An analysis of the audit report of category 3 Maltese voluntary organisations

Abstract

PURPOSE: One of the main objectives of the study is to analyse and investigate the audit reports of different local Category 3 voluntary organizations. The analysis of audit reports will be done in light of the financial guidelines and frameworks that are being used by Category 3 voluntary organizations. The second objective of the study is to analyse the problems that auditors are currently facing when compiling their annual audit report. In the light of the two aforementioned objectives, this study also focuses of providing recommendations on how such problems can be addressed within the Maltese Voluntary Organisations sector.

DESIGN: A qualitative exploratory research design was employed to achieve the objectives of the study. Semi-structured interviews were conducted with ten auditors of Category 3 Maltese Voluntary Organisations (VOs).

FINDINGS: Currently there are low levels of adherence to regulations and deadlines with regards to Category 3 VOs and the annual report. The low level of adherence indicates that the Commissioner OF VOs has little legislative power as there are no penalties being incurred by non-adhering VOs. Findings indicate that VOs and auditors would benefit from less detailed regulations since such regulations would provide more flexibility to VOs. It is important to note that only enrolled VOs are subject to such regulations which include a mandatory annual audit. Currently, enrolment is not obligatory and so the unenrolled organisations are not required to adhere to financial reporting requirements. Furthermore, auditors and VOs are required to prepare their financial statements in accordance to IFRS which is being viewed as a burden.

CONCLUSIONS: The study concludes that in order for the VO sector to move forward, improvements must be done to the regulatory framework. The major amendment to the current framework would be allowing Category 3 VOs to prepare their financial statements in accordance with GAPSME. The fundamental key for an improved sector is education.

VALUE: The findings contributes to the improvement of the VO sector as the main problems currently being faced by the auditors were discovered. Numerous recommendations were also put forward.