The failure or success of a company is easily determined by looking at the company’s financial documents; most importantly the up-to-date and accurate bookkeeping as this activity reflects the financial statements of any type of business.
Such financial documents are a snapshot of a company’s financial position as at a given date, making them an important decision-making tool as they provide various business trends. This is so because the financial statements are made up by two main components; the balance sheet and the income statement, the latter being also known as P&L (Profit and Loss statement). This shows the profitability or lack of it in a business over a period of time.
On the other hand, the balance sheet shows the basic accounting equation: Assets = Liabilities + Owner’s Equity. Everything of a value that is owned or is owed to a business is referred to assets, while anything that is owed by a business is a liability. Owner’s equity, which represents the owner’s share of the business is the balance that is left after liabilities are subtracted from assets.
This is why financial statements provide various business trends as amongst others, they indicate the rate at which businesses collect receivables, pay creditors and indicate whether there are any cash flow problems.
This is a common practice that all companies follow, of any size and registered in any country. Focusing now on the local scenario, in Malta there is a statutory and regulatory requirement that all financial statements should be audited, approved by the Company’s directors, and filed with the Registrar of Companies within the Malta Financial Services Authority (MFSA). This has to be done within 42 days from the end of the period for submitting annual financial statements to the General Meeting. It is also a requirement for all Maltese companies to appoint independent auditors registered with the local Accountancy Board.
If you require further information or an audit quote for your Malta company please contact us.