Malta Information Technology Agency (MITA) launched a technology start-up accelerator programme called YouStartIT. For outsiders, an accelerator is a special programme that takes in a cohort of five to ten teams with a market-validated idea or early prototype and transforms them into a company over a fixed period of time, usually 12-16 weeks. There is a plethora of different versions of accelerators, each with varying curricula. Some focus on teams launching a prototype, others taking in only scale-ups – start-ups that already have business traction – and others concentrating only on specific sectors, such as HealthTech or FinTech. Typically, start-ups receive a small pre-seed of between €15,000 and €50,000, sometimes against equity, sometimes equity free; plus, plenty of coaching and mentoring.

In MITA’s case the accelerator focuses on early stage digital start-ups with an early prototype providing an equity-free grant valued at €30,000, of which €20,000 is cash disbursed against performance in reaching set objectives and milestones.

Over six editions of YouStartIT, 32 start-ups have been accelerated – nine of them foreign. One-third proceeded to the next stage of funding raising

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nearly €6 million, mostly from private angel investors.

It has been a tremendously exciting journey to have kicked off this unprecedented initiative for the government.

The main advantage for aspiring tech entrepreneurs is that the programme bridges the gap between ideation and the actual point in time when the start-up is ready to start receiving further funding to keep growing.

The experience is intensive and rife with so many learnings from a human, management, financial and technological perspective.

Tech-savvy founders can be sure to learn skills that go way beyond the vertical expertise they already possess. Steadfastly enamoured of their technical solution, as they often are, they soon discover that jumping directly to building a solution, which is not properly market tested, is not going to make their business sustainable. And that is a big challenge.

>>

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Start-ups

<< By contrast, founders with a business or marketing orientation end up having to understand the nuts and bolts of their product, and learn how to weave it into a business narrative that must make perfect investable sense to the investors whose money they need in order to continue growing.

Nevertheless, keeping in mind the readership of this publication, one major challenge that tech start-up founders have to face is the â&#x20AC;&#x153;necessary evilâ&#x20AC;? of administering a company, understanding its accounts and all the institutional responsibilities that come with starting a tech business.

Unless any of the founders are accountants by profession, rarely the case, all of them find this responsibility tough. Which is why, throughout the acceleration period, the programme involves expert corporate service providers to help the start-ups draw up their M&As, explain in simple language the responsibilities involved, while legal firms to help the start-ups assess the feasibility of their start-up project from a legal perspective. This usually covers issues such as product liability, GDPR and privacy, IP, and even regulation of their activity if it is related to Blockchain, AI or gaming.

The message to the start-ups is always clear: an accountant and a legal advisor, just like their banker, should be their best friend.

Other major challenges faced by start-ups, in particular non-indigenous ones, are the long and bureaucratic process faced to register a company, and in particular when opening a bank account. While technically, opening a company could be done online, some foreign start-up founders complain that the process is impossible to conduct without a Maltese ID,

and therefore is too costly for cash-strapped, early stage start-ups to engage an accountant to assist. Other tech entrepreneurs lament that banks in Malta sometimes do not take the trouble or even fail to understand the risky nature or even the technology at the core of their business.

According to Startup Genome, a renowned start-up research and policy advisory firm, the global start-up economy was worth $2.8 trillion last year, and growing at 10% per annum, three times faster than the rest of other economies.

Due to their flexibility and rapidity at which they churn out disruptive innovations, start-ups are growing in importance. The jobs they create are more sustainable because they are more adapted to our economic future thanks to the agile, nearly holacratic, way start-ups operate, and many established companies are increasingly resorting to start-ups to innovate. Even their multiplier effect is higher, as for every high-tech job, Startup Genome estimates that another five jobs are created in the service economy.

With the pandemic changing human behaviour and accelerating the digitalisation of offline businesses, expect this trend to increase further.

One way for the accounting and auditing profession to prepare for this change is to offer pro bono help to early stage start-ups, possibly by including it as part of their corporate social responsibility. Depending on the size of their firm, taking one or two start-ups under their wing is an excellent opportunity to learn the way start-ups think and disrupt markets through technology, and perhaps expose junior staff to a wider worldview. Even if there is a one-in-ten chance that a start-up will make it to scale up and become a corporate client, the return in social and knowledge capital already carries plenty of value.

Alexander Borg has a lifetime of experience in dynamic, projectised tech environments.

Currently he manages the MITA YouStartIT accelerator.

20

Corporate Governance

we are Baker Tilly Come with us on your journey.

be connected

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be inspired

Baker Tilly is a place where we are dedicated to providing an environment that enables you to continually learn and have the opportunity to apply what you've learned. You will engage in challenging assignments that develop your expertise and abilities to their highest level. Your contributions will always be valued, and there are no limits as to what you can achieve here.

