2013 Review Malta Firm

www.pwc.com/mt
2013
Review Malta Firm
Doing the right thing for
our clients, people and
communities
2013 Review Malta Firm 1
PwC Malta helps organisations and
individuals create the value they’re
looking for. We’re a member of the
PwC network of firms in 157 countries
with more than 184,000 people. We’re
committed to delivering quality in
assurance, tax and advisory services.
Tell us what matters to you and find
out more by visiting us at
www.pwc.com/mt
2 PwC
2013 Review Malta Firm
Introduction 2
Highlights 5
Serving our clients
7
Committed to sharing information
15
Creating value for our people 24
Public Interest Entities audited by the firm
32
PwC refers to the Malta member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see
2013 Review Malta Firm
www.pwc.com/structure for further details.
1
Introduction
I am pleased to present our annual
review and transparency report for
the financial year which ended on 31st
December 2013. Our aim is to provide
a broad understanding of our firm, the
services we provide, and the way that
we do things. This publication also
incorporates our transparency report
for 2013 as required by the EU Statutory
Audit Directive.
Kevin Valenzia
Territory Senior Partner
[email protected]
Overall, it has been a good year for
PwC in Malta and we have stayed
on course in challenging market
conditions. Despite continuing economic
uncertainty across Europe, as well as
national elections in the first quarter of
2013, which always bring a temporary
element of indecision to the local
economy, our total revenues grew by
4.4% to €23.9 million. This is a solid
performance that reflects our strong and
balanced portfolio of businesses, the
high quality of our work and the depth
of our people’s expertise.
During 2013, we acquired Key IT Group,
a firm active in the areas of training
and IT services, as part of our ongoing
efforts and investment in our people,
technology and office environments.
This strategy has continued to help us
win business across a range of different
2 PwC
sectors, supported by the hard work and
commitment of our people. We continue
to focus on our very clear and proven
strategy, founded on staying close to
our clients and potential clients to gain
a better understanding of what they
need from us. This strategy also involves
setting ourselves several challenging
targets – both financial and nonfinancial – and continually measuring
our performance against them.
Being the market-leading firm is not
just about scale. It is about how an
organisation behaves, and how this
behaviour translates into the way our
firm is perceived across a range of
audiences, now and into the future. It
is about our reputation and our legacy.
Our firm’s reputation is nothing less
than our licence to do business – and
we do not take our standing in the
marketplace for granted.
Being market leader brings its own
responsibilities. In my view, these
include an obligation to build a lasting
legacy that is founded not on short-term
gains, but on solid long-term objectives
– including continually improving the
quality of our work, achieving greater
diversity in our talent base, building
ever-deeper client relationships and
making a positive economic and social
impact. Growth is clearly important to
maintaining a market-leading position:
after all, if any organisation is to lead
then it must first be sustainable and
profitable. But if it takes actions with
only a short-term agenda and objectives
in mind, then these can often be at odds
with its enduring values.
How we train and develop our people is
one example of how we focus on longterm results. We operate like a leading
business school which instils a sense
of independence and professionalism
that helps shape the leaders of
tomorrow. During the year we took on
80 full timers, and continue to run our
CareerDeal, ACCA, and ACA training
and recruitment programmes. We are
keen to employ talented individuals,
whatever their background or ethnicity.
One example of our culture and values
was the launch of the PwC annual €1
million start up fund in May of 2013,
which has been extremely successful.
We are currently assisting 53 local start
ups, mainly in the e-business field, and
watching many of these businesses grow
has been, and remains, an extremely
exciting process. Of course, we make
other contributions to the Maltese
economy and society as a whole. Around
50% of our revenues in 2013 have been
generated from work performed and
billed to non-resident clients setting
up in Malta, many of which have come
to Malta as a result of our business
development efforts. We continue to
provide material financial support
to a number of charities and NGO’s,
including Din l-Art Helwa at Our Lady of
Victories Chapel in Valletta.
Another initiative in our efforts to make
it easier for our people to balance their
work/life commitments, is our childcare
centre, First Steps@PwC, which was
launched late in 2012, and is being
operated by third parties who are
experienced in this field. This initiative
has also proved to be a great success
and the centre is being used by a large
number of families, both PwC people
and others. We will continue to do what
we can in this respect.
We have now had a full year with all
of the firm operating from one office
in Qormi, and the synergies and
advantages we expected to see have
been realised. PwC’s Academy, which
is also housed within our offices, has
continued to perform strongly during
the year and we have plans to expand
the range of training that we offer over
the coming months.
We acknowledge that our continuing
success depends to a very large extent
on the quality of our services. Quality
is therefore at the forefront of what we
do and I am pleased to report that our
quality control and risk management
processes, which are described in
more detail in this publication, remain
robust, and have been confirmed by
the excellent results obtained from the
various external and internal reviews
that were carried out during the year.
As always, my sincere thanks goes to our
clients and to our people, and all who
have contributed to make PwC in Malta
what it is today.
Kevin Valenzia
Territory Senior Partner
March 2014
2013 Review Malta Firm 3
4 PwC
Highlights
• During 2013, the maximum fees we
earned from any one client or client
group to whom we provide audit
services amounted to 2% of the total
billings of the firm.
• 58% of our advisory and tax fees in
2013 were earned from clients with
whom we have no statutory audit
relationship.
• The firm had a full time staff
complement of 359 at 31 December
2013, drawn from various disciplines.
The firm also had 134 students on
CareerDeal and ACCA full time study
programmes.
