The Setting up of protected cell companies in Malta : an accounting and financial reporting perspective

Abstract

PURPOSE: The study aims to identify accounting procedures and financial reporting requirements that are particular to Protected Cell Companies (PCCs) in Malta. The main objective is to explore the accounting and financial reporting issues that surround this type of company structure. DESIGN Primary data was generated through the use of semistructured interviews with locally registered PCCs, a selection of auditors and the Regulator. Other secondary data was collected from published financial statements. FINDINGS: The study shows that the separation of accounting records and segregation of assets and liabilities is the most fundamental aspect. This is essential for internal reporting and also for reporting to the MFSA and Tax Authorities. Yet, the study indicates that when it comes to external reporting, there are still a lot of issues related to the presentation method and the audit approach to be followed. Additionally, uncertainties also surround consolidation. CONCLUSION: Local PCCs take segregation between core and cells very seriously. However, the lack of consistency reflected in the presentation style of the audited financial statements shows that there is the need for regulation. Certain matters, such as those related to tax, audit and consolidation are still being developed and improved upon. VALUE: It is augured that the results presented by this dissertation raise more awareness about how the PCC structure operates as well as drive the authorities concerned to provide more guidance related to accounting and financial reporting.