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Malta’s accounting shake-up offers Unit4 departmental prospects

David Bicknell Published 07 September 2017

Modernisation across the Maltese government will see departments move from cash accounting to an accruals system

 

A shake-up in the way the Maltese Government manages its finances is offering Unit4 an opportunity as part of a €11.6m deal Malta has concluded with accounting firm Grant Thornton to move from a cash accounting to an accruals system.

The change will see Unit4 Business World implemented in departments and ministries following an 18-month pilot project, with a 30-month roll-out plan. Described by finance minister Edward Scicluna as a “revolutionary change”, the new system means Malta will have a fully devolved accrual based finance, budgeting and information system that will ensure more accountability and transparency in government income and expenditure.

“Mainly financed by the European Union, this is an important project that will ensure all ministries and government departments keep their books according to international standards,” said Joe Pullicino, partner at Grant Thornton Malta. “They will have access to more accurate, reliable and timely information, and consistency over how each department administers its finances. The Unit4/Grant Thornton consortium took the time over a five-year period to fully understand requirements, needs and culture in order to propose a complete and cost effective solution that is proven in government.”

Malta’s government functions replicate those of the UK and other European governments, but on a much smaller scale: the total population of the island is only just over 400,000.

As a result, Malta has had to structure its public sector in a different way.  In the UK, there is separation between central government functions such as defence, revenue and customs and health as opposed to local government functions such as social care, refuse collection and schools. In the UK, each of these organisations typically has their own systems for areas such as finance, procurement, human resources, payroll etc.

In Malta, the government is responsible for everything, and operates as a single entity, so it needs solutions that deliver efficiency by standardising business processes across ministries and departments, but with the flexibility to adapt these standard processes to suit local needs.

The other key driver, the change in accounting policies from simplistic cash accounting principles to the more widely used accruals accounting, means the Maltese Government will require a significant amount of planning and staff retraining. Unit4 has become involved because its applications can operate accruals accounting and cash accounting side by side, offering Malta the prospect of a smoother transition.








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