Revisiting the value added statement : its relevance in the Maltese scenario

Abstract

PURPOSE: This study sought to revisit the Value Added Statement (VAS), with a particular focus on its relevance in the Maltese context. Accordingly, through an analysis of the various views of local trade union representatives, this study intended to examine the appropriateness of the VAS as a supporting accounting document to the general purpose financial statements within the context of collective bargaining and employee relations. DESIGN: A qualitative research approach was adopted to achieve the dissertation’s objectives. Following an analysis of the existing literature, six semi-structured interviews were conducted with local trade union representatives who are professionally employed with their respective union, and which in turn are affiliated with the Confederation of Malta Trade Unions. FINDINGS: The findings initially suggest that no performance metric is deemed superior to the other, particularly because their specific use is dependent on a number of factors. It was also established that the use of a VAS alone may not necessarily enhance productivity and employee motivation, but is perceived to be effective when utilised in the collective bargaining process. This study also revealed that the VAS may be better suited to assist in the development of incentive schemes rather than that of the annual remuneration. Nevertheless, findings suggest that a set of adequate standards and a consistent framework must be established in order to enhance the credibility of value added figures, especially when in pursuit of comprehensive integrated reporting. In addition, it was established that the local application of a VAS may be better suited in the private sector. Furthermore, it was suggested that the VAS may also be a valuable internal reporting tool. CONCLUSIONS: Nowadays, the purpose of financial reporting is more focused on conveying the holistic outcome. As a result, this study concludes that the local disclosure of the VAS could be valuable in enhancing collective bargaining and employee relations. However, it is imperative that emphasis is placed on the development of appropriate standardisation and the necessary education, in order to further appreciate the document’s potential usefulness in Malta. VALUE: This study contributes to raising awareness about the VAS’s potential relevance in the Maltese context. Moreover, this study is expected to be of great value to local trade unions and employee representatives.