• The aggregate staff attendance
at training courses during 2013
exceeded 50,000 hours. Training of
professional staff averaged 160 hours
per person in 2013.
• Time value on community work and
pro-bono services, together with cash
donations, totalled €192,000 in 2013.
Total billings*
24
2013
2012
22
20
18
16
14
€’million
• Fee income grew by 4.4% in calendar
2013 to €23.9 million (€22.9 million
in 2012). The firm continued to win
important new mandates across all its
lines of service.
• International business continued to
grow significantly during the year.
Local client work has however grown
equally strongly. Excluding overseas
secondments, the firm’s fee income
increased by 13.3% in 2013.
• Overseas secondments of staff
participating in statutory audits
overseas amounted to 338 man
weeks, a material decrease from
the man weeks recorded in 2012
and 2011. In all, overseas work and
international business (excluding
foreign owned companies operating
in the local market), accounted for
55% of the firm’s income in 2013.
• Statutory audit fees, including fees
derived from seconding assurance
staff on overseas audits, amounted to
€11 million.
12
10
8
6
4
*Expenses and other direct costs charged and included in the above total amounted to €0.5m
(€0.9m in 2012), including inter alia fees billed by sub-contractors, such as other PwC member firms.
2
2013 Review Malta Firm 5
6 PwC
Serving our clients
Our clients
The general election held in March
2013, and the subsequent change of
Government led, as in other elections, to
a quiet start for the year as many clients
adopted a wait and see attitude towards
new projects.
The tempo accelerated as the year
progressed and a number of new
initiatives were announced. The
incoming Government has generally
been receptive to new property
development ideas, and has promoted
the enlargement of hotels and potential
land reclamation projects. These
initiatives led to increased client activity
as preliminary work commenced across
a range of potential projects.
2013 was also marked by an
extremely successful tourism season
and by a steady performance by our
manufacturing clients.
Continued growth was recorded in the
financial services industry. This industry
is contributing to many sectors of the
economy in terms of the employment
of clerical and professional staff, in the
added demand it has created in the
office and property rental markets, and
in other areas.
At the same time, the threats facing our
clients cannot be underestimated.
There is no doubt that tourism has
benefited from instability encountered
in other markets. This instability is
expected to be temporary in its duration
– although it must also be said that the
worldwide tourism demand is expected
to continue to expand in coming years.
In other areas, Malta faces challenges
in ensuring that it can offer
sustainable investment incentives to
its manufacturing industry, which
lacks a sizeable home market. It also
faces challenges to its financial services
industry. These are in part driven
by moves favouring enhanced tax
harmonisation between countries and
in part by public pressure being brought
to bear, in some countries, against tax
planning by multinational companies.
Europe is expected to enter into a period
of economic growth, and this may serve
to lessen the concerns stated above.
Nevertheless, much will depend on how
Government, and industry, respond to
these external threats.
In all, a growth in income of 13.3%
(12% in 2012) was recorded by the firm
across the market sectors noted above,
reflecting its continued momentum.
Source of total billings
55%
Clients operating overseas
45%
Clients based in Malta
2013 Review Malta Firm 7
Split of 2013 fee income
competitors in consulting cannot offer
this combined approach.
21%
Advisory
46%
33%
Tax
Assurance
The range of services we provide
The size of our client base has enabled
us to recruit and develop specialists
across a varied spectrum of services in
assurance, tax or advisory (deals and
consulting).
Our strength often lies in the firm’s
ability to combine these offerings to help
meet a client’s particular needs. We offer
a service, and not products, supported
by our ability to field teams from across
the different lines of service; and by our
ability, where necessary, to leverage the
experience and specialist skills available
across the PwC network. Many of our
8 PwC
Our non-assurance services are offered
to the business community at large.
Excluding routine tax compliance
services, which are closely allied to
our audit of tax provisions, 81% of our
non-assurance services were in 2013
delivered to a range of clients, both
in the private and public sector, with
whom we have no audit relationship.
Indeed, a number of the services
that we offer, such as business and
property valuations, would in certain
circumstances not be provided to our
audit clients to avoid any subsequent
self-review independence threats.
Our information systems consulting
practice was expanded in the course of
the year with the acquisition of Key IT
Group, led by Marcel Cutajar and Steve
Casaletto. Key Services has merged
with our IT support team, to form PwC
Malta Technology Services. The unit
is also responsible for supporting our
own firm’s considerable investment in
information technology.
PwC Malta Technology Services offers a
range of services to our clients, primarily
in the areas of IT infrastructure
installation, operation and support.
It enables a business to outsource
the operation of its IT infrastructure,
permitting management to focus on its
core business operations.
Key Training was combined with PwC’s
Academy to form PwC’s IT Academy
and delivers specialised IT training to
individuals acquiring certifications in
leading technologies, it also provides
corporate clients with customised
courses to make the most of their
investment in technology.
George Sammut has overall responsibility
for the firm’s technology services and
internal IT management.
Recent wins demonstrating our services
Our local client base
EC contract – iGaming study
Entities based in Malta remain the main pillar of strength of our firm, which has
an unparalleled client base. Growth in our local client base was recorded in recent
months as a result of local and international tenders and this augurs well for the
future of the firm. The firm secured, inter alia, the audit of:
In July 2013 the European
Commission issued an Invitation
to Tender for a study of the role of
regulators for online gambling. PwC
Malta won the €200,000 tender and
the Commission commented that the
tender was outstanding; demonstrated
strong industry knowledge and a
winning combination, with the central
Malta iGaming team led by George
Sammut coordinating data gathering
from 31 countries, mainly through
PwC offices, and supported by advisors
from Gambling Compliance in the UK
and W.H. Partners in Malta.
