MALTA: MFSA Second Circular on the Inclusion of Interim or Year-End Profits as part of the Own Funds Computation

Monday June 1 2015

On the 26 March 2015, a circular was issued to the investment services industry which including information on the verification of interim or yearend profits for the purposes of their inclusion in the own funds computation.

The MFSA has issued further guidance on the manner the verification of profits is to be undertaken.

In order for the Authority to consider the verification requirement under Article 26(2)(a) of the Capital Requirements Regulation as having been met, investment firms and fund managers are required to provide the Authority, upon request, with a document signed by its external auditor that complies with the following requirements:

a) For year-end profits, the verification shall consist either of an audit report or of a comfort letter stating that the audit has not been completed and nothing has come to the attention of the auditors that causes them to believe that the final report will include a qualified opinion;

b) For interim profits, the verification shall consist either of an audit report or of a review report (as defined by the International Standards on Review Engagements 2410 issued by the International Auditing and Assurance Standards Board) or, provided that the verification carried out by the investment firm or fund manager consists of an audit report, a comfort letter along the lines set out in paragraph (a).

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