So, if you think you have what it takes to make a difference to our organisation and if you are looking for an opportunity to work within a vibrant and growing environment with an excellent work-life balance, then look no further.

Help us create a bolder tomorrow, together. www.bakertilly.mt

Audit I Accounting I Tax I Advisory

Now, for tomorrow 21

Family Business

FAMILY BUSINESSES IN THE DIGITAL WORLD: INNOVATION AND DIGITAL TRANSFORMATION In terms of the Family Business Act, a Family Business is defined as a business which is managed by at least two members within the same family, none of whom hold more than eighty percent of the issued share capital in the company. This definition in itself indicates that Family Businesses can range from micro businesses to large successful multinational companies.

Business growth is dependent on a diversity of elements, some of them beyond the control of the family behind the business. One of these elements is the evolving ecosystem in which SMEs operate. This has far-reaching effects on the typical family business and whether it will grow and thrive depends very much on the ability of the business to adapt to technological changes, innovation, and the changes in demand of consumers.

The digitalisation, or digital transformation, of our economy is one of the key challenges faced by many family businesses today and changes in technology require that this transformation takes place rapidly and nimbly so that the business can remain ahead of its competition or, at least, on a level playing field.

For family businesses, the transformation to digitalisation presents more hurdles than other businesses not involving family members, but it needs to be faced at some point in time. A Family Business survey carried out by PwC in 2019 showed that 39% of local businesses feel vulnerable to digital disruption. This shows that it is crucial for family businesses to keep digital disruption as a priority on their agenda.

Every family business has a number of static values and traditions which remain constant and never really change.

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A clear sense of values and purpose is generally an advantage, but it may also present difficulties because it is not always easy to find the right compromise between keeping these constants in place while seeking to quickly adapt to a rapidly-changing market.

Category

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Family Business

Ignoring the dynamic and fast-paced changes taking place within the local and global business environment is, however, not an option and family businesses need to find the right formula to ensure the continuation.

This formula must be based on a holistic vision governing the ecosystem in which various actors and concepts including the family, values, traditions, business interests, transformation, legacy and heritage have to coexist.

It is inevitable that the actors and movers of the great change must be the founders and owners of the business. They need to be open to a transformative culture which encompasses the ability to accept change and do something about it. New technologies have a disruptive impact that is transforming business and the world as we know it. Often, the new generation can help the family business adapt more rapidly and this is one of the main reasons why well-planned succession in family business is critical to the survival of the family business.

A well-structured plan on how to pass the management of the family business to the next generation is crucial.

New blood replaces the old, and not just as an end in itself. The younger generation is brought up in a modern environment which, to the older generations, is often extraneous and requires them to adapt through an evolutionary process which may often take too long, leading the business to fall behind its times and lose its competitive edge.

Family businesses also need to be open to the possibility of passing on the ownership and management of their family business to professionals, whether members of their family or even others outside the family.

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Being open to recruiting new talent from outside the family itself and to collaborating with third parties will help ensure that the family business is better equipped to face new realities.

Back in March of this year, when the COVID -19 pandemic showed up on Malta’s doorstep and the implementation of precautionary measures took place, many businesses started to realise that resting on one’s laurels is never an option in business. Taking a comfortable back-seat, simply because business is doing well, often results in the business having to struggle for survival when unexpected events occur and disrupt the economic environment it is used to. All businesses, including family businesses, need to be open to innovation and transformation which will help them adapt to new realities.

Over the past months many family businesses realised the importance of digital transformation and having an online presence, of resorting to e-commerce to give them access to a larger, global market, as well as the importance of re-skilling and creating alternative revenue streams, in many cases through the use of modern technologies.

“

Openness to transformation and adaption is not a matter of choice. Whether digital, technological or a response to market demand, transformation is a necessity on which the very survival of the family business depends.

”

This is an article by the Regulator of the Family Business Office. The Office provides support to family businesses in relation to the regulation and governance of their business.

Cloud Accounting

THE CONCEPT OF CLOUD ACCOUNTING Author: Rachel Farrugia

FOR THE PAST YEAR AND A HALF, I HAVE BEEN WORKING AT A LONDON-BASED ACCOUNTANCY FIRM SPECIALISING IN START-UP AND FAST GROWTH SMES IN THE TECHNOLOGY AND E-COMMERCE INDUSTRIES. BORN WITH DIGITAL AT HEART, THE COMPANY IS CONSTANTLY TRANSFORMING TO ENABLE CLIENTS TO BE AGILE IN THEIR GROWTH JOURNEY.