•
•
•
•
•
•
•
•
Allcare Insurance
CassarCamilleri (merged Marsovin/Master group)
Central Bank of Malta (from 2014)
HSBC Malta (from 2015)
Malta Financial Services Authority
Smart Supermarket
Malta Resources Authority
Vodafone Malta (from 2014)
Data Protection training to public officers
The Government of Malta awarded a €290,000 tender
to PwC to provide a training programme for 100 Data
Protection Officers in the public service. The course
was approved by the Information and Data Protection
Commissioner and accredited as an award at MQF Level 5
by the National Commission for Further & Higher Education
in Malta. The assignment involves five days of theory
and practical training, as well as knowledge and practice
assessments to achieve certification. The training is being
managed by PwC’s Academy led by Lisa Pullicino and
delivered in PwC’s dedicated training centre in Qormi.
2013 Review Malta Firm 9
Bid support – Gas to power project
In the course of 2013, an Advisory team led by John Zarb assisted the Electrogas
Consortium in successfully bidding for a gas to power project tendered by
Government. The PwC team assisted in all stages of the tender preparation process,
including the co-ordination and drafting of the bid, assisting in the preparation of
the financial model, in the pricing of a competitive bid, and in the financing for the
project.
Bid support – Costa Coffee operation in Spain
In summer 2013 an Advisory team led by Joe Muscat worked closely with the
management of Island Hotels and Buttigieg Holdings in drawing up their successful
bid for the exclusive right to open Costa Coffee shops in Spain (East Coast), Balearic
Islands and the Canary Islands. The project is expected to commence in 2014.
The bid was very well received by Whitbread plc, the owner of Costa Coffee, who
commented on the high quality of the business plan submitted by the client.
Our firm has a strong track record in supporting clients in public and
other bids, and in securing the funding required for such projects. We assist
our clients in arriving at competitive but sensible bids; in conveying their
suitability for the project; and in defining solutions that recognise and meet
the tenderer’s key concerns.
10 PwC
Nurturing the clients of the future
The PwC €1 million Start up Fund
The PwC €1 million Start up Fund was
launched in mid-June 2013. This is an
initiative whereby the firm is dedicating
€1 million worth of pro-bono services
annually towards start up businesses.
For this initiative, PwC Malta is
collaborating with two key local
institutions, the University of Malta and
Times of Malta.
As the leading and largest professional
services organisation in Malta, PwC
has business experience which spans
across all industries. By putting our
experience to the service of start ups, we
aim to ease the burden falling on new
entrepreneurs, as well as to contribute to
new businesses being set up with proper
financial and management structures.
This will hopefully not only contribute
to the creation of more solid businesses,
but also lead to a more innovative
economy.
Typically, start up businesses would
require mentorship in aspects
relating to business strategy, financial
management, tax and accounting.
Services that may be provided through
The PwC €1 million Start up Fund
are therefore expected to comprise
assistance in the preparation of business
plans; the raising of bank finance; the
set up and registration of companies; tax
matters; the design and implementation
of accounting and IT systems; the set up
of employee share option schemes; and
staff training in financial management
related areas.
The PwC €1 million Start up Fund
is open to all entrepreneurs with
an innovative business idea that
operate from, or trade in, Malta. The
applications received are reviewed by a
Selection Committee, which meets on a
regular basis to review the applications.
We have to date received 53
applications. The majority of the
applications are related to the ICT
sector. Most applications are also still in
the research development phase or have
been in operation for less than one year.
Applications recieved (sorted by
status) as at 25 March 2014
8
Applications
23
22
Applications
Applications
Research and Development Stage
Pre Start up or new company start up
(less than 1year old)
Early stage full time project (more than 1
year old)
2013 Review Malta Firm 11
Engaging with clients
We look to be proactive in identifying
and addressing client needs; and in
sharing and collaborating with them.
Clients keenly appreciate being kept
adjourned on technical matters and
on issues and trends that impact their
particular industry, both locally and
overseas.
During 2013, a total of 94 client
newsalerts and newsletters were issued
by the firm, covering accounting,
income tax, VAT, regulatory and
industry specific topics.
In addition, 31 PwC’s Academy open
events were organised for clients and
for PwC Alumni in 2013, attracting
a total of 1,100 participants; apart
from a number of client specific
training activities. The Academy is the
platform through which PwC channels
its commitment towards promoting
technical expertise and continuous
professional development.
Drawing on the knowledge and
experience of our firm, the Academy
fosters, internally and externally, our
firm-wide culture of learning and
development. Both the firm’s intensive
internal training programmes, as well as
12 PwC
all external training carried out by the
firm, are undertaken by PwC’s Academy.
Managing potential conflicts of
interest
The firm attaches great importance to
confidentiality and to the management
of potential conflicts of interest.
While very active in the corporate
finance arena, the firm does not act as
the originator of potential transactions,
as this would entail having to choose
between clients as to where to direct a
business opportunity.
Conflicts of interest may arise on nonaudit services, in particular when clients
request assistance on purchase or sale
transactions that may involve other
clients in a counterparty or competitor
capacity.
Generally speaking, depending on
the nature of the bid and the role
requested from us, our firm prefers to
act for only one party in a competitive
bidding situation. When approached
by more than one company to assist
on a particular transaction, and after
ensuring, where applicable, that we
are able to assist on the transaction
concerned within the constraints of
audit independence rules, we act for the
party who first approaches the firm.
