Party state funding and its implications for financial reporting : the perception of the Maltese electorate

Abstract

The objective of this research is to identify the perceptions of the Maltese electorate on the enactment of legislation on party financing and party state funding. A law on the financing of political parties should fight corruption, eliminate partitocracy and patronage and enhances the confidence of the electorate in political parties. Design: The objective is achieved by identifying what form of state funding could be acceptable, whether full set of financial statements should be drawn up and published, whether political parties should be tandem with limited liability companies and what possible disclosures would be required to ensure transparency and accountability. A telephone survey was undertaken with the Maltese electorate. A sample was chosen from the 13 electoral districts in the April 2013 Electoral Register and statistical tests were performed from the data obtained. Findings: The study shows that the Maltese electorate expects political parties to audit and publish their financial statements and will use such statements for voting decision-making. In addition, the study shows that the Maltese electorate is against party state funding, against capping donations to parties and expects parties to disclose a breakdown of the amounts of donations they receive. It is unclear whether parties should disclose the identity of the donors. The expenditure of the parties on election campaigns is of utmost interest to the Maltese electorate. Conclusions: The study concludes that political parties should not be state funded, should be honest, transparent and accountable to society. This means that political parties should be considered in tandem with limited liability companies. Donations to political parties should be permitted but should be regulated. Value: As political parties are considered as public interest entities, they should adopt IFRS or GAPSE. More accounting information and accounting regulation will enhance transparency and accountability of political parties.