The move to a digital-first accounting firm meant that my role would be twofold: leading a team of accountants in delivering a range of services to our clients as well as an internal role in the company’s finances including assessing the feasibility and potential benefits that new technologies can bring if implemented within our work processes.

“

Being at the forefront of the latest technological advancements has resulted in my day-to-day accounting processes becoming more efficient thus allowing me to dedicate more time to strategic finance and quality assurance work.

”

The same can be said for our clients who are very receptive to us embedding new technologies in their finances enabling them to move away from the mundane day-to-day finance tasks and focus more on the strategic planning of their business.

Whilst many clients are receptive and expect us to put forward such innovations to them, there are still the occasional challenges in proving that the move to digital is worthwhile, as not all clients have the foresight or willingness to change their ways of working.

Despite having their own businesses revolve around technology innovation, clients may still be very conservative when

it comes to their finances and there are, therefore, always challenges in putting digital change into motion.

Humans have always feared the impact of technology on their roles in the workplace, however, this often arises from a lack of understanding and knowledge of the technology and its benefits and also its limitations. Embracing it, helps to recognise the new opportunities that it provides, such as enhancing other analytical skills that previously one would not have had the opportunity or time to work on. Personally, this has resulted in my team being able to provide our clients with new financial insights that will help them make more informed strategic decisions.

Cloud Accounting

Digital technology has proven that it can radically transform and benefit the whole accounting cycle, from data input to stakeholder reporting. For example, Artificial Intelligence and Natural Language Processing have the ability to crawl through thousands of documents picking up the relevant details and automating what is currently a massively resource-intensive process.

The benefits arising from this relate not only to the increasing speed at which transactions are processed but also to the reduction in the margin of human error, thus enabling higher-quality outputs and lower risk of non-compliance with accounting and regulatory frameworks.

These two factors combined, provide more accurate and real-time reporting for stakeholders to be able to act upon as quickly as possible rather than react to the facts after the matter.

Freeing up this time also allows for better focus on value-adding work such as internal projects on assessment of margins, key cost drivers within the business and real-time data to track budgets against actual. These tasks in themselves can also be assisted by technology through data analytics that provide key insights on the trends coming out of a businessâ&#x20AC;&#x2122; accounting transactions.

â&#x20AC;&#x153;

and legacy system maintenance costs.

Siloed legacy systems have imposed various challenges that cloud accounting helps to overcome. A key example is the hesitance to move to new processes due to the inability of legacy systems to support the transition of data and integration with newly embedded software.

This is diminished significantly with cloud accounting since such software have been built with multiple open APIs (application programming interfaces) to enable the integrations with other software used by the business such as sales, CRM (customer relationship management), banking, procurement, strategic tools and even HR planning. All of this allows businesses to be agile in technological advancements with the peace of mind that accounting processes will not only remain uninterrupted but will also be improved.

Technological advances up to a decade ago have helped to provide piecemeal efficiency improvements in the way we work, however, the ones that are at our disposal today are providing improvements in leaps and multiples.

This is why it is crucial to appreciate how digital solutions will impact our current and future roles and investment in these developments will provide the competitive edge that is not only sought after, but crucial to the success of each business.

One of the main drivers enabling this transformation has been the growing adoption of cloud technologies.

â&#x20AC;?

This has allowed financial data to be stored more securely and to be accessed from anywhere, enabling flexibility within the workforce. This not only makes the business more agile to react to unprecedented situations such as COVID-19, but also opens up a much broader talent pool of individuals who could possibly work for the company.

There are also potential cost benefits related to the reduction in upkeep of on-premises technology infrastructure including those related to reduced server

Rachel graduated at the UOM with a Masters in Accountancy. Joined PwC Malta which then led to a secondment at PwC London. In 2019, Rachel moved to the Accountancy Cloud where she currently holds the role of Head of Finance.

27

Blockchain

THE MALTA BUSINESS REGISTRY’S LEAP INTO BLOCKCHAIN

Author: Kurt Izzo

SIMPLE, CONVENIENT, AND EFFECTIVE INTERACTION BETWEEN THE GOVERNMENT AND CITIZENS HAS BECOME A COMMON EXPECTATION OF CONTEMPORARY SOCIETY. ELECTRONIC GOVERNMENT SOLUTIONS BASED ON AUTOMATION OF DECISION-MAKING PROCESSES ON A NATION-WIDE SCALE SERVE TO MEET THESE EXPECTATIONS, WHILE GENERATING EFFICIENCIES IN GOVERNMENT AND SOCIAL COMMUNICATIONS FOR EVERY MEMBER OF SOCIETY. ELECTRONIC GOVERNMENT INTRODUCES FUNDAMENTAL CHANGES TO THE DISTRIBUTED GOVERNANCE SYSTEM, AFFECTING PRIMARILY THE ENTIRE RANGE OF FUNCTIONS PERTAINING TO DOCUMENT MANAGEMENT AND PROCESSING. Malta has made visible progress towards establishing an electronic government infrastructure and services, enabled primarily by the accelerated development of information and communication technologies (ICTs). However, citizens’ participation in e-governance in Malta is still below average, largely as a result of limited exposure to interactive functions and online services available on the official websites of government bodies and institutions.