In certain cases, it may be considered
appropriate to assist more than one
bidder. In such instances, all the
clients concerned are advised that we
would not be acting on an exclusive
arrangement. The work concerned
would in such cases be handled by teams
working in a strictly segregated fashion.
Such situations typically arise when
the work requested from us is relatively
limited, e.g., reporting on the proper
technical preparation of the financial
projections supporting a bid.
When we act for government as its
advisor in a privatisation or in the
formulation and award of a public
sector contract, we recognise that in
the interest of public transparency such
work must always be conducted on an
exclusivity basis. We would expect, as a
matter of probability, that a proportion
of the eventual bidders will be clients in
one capacity or another of the firm or of
other members of the PwC network. In
all such cases, we decline from acting for
any of these clients in relation to the bid
concerned.
Independence considerations in
relation to client services
Our client relationships are based on
a mutual respect that recognises, inter
alia, our reporting responsibilities; and
the need to maintain our professional
independence and objectivity.
The size of our client base is relevant
to the stakeholders who rely on the
assurance reports issued by this firm.
Under Directive 2 issued in terms of
the Accountancy Profession Act, a firm
should ensure that the aggregate fee
income it receives from any one client
(or client group, as defined in the
Directive) must not exceed 15% of total
income in the case of public interest
entities; or 20% of total income in
other cases.
During 2013, the maximum fees
we earned from any one client or
client group to whom we provide
audit services amounted to 2% of
the total billings of the firm.
A list of the public interest entities
(PIE’s) currently audited by the firm is
set out in the appendix to this report.
This list includes listed companies,
banks and insurance companies, which
are defined as PIE’s in terms of law,
and for which additional independence
requirements need to be met to
safeguard the public interest.
The firm attaches importance to the
maintenance of independence on audit
engagements, and this requires care
when providing non-audit services
to audit clients. Certain services are
deemed incompatible with an audit
mandate, and are not provided to
assurance clients. These include
valuations that impact the statutory
accounts that we are opining upon,
book-keeping services to public interest
entities, and any assignments that
require us to take executive decisions
– as against advising a client who is
sufficiently familiar with the subject
matter to make informed decisions
independently of us.
Source of tax and advisory billings
42%
Audit clients
58%
Non-audit
clients
In all cases, the final decision as to
whether a non-audit service can be
provided rests with the audit partner,
who must also consider how any
potential independence threats should
be mitigated.
2013 Review Malta Firm 13
14 PwC
Committed to sharing information
Legal structure and ownership
PricewaterhouseCoopers (PwC) is a
civil partnership governed by Maltese
law. The firm is owned by a group of
18 members, commonly referred to as
partners, all of whom are professionals
active within the practice.
The firm is registered as an audit firm
with the Accountancy Board in terms
of the Accountancy Profession Act
(the Act). Kevin Valenzia is the firm’s
Compliance Principal in terms of the
Act.
The number of partners of the firm who
are Certified Public Accountants holding
a practicing certificate in auditing, and
the percentage of voting rights in the
firm held by such partners and directors,
are materially in excess of the thresholds
established in article 10.4 of the Act.
The PwC network
In most parts of the world, the right
to practise audit and accountancy is
granted only to firms that are majority
owned by locally qualified professionals.
PwC is a global network of separate
member firms, operating locally in
countries around the world.
As members of the PwC network,
PwC firms share knowledge, skills and
resources. This membership enables
PwC firms to work together to provide
high-quality services on a global scale
to international and local clients,
while still taking advantage of being
local businesses, knowledgeable about
local laws, regulations, standards and
practices.
PricewaterhouseCoopers International
Limited (PwCIL) is a UK private
company limited by guarantee in which
PwC firms are members. PwCIL does not
practise accountancy or provide services
to clients. Instead, it acts as a coordinating entity for PwC firms. PwCIL
works to develop and implement policies
and initiatives that create a common and
co-ordinated approach for PwC firms.
PwCIL focuses on key areas such as
strategy, brand, and risk and quality.
PwC firms can use the PwC name
and draw on the resources and
methodologies of the PwC network. In
return, member firms are required to
abide by certain common policies and
the standards of the PwC network.
Member firms are also part of regional
clusters that promote cooperation and
the application of common strategies,
risk and quality standards.
Kevin Valenzia is the firm’s Territory Senior
Partner. He is seen above hosting the Family
Business Forum, an event organised jointly with
BOV in May 2013.
2013 Review Malta Firm 15
Governance and management
structure
The governing body of the firm is the
partner group, led by the Territory
Senior Partner, which meets at regular
intervals to discuss strategy and to
monitor the firm’s progress.
The firm is organised in three service
lines, namely Assurance, Tax (including
Company Administration), and
Advisory.
Service line issues are delegated to
subsidiary boards comprised of all the
partners in the respective service line,
together with the Territory Senior
Partner.
Joseph Camilleri
Business development
Lucienne Pace Ross
Quality assurance and risk management
Simon Flynn
Head of Assurance
David Valenzia
Human Capital
Neville Gatt
Head of Tax
John Zarb
Finance and regulatory affairs
Dedicated boards are also devoted to
managing human resources, business
development, training, risk management
and IT management. These boards have
a role across all lines of service.
This structure ensures that all partners
are actively involved in the management
of the firm, while that certain partners
carry specific executive roles, reporting
to the partner group as a whole.
Joe Muscat
Head of Advisory
16 PwC
Quality in what we do
Standards and internal quality control
systems
As members in the PwC network, PwC
Malta is required to implement the
agreed-upon common standards and
policies of the PwC network. Our firm is
responsible for its own risk and quality
performance and, where necessary, for
driving improvements. The firm is also
exclusively responsible for the delivery
of services to its clients.
