Changing accountants in Malta: how to switch without losing records or deadlines

01How do you change accountants in Malta?

Unlike a change of auditor, a change of accountant is not a procedure set out in the Companies Act. It happens through contracts, a professional handover and a few authorisations, such as your tax representative with the Malta Tax and Customs Administration (MTCA). It runs in five steps: let the new firm make its enquiries, appoint it, assign the open work, move the records and access, and check the opening position.

Start by checking who you are appointing. The Accountancy Board says bookkeeping is not a service regulated by the Accountancy Profession Act. Some work is reserved. Only a warrant holder may issue reports on a company's annual or interim financial statements, including compilation reports, unless the statements are prepared only for internal use. Only the holder of a practising certificate in auditing may carry out an audit or a review engagement. The Accountancy Board publishes registers of warrant holders, practising certificate holders, audit firms and accountancy firms that you can check.

Before the new firm accepts you, it will usually ask for your permission, preferably in writing, to contact your current accountant. This is often called professional clearance. It lets the new firm ask whether there is anything, professional or otherwise, it should know before it decides whether to accept. It is a check by the new firm, not permission from the old one.

If both firms are warrant holders, the Accountancy Board's Code of Ethics for Warrant Holders (Directive 2) applies. The current accountant is bound by confidentiality. Once you give permission, any information it gives must be honest and unambiguous (para. 210.15). For a statutory audit the contact is mandatory (para. 210.16). The outgoing auditor must also give the incoming auditor access to the relevant information about the company and its last audit (para. 210.14). Auditors must follow this code under the Companies Act (article 153). It binds warrant holders only, so it does not cover a bookkeeper who is not a warrant holder.

02Are you changing your accountant, your auditor or both?

Your bookkeeping, your accounts and tax work, and your statutory audit, if your accounts are audited, can sit with different people. Changing one does not change the others. Decide which roles are moving before anyone writes to anyone.

Malta's Companies Act requires a company's annual accounts to be audited, unless it is a very small private company that qualifies for the audit exemption. An auditor is appointed by the shareholders at the general meeting where the accounts are laid, and holds office until the next one (Companies Act, article 151). To change auditor, the shareholders appoint someone else at that meeting, the company removes the auditor by resolution, or the auditor resigns. Removal needs a proper ground. A difference of opinion on accounting treatment or audit procedures is not one (article 157). Before a resolution to remove the auditor or appoint someone else, the company sends the outgoing auditor its text and reasons. The auditor may reply in writing (article 158). Whatever the route, the outgoing auditor leaves a statement at the registered office. It sets out anything about the departure that shareholders or creditors should know, or says there is nothing (article 161).

A removal or a resignation is notified to the Registrar within 14 days, on Malta Business Registry forms F(1) or F(2), filed through BAROS. When a new auditor is appointed after a resignation or removal, the company files form F(3) within 14 days with the new auditor's name and warrant number (article 151(9)). After a removal, the company also gives the Accountancy Board a statement of its reasons. Separately, an auditor dismissed or resigning during its term tells the Accountancy Board within 14 days (Accountancy Profession Act, article 17).

Independence matters when one firm would keep your books and also audit them. At A4, audit and accounting work are kept independent, and A4 will explain how that works for your company.

03What should you check before you give notice?

Read your current engagement letter. Look for the notice period, how final work is billed, what happens to work in progress and how records are returned. Then agree the new firm's terms in writing: the services, the first period it is responsible for, the fees and what you must supply each month. A quote or a call is not an engagement. Sign once the new firm has made its clearance enquiries and accepted, then give notice to the old firm.

Check who owns the accounting software subscription. If the old firm holds it, ask for the company to become the owner, or for a full export, before notice takes effect. Do the same for shared folders and document portals. A4's accounting page says clients can export their ledger and documents in full at any time. Ask any firm you appoint what its exit terms are.

If your bookkeeping is behind, say so now. Catch-up work changes the scope, the price and the first date the new firm can stand behind. It is better agreed before the switch than discovered after it.

04Who finishes the work that is still open?

List every open item by period. For each one, record where it stands: prepared, approved, submitted or accepted. Then name one owner. "It is with the accountant" is not a status, and having the files is not the same as owning the deadline.

One clean split is by date. The old firm finishes everything up to an agreed cut-off, and the new firm starts the day after. Work that is nearly done often stays with the firm that started it, especially near a deadline. Whatever you choose, put it in writing and copy both firms.

Changing accountant does not move any statutory date. A private company's annual accounts must be laid before the shareholders and approved within ten months of the end of the accounting period. For a public company the limit is seven months (Companies Act, article 182). The directors then deliver them to the Registrar within 42 days after that ten- or seven-month period ends (article 183). The annual return is made up to each anniversary of the company's registration and is due within 42 days after that date (article 184). Ask the new firm to confirm every date that applies to your company.

• Bookkeeping not yet done, and reconciliations not yet reviewed.
• VAT returns and payments for open periods.
• Payroll runs and FSS submissions.
• Financial statements in draft or awaiting approval, and any audit under way.
• The company income tax return and the MBR annual return.
• Anything the old firm will keep, such as work it has already started and billed.

05Which records should your old accountant hand over?

Ask for records the new firm can use, not just final reports. Agree export formats with the new firm before you ask, so the old firm only has to do it once.

• Trial balance and general ledger to the cut-off date, as exports the new firm can import.
• Customer and supplier balances, bank reconciliations, the fixed asset register and other balance sheet schedules.
• The last signed financial statements, with the year-end adjustments behind them.
• Tax computations, VAT returns and payroll submissions, with proof of submission.
• Open correspondence with the MTCA, the Malta Business Registry or any other authority.
• Agreements the old firm holds, such as loans, leases and shareholder agreements.

06How do you move tax, VAT and software access?

List every system with its owner and its users: accounting software, bank feeds, the document portal, payroll software and government online services. Give the new firm its own users with the permissions it needs. Do not pass one person's password around.

For tax, the MTCA's online forms include MTCA02, the appointment of a registered tax representative, and MTCA03, the registration of users for FSS and VAT services. Tax practitioners file a company's income tax return and financial statements through the e-Return the MTCA provides to them for their corporate clients. Ask the new firm to submit the appointment. Ask the old firm to remove its authorisation in the MTCA's online portal once its agreed work is done. The MTCA's user manual for that portal shows that a tax practitioner can remove an active authority form. Confirm with the new firm or the MTCA whether anything else is needed.

Leave the old firm the access it needs to finish its agreed work, then remove it. Keep bank feeds and integrations running so documents keep flowing while the firms change over. Record what changed, when, and who confirmed it.

07How do you check the opening position and start the new routine?

Before the new firm builds on the ledger, ask it to agree the opening balances to the last signed financial statements. If the ledger differs from the accounts that were issued, find out why first. Keep agreed corrections and unresolved differences in a change log.

A trading company with unreconciled supplier balances, for example, should list those balances and assign the investigation during the handover, not after the first monthly report.

The records stay the company's responsibility throughout. Under the Companies Act, a company keeps proper accounting records at its registered office or another place the directors choose. They are open to its officers at all times and are kept for ten years (article 163). VAT records must be kept for at least six years from the end of the year they relate to (VAT Act, article 48). The six years run from a later date if a return was filed late or corrected. So keep copies under the company's control. If a record cannot be provided, put it on the plan with the reason and the next step.

Then agree the routine: how documents reach the new firm, when questions are answered, which reports you receive and how filing confirmations come back to you. The tracker below turns this guide into a plan with an owner and a date for each item. It does not send anything, end an engagement or notify any firm or authority.