Blockchain is an emerging technology that promises to change the way the world works and Malta is the first country to shift its national business registry to a Blockchainbased system.

This technological shift forms part of a national strategy to popularize Blockchain, encouraging other public entities to introduce the technology in their own functions.

The Malta Business Registry (MBR) is the agency responsible for collecting and storing data for every Maltese company. It is also responsible for the register of foundations, associations and non-profit organisations.

In mid-2019, the MBR launched a revamp of the Registry’s online system using a permissioned Hyperledger Blockchain environment with the aim of developing a system that performs the actions required for the registration and subsequent administration of companies.

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Blockchain Technology A Blockchain is a transparent distributed database that records details of all transactions performed by the system’s participants. In the context of electronic government, this means a technology that stores data on the results of all interactions between citizens and government agencies.

Importantly, the data is interlinked, coded, and stored by all members of the system, and is automatically updated to reflect the changes made.

Users act as a collective notary that certifies the accuracy of the data in the system while guarding against abuse and scheming attempts. Blockchain technology helps to prevent corrupt practices that harm society and state sovereignty and promotes collective responsibility by encouraging to observe rules.

A registration system based on Blockchain improves safeguards while it makes transactions less time-consuming, more transparent and more secure.

Blockchain Characteristics It is autonomous.

It operates continuously.

It is safe.

The code supports the development of new services, software, and other products.

Blockchain

Application of Blockchain at MBR While Blockchain technology was originally used for public cryptocurrencies like Bitcoin, private Blockchains have since emerged to satisfy the needs of businesses. The MBR will make use of Hyperledger Fabric, a popular private, or permissioned, distributed ledger, which restricts access to verified users only.

Once companies are verified and approved by the MBR, they will be able to submit documentation through the distributed ledger, which of course will also be accessible to Registry employees.

The Blockchain System will handle all processes performed by the MBR. One of the existing system’s main shortcomings is that there is not always a clear trail of everything that happens in each process, but, this functionality will be built into the new system using distributed ledgers.

The system will be able to handle and manage the workflow of processes performed by the Registry.

Customers with the necessary permissions may initiate processes and the MBR’s employees will be able to manage them using the same ledger.

This will increase process efficiency and ensure transparency.

The Blockchain framework will contain a document management system that guarantees the management of documents and their relative processes in a unified manner, logging and storing all versions of documents making them easily searchable to the Registry. This will also reduce paperwork.

While the benefits of the new Blockchain System will mostly be behind the scenes, users will also notice changes to the MBR’s website itself.

The Blockchain System will introduce a chat functionality between practitioners, customers, and MBR officers to establish faster, more efficient communications. The system will record all conversations regarding a company, keeping an audit trail leading to the incorporation of the company and any subsequent changes to create an efficient, less time-consuming, and more trustworthy process.

information about EU companies and ensure that all EU business registers can communicate with each other.

The current system can only issue certificates in paper format and has no notion of digital company certificates. Conversely, the Blockchain System will allow for all certificates by the MBR to be issued electronically, exhibiting any changes to their content in real time. Certificates can still be printed, but they will be linked through a QR code.

The Blockchain System is expected to facilitate the introduction of artificial intelligence at the Registry, including the deployment of intelligent chatbots to automate a share of client conversations while ensuring that submitted documents comply the with laws and regulations.

Staff members will be able to track processes in the system on live dashboards which can generate impromptu reports and build new dashboards to represent the live state of the system. This will help MBR to track important key performance indicators (KPIs) and monitor them over time.

To make the MBR’s services accessible to everyone in a user-friendly manner, the Blockchain System will be available through a web application while corresponding mobile applications are also being planned.

The new system will give users unique and incorruptible digital signatures allowing them to permanently store their records and transactions across a distributed space without a central node for hackers to tap into. These digital signatures will work without the use of any physical hardware, making them as user-friendly as possible.

Blockchain is becoming more popular worldwide and it will probably not be long before the technology becomes as ubiquitous as the internet. As Malta pursues ambitious plans to become a global centre for the development of these technologies, this pioneering move by the MBR can only be applauded.