To support transparency and consistency
within the network, each PwC firm’s
Territory Senior Partner signs an annual
confirmation of compliance with certain
standards. These cover a range of areas,
including independence, ethics and
business conduct, Assurance, Advisory
and Tax risk management, governance,
anti-bribery and data protection and
privacy.
These confirmations are reviewed by
others who are independent from the
PwC firm in question. Member firms are
required to develop an action plan to
address specific matters where they are
not in compliance; such action plans are
reviewed and execution of the plan is
monitored.
There are some common principles and
processes to guide the firm in applying
the network standards. Major elements
include:
• the way we do business
• sustainable culture
• policies and processes
• quality reviews.
networks within the firm, and within
PwC globally – both formal and informal
– and technical specialists to help them
reach appropriate solutions.
The foundation of our culture is
objectivity, professional scepticism,
cooperation between PwC firms and
consultation.
The way we do business
The firm undertakes its business
activities within the framework of
applicable professional standards, laws,
regulations and internal policies. These
are supplemented by a PwC Code of
Ethics and Business Conduct for their
partners and staff. Our people have an
obligation to know, understand and
comply with the guidelines contained
in the Code as well as the values –
Excellence, Teamwork and Leadership.
Sustainable culture
To promote continuing business
success, the firm nurtures a culture
that supports and encourages partners
and staff to behave appropriately and
ethically, especially when they have to
make tough decisions. Our people have
ready access to a wide array of support
Lino Casapinta retired from the partnership
at the end of 2013, having reached the firm’s
mandatory partner retirement age. He had
served as a partner in our Advisory practice
since 1 January 1995, having joined the firm
ten years earlier. He will continue to assist
the firm in a consulting capacity.
2013 Review Malta Firm 17
Policies and processes
The firm has developed policies based
on the common standards and policies
of the PwC network. We also have access
to common methodologies, technologies
and supporting materials for many
services that are developed across the
network.
These methodologies, technologies and
content are designed to help a member
firm’s partners and staff perform their
work more consistently, and support
their compliance with the way PwC
does business. Each client engagement
leader is responsible for assigning staff
to a particular engagement and for
building the appropriate combination
of professional competence and
experience.
Quality reviews
Each PwC firm is responsible for
monitoring the effectiveness of its own
quality control systems. This includes
performing a self-assessment of its
systems and procedures and carrying
out, or arranging to have carried out on
its behalf, an independent review.
not only whether we have conducted
objective quality control reviews of
all of our services, but also includes
consideration of our processes to
identify and respond to significant risks.
For Assurance services, the PwC
network conducts an annual global
programme of quality reviews intended
to ensure that:
• quality management systems
are appropriately designed, are
operating effectively and comply
with professional network standards
and policies;
• engagements selected for review
were performed in compliance with
applicable professional standards
and PwC Audit requirements, and
managed appropriately;
• significant risks are identified and
adequately countered through the
audit testing performed.
Quality reviews are carried out on
each PwC member firm, including the
Malta firm, on an annual basis. These
supplement the quality reviews also
made annually by the firm itself, and
help ensure that our internal review
processes are attaining the desired
results. The reviews have confirmed that
the internal control systems of the firm
have worked well.
External inspections
Under procedures introduced in 2007,
the Quality Assurance Oversight
Committee of the Accountancy Board
is responsible for undertaking an
inspection of the audit quality of all
registered auditors in Malta.
The most recent inspection of our firm
was completed by the unit in 2012, with
satisfactory results. The next QAOC
inspection is due to commence in 2014.
The network monitors our firm’s
compliance. This includes monitoring
Our Assurance partners – Joseph Camilleri, Stefan Bonello, Simon Flynn, Romina Soler, Fabio Axisa,
David Valenzia, Lucienne Pace Ross.
18 PwC
Independence practices
Policy and resourcing
Objectivity is the hallmark of our
profession, at the heart of our culture
and fundamental to everything we do.
Independence underpins objectivity
and has two elements: independence of
mind and independence in appearance.
PwC firms reinforce both of these
elements through a combination
of setting the right tone from the
top; independent consultation on
judgemental issues; detailed policy
requirements including prescribed
processes to safeguard independence;
regular training; and careful observance
of independence requirements.
PwC’s Global Independence Policy
– based on the International Ethics
Standards Board for Accountants’ Code
of Ethics for Professional Accountants
– contains minimum standards with
which PwC firms have agreed to comply.
These relate to assurance clients,
including the adoption of processes
and safeguards designed to maintain
independence from such clients.
Each PwC firm is required to have a
partner responsible for independence
matters, supported by adequate and
trained resources, to support the
relevant member firm and its people in
complying with policy requirements.
This includes providing a resource to
consult on policy interpretations and
practice matters.
PwC firms impose supplementary
independence restrictions and processes
by reference to local regulatory and
ethical requirements, when necessary.
Details of any such requirements with
cross-border effect are communicated
throughout the network.
Training programmes on the PwC
Global Independence Policy and related
independence processes are provided to
all staff. These include the requirements
around personal behaviour, services that
may and may not be provided to audit
clients, and business relationships.
Training
Winston Zahra (Jnr), Professor Edward Scicluna , Minister for Finance, and Andrew Mangion, the guest panel at our 2013 Annual Conference.
2013 Review Malta Firm 19
The provision of non-audit services
To conduct quality audits on large
enterprises, firms need expertise in
many areas such as tax, valuation, risks
and systems – as well as the ability to
keep pace with constantly changing
regulations, standards and industries.
