Developing an accounting framework for trusts in Malta

Abstract

This dissertation deals with the general principals of trust accounting. In Malta trustees are statutory required to keep accurate accounts and records of their trusteeship. However, the Trusts and Trustees Act provides no specific guidance as to the books of account to be maintained by trustees, the form and content of accounts which trustees are obliged to prepare, the requirements of review or audit on such accounts and the duties of auditors who may be engaged for such purpose. Foreign guidelines provide an alternative basis of reference to enable professional to produce accounts for trusts. This dissertation explores in detail the guidelines and commentary issued by the Society of Trusts and Estate Practitioners which regulate trust accounting in England and Wales and which are considered to be the authoritative guide to best practice in many other jurisdictions as well as practitioners in Malta. This dissertation looks into the distinctive aspects of trust accounting which inter alia include the importance of making a clear distinction between the capital and income of a trust. The application of the rules of classification and the rules of apportionment are also covered in detail. The fiscal registration of a trust has an effect on the reporting requirements and accounting obligations of a trust. The requirements which emanate from the Income Tax Act provisions are explored in this regard. An assessment of the current practice adopted by Maltese practitioners when accounting for Trusts is made in order to evaluate the perceptions and ideas of professionals regarding the suggested development of local accounting guidelines and regulations for trusts in Malta.