A major feature of the new system will be the incorporation of all types of company registration including the registration of legal entities.

Meanwhile, intelligent Statutory Forms related to other company types will facilitate the submission of documents.

Connected to the Business Registers Interconnection System (BRIS) (set out by Directive 2012/17/EU), the system will facilitate access to

Kurt Izzo is a Software Solutions Architect within the ICT Unit at the Malta Business Registry. He specialises in Business Analysis and Information Systems.

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Audits

IT AUDITS; TODAY AND IN THE FUTURE Author: Matthew Abela

AS THE SAYING GOES ‘THE ONLY CONSTANT IS CHANGE’ AND LIKE MOST PROFESSIONS AROUND THE WORLD, THE ACCOUNTING AND AUDIT PROFESSIONS ARE CONSTANTLY EVOLVING. ARGUABLY, OUR PROFESSION HAS ENTERED A PHASE OF HYPEREVOLUTION WITH CHANGES AND OTHER CONSIDERATIONS BEING PROPOSED BOTH FROM WITHIN THE PROFESSION AND BY EXTERNAL FORCES AT A MUCH QUICKER RATE THAN IN THE LAST DECADES. THE REASONS ARE NUMEROUS, HOWEVER CHIEF AMONG THEM WE NOTE THAT THE PROFESSION IS UNDER CONSIDERABLE PRESSURE FROM AUTHORITIES AS IT TRIES TO WEATHER AN EXTENDED NEGATIVE NEWS CYCLE LOCALLY AND, MORE SO, INTERNATIONALLY. Similarly, the pressures brought about by COVID-19 pandemic. Besides financial pressures and Going Concern considerations, audit teams around the world are facing complexities in running through their Audit procedures. As tends to happen in these situations, and simply because necessity is the mother of discovery, audit teams significantly increased their references towards IT Auditors, seen as a mitigating measure towards audit testing in ways that could not be done due to COVID-19 situations.

“

Simply stated, IT Auditors have been inundated with work and general audit teams found that the procedures undertaken by the IT Auditors were also more comprehensive and more efficient.

”

It was predictable that many audit teams concluded that in future periods more IT Audit involvement would be staggered throughout the audit process. The COVID-19 emergency may have shaved off a couple of years of conservative, inefficient audit methodology and shocked the system into accepting IT Audit into a generalised and instrumental tool in every audit engagement.

Internationally many setups within audit firms silo off IT Audit/Assurance as a separate service line, with a separate Partner heading these important resources. The reason for this is largely a historical one but, predominantly, also a practical one, arising from difficulties in finding personnel experienced in both Financial Audit and IT Audit. This walled-up approach is a hindrance to efficiency and may even reduce the audit quality while opening Audit engagements to miscommunication risks. Locally, empirical research on the setup of IT Audit teams is limited but the same deficiencies are likely to be present. Throughout this year, noticeable movements, especially in agile mid-tier entities have resulted in merging or partmerging the previously distinct Financial and IT Auditors.

>> 30

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Audits

<< Towards the Future: The Hybrid Auditor Gone are the days when only a limited number of audits required IT Audit support.

As mentioned, IT Audit procedures serve not only as stop-gap measures when other more traditional procedures cannot be performed, but offer a more efficient methodology. It is now customary to include an IT Auditor as part of the audit planning phase, in fact, not availing of these IT Audit procedures has become an exception not the rule.

The next obvious evolution of this approach shall again be borne out of necessity, this time the lack of resources in the current IT Audit teams. It takes more investment to train resources into good, professionally sceptic IT-centric auditors than training more traditional Financial Auditors. This sudden and plateaued spike in IT Audit resource requirement and the very limited supply, coupled with the change in mentality will likely mean that the distinction between IT Auditors and Financial Auditors will grey out, leading to the emergence of the Hybrid Auditor.

The Hybrid Auditor will be well versed in carrying out all audit procedures, both those traditionally carried out by a Financial Auditor and those carried out by an IT Auditor. The synergies involved in this change of mindset could be ground-shaking, potentially giving the profession important new tools and opportunities in tackling quality, ethics and other issues.

32 32

The auditor of the future will be better equipped, more adaptable, more profitable, and able to mitigate risk in a more optimal manner.

It is likely that a proactive move towards a Hybrid Auditor approach will still not lead to the full elimination of the other roles before another decade. One may even envision a happy medium int the short-term whereby audit procedures are guided by Hybrid-ITcentric Managers and Hybrid-Traditionalcentric Managers.

Such a shift in mindset requires investment, time, and ample discussion within the profession. Education campaigns at firm level are needed until the initial seeding ideas are fostered and properly managed to ensure that the process does not shock professionals who are unsure or uncomfortable with new procedures.