Such services however need to be
provided within the independence
restrictions relevant to firms that also
perform statutory audits.
The Assurance, Tax and Advisory lines
of service provide training and other
materials dealing with independence
considerations related to the provision
of non-assurance services.
Our tax and advisory partners and staff
support our statutory audit service
in specialised areas such as taxation,
valuations and impairment reviews,
regulatory compliance and systems
and process assurance. Moreover, the
collective experience and insights
our professionals gain from providing
these services increase our ability to
understand companies’ business and
risks – thus benefiting audit quality.
20 PwC
Our Advisory partners – Ryan Sciberras, George Sammut, Joe Muscat, John Zarb, Michel Ganado.
Our Tax partners – Chris Galea, Kevin Valenzia, Neville Gatt, David Ferry, Bernard Attard.
Compliance
Our compliance processes rely on a
combination of business activities and
monitoring systems.
The firm has detailed policies and
processes to evaluate the potential
impact of a proposed service on our
independence.
PwC firms are required to obtain
authorisation from the lead audit
engagement partner regarding the
provision of non-audit services to
entities on the ‘Independence List’.
Authorisation is only given after
careful analysis of whether the service
could impair the reporting firm’s
independence by reference to policy
requirements, including an evaluation of
threats to independence.
Partners and client-facing managers
are also required to record the details
of their investment portfolios on a
sophisticated confidential database
that provides real-time monitoring of
the permissibility of investments held
against a global ‘Independence List’ of
prohibited securities.
Joint business relationships
are evaluated for any threats to
independence, and are required to
be approved, recorded and regularly
monitored for changes that may impact
the independence assessment.
As well as these and other compliance
monitoring systems, the firm operates a
number of confirmation and verification
processes, such as:
• annual compliance confirmations by
partners and practice staff, and
• inspection and compliancetesting programmes at firm
and engagement levels. Such
inspections look at, among other
things, compliance with the
requirements relating to partner
rotation and partner compensation.
This would include, where appropriate,
discussion with the client’s audit
committee regarding an evaluation
of the impact of the independence
issue and the need for safeguards to
maintain objectivity. Any breaches are
taken seriously and investigated as
appropriate.
The firm is required to have disciplinary
policies and mechanisms that promote
compliance with independence policies
and processes, and to report and
address any breaches of independence
requirements which, even with the
control processes outlined above, may
occasionally occur.
2013 Review Malta Firm 21
Partner remuneration
Monitoring
Our partner remuneration system
includes three core elements for
which partners are rewarded: first,
the role they are asked to play in the
partnership; second, how well they
carry out their responsibilities, with a
particular emphasis on quality; and,
third, how well the firm performs as
a whole.
Regular reports, based on documented
monitoring procedures, are submitted
to the partner group by the partners
responsible for risk management and for
monitoring quality in terms of ISQC1,
to ensure the proper operation of the
procedures described above.
Within this framework, the
determination of an individual partner’s
rewards hinges on a balanced scorecard
evaluation against individual and team
objectives.
Where financial performance is
concerned, partners are rewarded on
the basis of the performance of the firm
as a whole, and not on the basis of the
fee income generated by a particular
service line or client.
22 PwC
The review of our systems of internal control
has not identified any failings or weaknesses
that have been determined to be significant.
2013 Review Malta Firm 23
Creating value for our people
Policy and resourcing
Staff recruitment, development, and
retention, are of central importance to
the firm.
Recruiting and training the best
We remain one of the largest
organisations recruiting from University,
principally Master in Accountancy
graduates. Our CareerDeal provides
students with a training programme
which moves in parallel with their
university studies, as well as work
experience at different times of the year.
The firm currently has 94 students on
CareerDeal. The programme is managed
by our dedicated Human Capital group.
It is also supported by all our managers,
who play a key role across all the
activities of the firm.
Our firm is always on the lookout for
young, bright students, no matter the
background of studies they come from.
We have recruited staff who work with
us on a full time basis while studying
for their ACA or ACCA qualifications,
and we support such students with
structured training courses and
additional study leave. A significant
number of these staff already hold a
tertiary level first degree.
24 PwC
Other students opt to study for an ACCA
qualification on a full time basis after
they obtain their ‘A’ Levels, or after they
complete a first degree at University.
PwC’s Academy’s ACCA full-time study
programme aims to accelerate the
learning curve of students and offers a
fast track route into the profession.
PwC’s Academy provides such students
with dedicated classroom tuition
to ensure that they are thoroughly
prepared for the ACCA exams. This
training programme is planned over
approximately 2 years (5 examination
sittings) and during this time the firm
also offers a monthly study grant and
provides students with work experience
in the different lines of service through a
job shadowing and rotation system.
These policies, together with the
recruitment of expatriate staff, ensures a
staff intake from different backgrounds
that is not limited by the number of
accountants graduating annually from
university. The programmes entail an
annual spend that contributes towards
tertiary level education in Malta in the
field of accountancy.
Lisa Pullicino, partner, is responsible for running
PwC’s Academy.
Staff complement at 31 December 2013
Accountants
220
Other professional staff
29
Staff pursuing
professional studies
49
Non-qualified,
including support staff
61
Full-time staff complement
Employee age profile
40%
28%
15%
359
9%
CareerDeal students
94
ACCA full-time study
40
134
Extended staff complement
493
3%
5%
10%
0%
Female
20%
30%
40%
50%
Male
Our staff is 58% female and
42% male
Our average age of our staff is
30
years
58%
42%
Full-time CareerDeal and ACCA students are excluded
from the above statistics
2013 Review Malta Firm 25
Our recruitment is not limited to
accountancy graduates and students.
Our advisory and tax practices are
increasingly reliant on the recruitment
of non-accountants at all levels of
the firm. Moreover, a number of our
accountants in these two service lines
hold post-graduate degrees in other
disciplines such as taxation, financial
services, IT and economics.
The staffing needs of the firm has led us
to look overseas for additional qualified
staff. This overseas recruitment enriches
the firm with the injection of different
experiences and cultures. Today, the
firm has a total of 26 overseas staff
within its ranks, drawn from France,
Ireland, the Philippines, Holland,
Romania, Bulgaria, Ukraine, Russia and
the United Kingdom.
Developing our staff
The ongoing development of staff once
they join the firm centres around a
Personal Development and Coaching
system, supported by a comprehensive
and fully integrated training
programme.
26 PwC
The system entails:
• Assigning a development coach to
all staff within the firm.
• Setting and agreeing personal
development objectives aligned
with the firm’s goals.
• Providing feedback after
the performance of material
assignments and at periodic
intervals. This process entails
formal manager and partner
meetings with all staff, and serves
as a determining factor in an
individual’s career progression.
• Attendance at a series of courses
throughout one’s career with the
firm. Courses may be technical in
their content, or may deal with the
development of personal skills, the
use of IT and the values of the firm –
the PwC Experience.
This training ensures that our people are
alert to regulatory changes, reinforces
their awareness of key compliance
matters and supports the wide range of
industry expertise and specialist skills
available across the firm.
Training courses are progressive in
their design, with each year’s courses
building on the earlier training given to
an individual.
Courses are generally held in our
training centre in Qormi, which was
expanded in 2012 and which now
includes four lecture theatres which can
be utilised concurrently. Attendance
at overseas courses and gatherings is
however a regular event, especially on
specialist topics.
The aggregate staff attendance
at formal training courses
during 2013 totalled over 50,000
hours, covering all our extended
staff complement. Training of
professional staff averaged 160
hours training per person
Staff mobility
One of the things that makes working
at PwC attractive is the opportunity
to work on assignments overseas. The
global PwC staff mobility programme
recognises that an opportunity to
work overseas exposes an individual
to experiences in new environments,
working with different professionals. It
also helps in building bridges between
member firms, often establishing
personal relationships that last
throughout an individual’s career with
the firm.
The firm committed senior staff for
a total of 338 man weeks to this
programme in the course of 2013.
Our people gained significant work
experience abroad in the Channel
Islands, Italy, Switzerland, the United
Kingdom and the United States.
The firm’s annual PwC Experience prize was
in 2013 awarded to Melanie Gauci. The PwC
Experience programme seeks to optimise the
manner in which our people interact both with
clients and with their peers. PwC Experience is
looking to differentiate the client’s experience in
working with our firm. The programme is fully
embedded within the firm’s processes, including
all aspects of quality assurance, training, staff
development planning and staff reviews.
Summary result of the PwC Malta
staff survey conducted in 2013
People engagement index
81%
Survey response rate
0%
20%
78%
40%
60%
80%
100%
2013 Review Malta Firm 27
Creating shared value
Contributing to the PwC network
Corporate Responsibility
Our people’s contribution to the PwC network goes beyond staff mobility and
participation in overseas training courses:
• We attend and participate at all levels in various network meetings and
gatherings that concern our operations. This entails regular overseas travelling
attending leadership and service line meetings; and a number of technical,
training and IT services meetings.
• We make lecturers available for training courses outside Malta.
• We host and help organise network courses and other meetings held in Malta.
• Partners and managers from the firm participate annually in quality control
reviews of other member firms.
• We participate in cross border panels that are convened on a regular basis to
assess and approve large proposals from a risk management perspective.
• We contribute, both financially and in terms of making time available, in the
development of the network’s methodologies.
Our corporate responsibility strategy
looks at four objectives:
• Contributing to the wider
community, and to our profession.
• Reducing our footprint on the
environment.
• Making the office a better place
to work in for our people, an
area which was the subject of a
considerable investment in 2012.
• Assisting clients in integrating
corporate responsibility goals
within their business strategy,
through our sustainability services.
Karaoke night - Our Social Affairs group organised a total of 18 events in 2013, both at firm and at line of service level.
28 PwC
Sharing
Various activities were carried out during the year, including the firm’s ongoing partnership with Din l-Art Helwa. This included
voluntary work such as gardening, photography, back office and administration work, maintenance work at various sites,
organisation of events and fundraising.
Moreover, as part of its corporate social responsibility programme, in 2012 the firm agreed with Din l-Art Helwa to fund the
restoration of paintings and frescoes at Our Lady of Victory Church in Valletta. The firm’s commitment to this restoration process
extends over a period of ten years.
The firm continues to play an active role in supporting various professional bodies and the University, through the provision of
partners and managers who participate on the council of the Malta Institute of Accountants, the Institute of Financial Services
Practitioners and the Accountancy Board, or as lecturers and tutors at University.
Our CSR contributions during 2013 included:
• Expending €43,000 in time value on activities related to the profession.
• Pro-bono work with a time value of €107,000 on various charities and community organisations, such as the annual
L-Istrina charity program.
• Cash donations of €42,000 to various worthy causes including cash amounting to €6,432 collected by staff during social
functions.
Swimming for charity at Balluta Bay – 26 partners and staff participated at this event, held in August 2013.