The IT Auditor of the future will be every auditor of the future - it is now our duty as professionals to manage this shift optimally.

Matthew Abela is a Manager - Audit at Capstone Assurance, a warranted Accountant and Auditor with a strong background in both Financial and IT Audit. He is also a member of the MIA Digitilisation/IT Committee.

Advertorial

MAZARS REBRAND MARKS A KEY MILESTONE Mazars, the international tax, audit and advisory firm, recently unveiled its new global brand identity in over 90 countries and territories, marking a key milestone in the firm’s evolution.

The rebrand reflects Mazars’ aspiration to bring choice and a different perspective to the audit, tax and advisory market, and reaffirms its commitment to building a fair, prosperous and sustainable world.

Hervé Hélias, CEO & Chairman of Mazars Group said:

“

I’m very excited to reveal our new brand identity and positioning. It reflects who we are today and confirms our aspirations for the type of firm we want to be in the future. We are one connected team around the world, with the scale to serve large international clients and the agility to be creative and personal in our approach. In each country we operate, our teams combine cultural understanding with global perspective, offering clients of all shapes and sizes a true partnership, one that gives them confidence in their business and helps them achieve their ambitions.

”

Mazars has launched the rebrand on the back of steady, balanced growth and successful expansion, which reflects its strong position in the marketplace. Last year, the international audit, tax and advisory firm recorded revenues of €1.8 billion, up 10.4% compared to the previous exercise.

The rebrand also recognises Mazars’ evolution into an international group, now present in over 90 countries and territories, with nearly 25,000 colleagues around the world. The Mazars North America Alliance brings an additional 16,000 professionals available to serve the firm’s international clients who operate in the USA and Canada. In total, over 40,000 professionals support Mazars’ clients around the world.

Commenting on Mazars’ growth and expansion, Hervé Hélias said:

“

In 75 years, our guiding principles haven’t changed, but our firm has. We have doubled in size in the past ten years and the diversity of our offerings, clients and talent has flourished as we have grown. Today, we work with nearly 2,000 PIE clients around the world on their audit; 30% of the listed companies in France, and in China, and we serve almost 140 large-listed companies. At the same time, we serve over 50,000 privately owned and family businesses, from private clients and start-ups to mature international clients.

”

According to Anthony Attard, managing partner at Mazars in Malta, the rebranding of Mazars will further reinforce the values for which Mazars in Malta is already renowned and which are embedded in the firm’s mission statement. “Our reputation is founded on our dedication to our clients’ needs, and our commitment to deliver value through our personal service, quality advice, and deep knowledge of market sectors. The rebranding of Mazars will allow us to continue to pursue these objectives more effectively.” He added that Mazars’ new brand identity further emphasizes the underlying value of belonging to an international group such as Mazars, “with all the benefits that can accrue to our local clients from access to a global network and an international source of specialist knowledge and expertise”.

Anthony Attard, managing partner at Mazars, Malta

This article is a paid advertorial by Mazars for the Autumn issue.

34

www.mazars.com.mt/identity

35

Leadership

THE NEED TO LEAD AND NOT MICROMANAGE Authors: Silvan Mifsud

WE SEEM TO HAVE AN ABUNDANCE OF MICROMANAGERS AND A SCARCITY OF PROPER LEADERS. MANY TIMES EMPLOYEES CLIMB THE HIERARCHICAL SCALE AS THEY SHOW A PROFICIENCY IN A CERTAIN TECHNICAL SKILL, BUT FEW REALISE THAT THE HIGHER THE HIERARCHICAL SCALE YOU GO, LESS TECHNICAL SKILLS ARE REQUIRED AND MORE LEADERSHIP SKILLS ARE NECESSARY. HENCE, WE END UP WITH MANAGERS DOING WHAT THEY KNOW BEST I.E. MICROMANAGING. The reality is that no one likes to be micromanaged. It’s frustrating, demoralising and demotivating. Yet, some managers cannot seem to help themselves. To make things worse most micromanagers do not even know that they are doing it. Yet the signs are always clear. If you want to test whether you are a micromanager, please consider the following tell-tale signs: You are never quite satisfied with anything not done by yourself.

You often feel frustrated because you would’ve gone about the task differently.

You focus on the details and take great pride and /or pain in making corrections.

You constantly want to know where all your team members are and what they are working on.

You ask for frequent updates on where things stand.

You prefer to be copied in on all emails.