2013 Review Malta Firm 29
We take an active part in contributing
to sustainable development, both in our
operations and by raising awareness
and improving the understanding of
environmental issues with our clients.
We are also in a position to impact the
environment positively through our
work with our clients and cooperation
with government and constituted
bodies. More local companies are
disclosing non-financial information.
We are also observing an increased
interest in the auditing of non-financial
disclosures to enhance the credibility of
such disclosures.
We are accordingly creating new
client services to help others build
more transparent and responsible
businesses. We continue to develop our
Sustainability Advisory Services which
aim to support our clients in addressing
environmental and social challenges,
and in communicating better with their
key stakeholders.
Reducing our environmental impact
Key savings achieved in 2013:
We have been actively working to make
our operations more environmentally
efficient, for example by reducing the
consumption of energy and water,
encouraging our staff to adopt greener
practices in their daily activities at the
office and measuring our performance
on environmental KPIs.
Electricity - A 19% decrease in electricity
consumption (2013 compared to 2012)
as a result of energy efficient lighting,
motion and light intensity sensors,
together with centralised control of air
conditioning temperatures.
We are monitoring and managing
our impact on the environment. We
track our performance in terms of
environmental KPIs on a monthly basis.
A committee set up for this purpose,
internally referred to as the Green
Committee, meets on a quarterly basis to
consider results and actions that may be
appropriate.
Water - A 75% decrease in consumption
of first class water (2013 compared to
2012) as a result of measures introduced
for the use of second class water in our
offices. Overall water consumption (first
and second class) decreased by 28% in
2013 with an overall saving of 1,220
cbm, primarily from utilising water
saving equipment.
3%
We are building internal awareness
about corporate responsibility. As part
of our induction process, each employee
joining PwC is introduced to corporate
responsibility and the efforts of our
Green Committee.
Paper
consumption
Electricity
49%
Travel
3%
Laptops
30 PwC
45%
Many of the firm’s staff attained
personal achievements in the course
of 2013, both in professional activities,
their family life and in a variety of other
areas, such as sports.
Vladyslava Kravchenko, a junior associate in
our Tax Line of Service, was recognised for her
achievements in sports in 2013, in the Ghazliet
Sportivi Nazzjonali in the nomination ‘athlete in
adapted sports’.
Mark Tabone, a senior manager in our Advisory
Line of Service, was one of 7 partners and staff
who participated in the 2013 half marathon,
finishing in 1 hour 22 minutes. Another creditable
performance was that of David Leone Ganado, a
senior manager in Assurance, and a newcomer to
the sport, who clocked in at 1.28.
2013 Review Malta Firm 31
2012 Review Malta Firm 31
Public Interest Entities audited
by the firm
The Accountancy Profession Act defines
a Public Interest Entity (PIE) as an
entity whose transferable securities
are admitted to trading on a regulated
market of any EU Member State within
the meaning of point 14 of Article
4(1) of Directive 2004/39/EC, a credit
institution as defined in point 1 of
Article 1 of Directive 2000/12/EC of
the European Parliament and of the
Council of 20 March 2000 relating to
the taking up and pursuit of the business
of credit institutions, or an insurance
undertaking within the meaning of
Article 2(1) of Directive 91/674/EEC.
The PIEs currently audited by the firm
include:
Listed Bonds
Credit Institutions
Gasan Finance Company plc
Melita Capital plc
Mizzi Organisation Finance plc
Pavi Shopping Complex plc
Tumas Investments plc
United Finance plc
CommBank Europe Ltd
Ferratum Bank (Malta) Ltd
IIG Bank (Malta) Ltd
Listed Equity
GO plc
Lombard Bank Malta plc
Malita Investments plc
MaltaPost plc
Midi plc
Plaza Centres plc
Simonds Farsons Cisk plc
Tigne Mall plc
Unibet Group plc
Listed Funds
Amalgamated Investments Sicav plc
Global Funds Sicav plc
La Valette Funds Sicav plc
Vilhena Funds Sicav plc
Wignacourt Funds Sicav plc
Rohfund Global Funds Sicav plc
Timeless Precious Metal Fund Sicav plc
The Timeless Energy Fund Sicav plc
32 PwC
Insurance Companies
AarhusKarlshamn Insurance Malta Ltd
Allcare Insurance Ltd
Arnold Clark Insurance (Malta) Ltd
Arnold Clark Life Insurance (Malta) Ltd
Atlas Insurance PCC Ltd
Bastion Insurance Company Ltd
Cafina Assurances Ltd
Elmo Insurance Ltd
Ergon Insurance Ltd
Falcon Insurance Ltd
GasanMamo Insurance Ltd
MSV Life plc
One Insurance Ltd
Oney Insurance (PCC) Ltd
Oney Life (PCC) Ltd
Practice Plan Insurance Ltd
Rhenas Insurance Ltd
Shield Insurance Company Ltd
SN SecureCorp Insurance Malta Ltd
Taurus Insurance Ltd
Werla Insurance Ltd
Primary photography: Rene Rossignaud
Additional photography taken by members of the staff of PwC Malta
Printing: Printex Limited
© 2014 PricewaterhouseCoopers. PwC refers to the Malta member firm, and
may sometimes refer to the PwC network. Each member firm is a separate legal
entity. Please see www.pwc.com/structure for further details.
All persons appearing in this review are partners, managers or members of
staff of PwC attending PwC events in 2013.
Printed in Malta on FSC certified paper.
2013 Review Malta Firm 3
www.pwc.com/mt
To view the web version of this report visit
www.pwc.com/mt/2013reviewmalta
4 PwC

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