It is true that paying attention to details and making sure the work is getting done is very important. It is easy to conclude that all the above is a necessary part of leadership, however, this is not necessary all the time. The problem with micromanagers is that they apply the same level

36

of intensity, scrutiny, and in-your-face approach to every task, whether warranted or not. The result is endless harm to their team’s morale and – ultimately – their productivity.

In essence, what micromanagers fail to see is that while micromanaging may get them short-term results, over time it negatively impacts their team, their organisation and their wellbeing.

They dilute their own productivity and end up running out of capacity to get important things done. Hence, micromanagers never have time to plan and to develop a strategy. This results in an organisational vulnerability causing the people in the organisation to become unable to function without the presence and heavy involvement of the micromanager.

What should a micromanager do if he or she wants to stop managing the team in this way? Here are some pointers to help in this achievement: Get over yourself.

We can all rationalise why we do what we do and the same holds true for micromanagers.

Here are some common excuses that chronic micromanagers give, and what they really mean:

Leadership

WHAT CHRONIC MICROMANAGERS SAY

WHAT THEY REALLY MEAN

It will save me time if I just do it myself.

I do not believe it is worth my time to let them try, because they will not get it right anyway.

Too much is at stake to allow anything to go wrong.

I do not trust them to do their jobs according to my standards.

My credibility is on the line if we do not get it done on time.

The work would not get done unless I constantly prod them.

When I am not involved, they mess up.

The one time I yielded some control, there was a mistake and I am not willing to take the risk again.

These excuses lead to a disempowered, demoralised team. Micromanagers need to stop focusing on all the reasons why they should micromanage and instead focus on why they should not.

Let it go.

The difference between managing and micromanaging is the focus on the “micro.” This can be hard, but the key is to make the change gradually. Managers need to start by looking at their to-do list to determine what low hanging fruit they can pass on to team members. The next step is to engage in explicit discussions with team members on what level of detail they are required to provide. Most importantly, micromanagers should also highlight the priorities on their list — the big-ticket items where they can truly add value — and make sure that is where they are spending most of their energy. Give the “what” but not the “how.” There is nothing wrong with having an expectation about a deliverable, but there is a difference between sharing that expectation and dictating how to get to that result. Normally, micromanagers end up being surprised that the approach of others, while different, this may yield excellent results.

Fear of failure.

At the core of why micromanagers exist is their fear of failure. By magnifying the risk of failure, employees end up engaging in “learned helplessness” where they start believing that the only way that they can perform is by being micromanaged. It’s a vicious cycle.

Micromanagers need to focus on setting up their people up for success, by being clear on what success looks like and providing the resources, information and support needed. It is important for micromanagers to learn to give credit where credit is due. Over time, micromanagers realise that a loss every now and then helps build a strong track record in the long run.

I normally realise that even micromanagers themselves know that they would like to stop being the micromanagers that they are. With a commitment to focus on the big picture and on motivating their employees, they can redirect their efforts to be the most effective manager they can be.

Silvan holds a degree in Banking & Finance from the University of Malta and an MBA from the University of Reading, specialising in Corporate Finance and Business Leadership. Silvan has been involved in many sectors of the economy holding various managerial and Director roles. Silvan is presently working as a Director for Advisory Services at EMCS.

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Meet the Team

MEET THE MIA TEAM CATHERINE MALLIA BONAVIA

“ I AM... a strong-willed person who sees challenges as opportunities to further develop my skills and knowledge. My journey in the employment world kicked off in 2001 after graduating in Management from the University of Malta. My experiences throughout the years have helped me become the person I am today. I consider myself to be very serious and meticulous in my work, although I am also young at heart and with a passion for life.

I appreciate the little things in life and love bringing happiness to the people around me, whether it is at the office or at home. Juggling work and family life and giving the due importance to both is a huge challenge, but I have become accustomed to it.

MY ROLE AT MIA IS…that of Compliance Manager. I have been working at the MIA for many years and my role has changed notably.

I was initially responsible for the organisation of CPE events, then moved on to organising non-educational events such as the annual general meeting, social events, and the new members’ ceremony. I have been and continue to be involved in ad-hoc projects which arise from time-to-time, including implementing and maintaining the MIA website and backend system. This year I was involved in the organisation of the first online elections for Council members held during the AGM. These projects along with my compliance role fill up my working days and help me to enhance my knowledge in different areas.

IN MY FREE TIME…I enjoy going for

TO ME, THE ACCOUNTING PROFESSION… is what I have been giving

solitary walks to help me to relax, I also use this time to plan and reflect. Despite my hectic lifestyle, I make it a point to spend some daily quality time with two of the most important people in my life, my husband, and my daughter. I am lucky that my husband and I have many common interests such as food, wine, music, art, interior design, and travelling.

We try to spend our free time as quality time with the family.

MY LIFE MOTTO… is plan ahead, do not

I CONTRIBUTE TO MIA’S MISSION…by being of continued service to

I AM MOTIVATED… to face any challenges I encounter; both in my personal and work life.

a service to in the past years.

leave things to the last minute and do it well or not at all.

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the members irrespective of what project I am entrusted with.

Unhappy with your job?

WE CAN CHANGE YOUR FUTURE.

At KSi Malta we are always on the lookout for recent graduates and experienced professionals in the audit, accounts, tax and legal sector. Give your career a boost and join our dynamic team.

Send us an email on recruitment@ksimalta.com for more information.

6, Villa Gauci, Mdina Road, Balzan BZN 9031, Malta T: +356 2122 6176 | F: +356 2122 6019 | www.ksimalta.com

Lifestyle

COUNTING CHUKKAS Author: Edward Engerer

WHAT ARE THE CHALLENGES AND BENEFITS OF PRACTICING A SPORT? HOW DO YOU INCORPORATE THE ELEMENT OF WORK-LIFE BALANCE TO JUGGLE YOUR CAREER AS AN ACCOUNTANT WHILST KEEPING YOUR COMMITMENT TO THE SPORT? We are all aware that the world is a very different place to what it used to be a century ago.

Laptops and phones have taken over, and technology has limited the balance between work-life and pleasure. Countryside walks are not the same, and we do not spend enough time away from technology to enjoy the simplicities of life. I think one of the hardest challenges that we face is living a balanced life. Having said this, limited or no free time is not a plausible excuse to be inactive, that is why I have taken a decision to start practising a sport at this stage of my life.

WHAT MADE YOU WANT A CHANGE FROM YOUR WORK LIFE? I started working early in life, despite knowing deep down that I would want to complete my professional education. After having worked for a couple of years I realised that it was time to take the step and I started my ACCA qualification. At that time, I could really feel the pressure of working and studying but I was determined to break the routine.

I embarked on something new, and exciting. I spent two years helping a local NGO and during that time we rescued and rehomed around a hundred horses. I also adopted and cared for an ex-racehorse and I took every opportunity to ride, building a bond with the horse

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which gave me confidence that can only be developed with time and experience. This is when I really realised my true passion for horses.

As I moved on in my career as an external auditor, it was clear that work-life balance is not always as easy as it seems. In fact, the longer hours of work and the final exams made it even harder to practice a sport regularly. It was not until I completed the professional exams that I started playing a sport on a regular basis again.

At this time, I had completed all the ACCA examinations and I was progressing in my career,

but I still felt determined to become more physically active again. Needless to say, I was interested in starting something different, an equestrian team sport. I could not think of anything better than practising a sport which involves horses and competition. I was introduced to Arena Polo several years ago by a relative of mine who has been playing the sport for more than forty years.

He is in fact our mentor and coach and he has dedicated most of his time practising and promoting the sport in Malta. >>

Lifestyle

WHAT IS POLO AND WHERE DID IT ORIGINATE FROM? Polo is a horseback mounted team sport, and it is said to have originated in central Asia, both as a sport and as a way to train the cavalry. It made its way into Persia, where it became the national sport. The modern game of polo was witnessed by British military officers in India in the early 1800’s and they were so impressed that they spread the game across continents. It was in fact introduced in Malta by the British military before most countries and is still played till this day. The polo field in Marsa was built by the British and it is the only full-sized polo field in Malta.

HOW IS IT PLAYED AND WHAT ARE THE BASIC RULES? Arena polo is a fast-paced version of polo and it is played in an indoor or outdoor arena, a hundred metres long and fifty metres wide. In the arena you will find two teams, each having three players (four for grass).

Every player rides a polo pony, which can be of any breed or size but has to be agile and fast - just not too fast that you fall off!

A professional game is played in four periods, called chukkas, of seven and a half minutes each.

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“

There is no better feeling than getting on the horse and focusing on one thing only, your performance.

Every other thought or worry just seems to vanish.

The preparation of the game does not start on the field, but in the stables. Part of the whole experience is tacking up the horses and discussing the roles and positions of the players. At this point I no longer think of anything else but being one with the horse. At the end of the day you cannot forget that your performance depends on the synchronisation between the polo pony and yourself, and your teammates of course.

”

I can compare the adrenaline rush I get from the game to riding a motorcycle, but I do not think anything can compare to galloping on a half-ton animal whilst trying to score a goal.

Edward Engerer is an ACCA qualified accountant. He currently holds the position as a manager in the banking industry.

“

I would like to dedicate this article to my aunt Jenny who shared the same passion of horses and tragically passed away doing what she loved most.

”

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