Audit Preparation Checklist for Malta Companies: 2026 Guide

By the EGM Assurance Editorial Team . Last reviewed April 2026 . 12 min read

A statutory audit is an evidence-based engagement in which an independent auditor forms an opinion on whether a company's financial statements are free from material misstatement. It is not simply a review of whether the accounts are broadly correct. The auditor gathers evidence against each significant balance and transaction class, assesses the risks of error or fraud, evaluates the going concern basis, and tests the adequacy of the company's accounting judgements.

This guide is for finance managers, CFOs and directors of Malta companies preparing for a statutory audit or a review engagement. It covers who is subject to audit, how to read the timeline around Malta's filing deadlines, what documents to prepare, the going concern assessment, and how to work with your auditor efficiently. It reflects the position at April 2026.

1. Who is subject to a statutory audit

Statutory audit in Malta is the default for companies of any meaningful size. Most private limited companies with active trading operations, external financing, or corporate shareholders are subject to audit. The following are always required to have audited financial statements:

• Public interest entities (PIEs) - companies listed on a regulated market, credit institutions, insurance undertakings, and other entities designated as PIEs by the competent authority.

• Medium and large companies - those exceeding the medium-entity thresholds (balance sheet above EUR 4 million / turnover above EUR 8 million / more than 50 employees, on two of three criteria) must apply IFRS and are subject to full audit.

• Regulated entities - companies licensed by the MFSA (investment services, gaming, payment institutions, insurance) are typically subject to audit as a licence condition, regardless of size.

• Companies whose constitutive document, shareholder agreement, or lender covenant requires a statutory audit.

• Companies that have voluntarily elected into audit - for example, to meet investor, bank, or trade partner requirements.

For smaller companies, Legal Notice 139 of 2025 introduced exemption pathways: a full audit exemption for qualifying micro-entities, a review report option for companies meeting the 2-of-3 size criteria, a newly-incorporated company waiver, and a Merchant Shipping Act route for qualifying vessels. These are discussed in our companion guide on Statutory Audit in Malta. Even companies that qualify for exemption sometimes retain audit for commercial reasons.

Related guides: Accounting Records in Malta: Companies Act Requirements

2. Statutory audit vs review engagement

Since LN 139/2025, companies qualifying under the 2-of-3 size criteria (but not micro-entities) may opt for a review engagement rather than a full statutory audit. The distinction matters for preparation:

For companies that have opted for a review engagement, many of the preparation steps below still apply - the reviewer still needs accounting records, reconciliations and corporate documentation. The difference is in the depth of evidence they will gather themselves.

3. Understanding the audit and filing timeline

Planning around Malta's statutory deadlines is essential. There are two distinct deadlines to understand: the Companies Act deadline for the AGM (at which accounts are approved), and the MBR filing deadline (at which approved accounts are lodged). The audit must be complete before the accounts are approved at the AGM.

4. Accounting and bookkeeping records

The trial balance is the auditor's starting point. Provide a clean, fully reconciled trial balance at year-end with comparative prior-year balances. Unreconciled differences, unposted journals or suspense balances at the time of handover transfer work from your team to the auditor - at the auditor's billing rate.

What to prepare

• Fully posted and reconciled trial balance at year-end, with comparative prior-year balances.

• General ledger with sufficient transaction-level detail for each balance sheet and income statement line.

• Chart of accounts and a note of any changes made during the year.

• Accounting policies document (or equivalent) confirming the framework applied - GAPSME or IFRS - and any changes from the prior year with the reason for the change.

5. The document checklist

Fixed assets

• Fixed asset register: opening balances, additions, disposals and depreciation for the year, closing balances.

• Purchase invoices for all capital additions during the year.

• Disposals documentation: contracts of sale, proceeds received, carrying value at date of disposal.

• Depreciation policy by asset class, confirmed as consistently applied from prior year.

Bank and cash

• Bank statements for all accounts (including foreign currency accounts) as at year-end.

• Bank reconciliation at year-end, agreed to both the general ledger and the bank statement.

• Explanation of any reconciling items outstanding at year-end.

• Details of any cash balances held on premises at year-end.

• Bank confirmation letters - your auditor will likely send direct confirmation requests to all banks; provide contact details and authorisation in advance.

Debtors and receivables

• Aged debtors listing at year-end, showing balance and days outstanding for each customer.

• Details of any debts older than 90 days and the company's assessment of recoverability.

• Confirmation of any bad debt provisions and the basis for calculating them (history, correspondence, post-year-end cash received).

• Evidence of post-year-end receipts from major debtors - the most direct evidence of recoverability.

Creditors and payables

• Aged creditors listing at year-end.

• Supplier statement reconciliations for significant creditor balances.

• Accruals schedule: expenses incurred before year-end but not yet invoiced, with supporting calculations.

• Prepayments schedule: amounts paid before year-end for services relating to the next period.

Stock and inventory (if applicable)

• Stocktake results from a physical count conducted at or close to year-end. Where auditors attend the count, coordinate the date in advance.

• Inventory valuation methodology (cost, FIFO, weighted average) applied consistently with prior year.

• Slow-moving or obsolete stock schedule and provisions applied, with supporting analysis.

Payroll and employee obligations

• Payroll summary for the year: gross salaries, FSS deductions, SSC contributions (employer and employee), MLTF, and net pay.

• FS7 annual reconciliation reconciled to payroll records.

• Holiday pay accrual at year-end: days accrued but not taken by each employee, valued at the applicable daily rate.

• Confirmation of any employee-related provisions (notice periods, redundancy obligations).

Tax

• Prior year income tax assessment from the MTCA and any open tax correspondence.

• Current year tax computation (or working draft) showing the company's estimated tax position.

• VAT returns for the year and confirmation of any outstanding VAT balance or correspondence.

• Deferred tax working (required under IFRS and for medium entities under GAPSME; not required for small entities under GAPSME but may be disclosed).

• Tax credit certificates (for example, MicroInvest) to be recognised in the financial statements.

Loans and financing

• Loan agreements for all borrowings in place at year-end.

• Bank loan statements confirming outstanding principal and interest at year-end.

• Shareholder loan details: amount, terms, interest rate, repayment schedule, and written loan agreement.

• Details of any security, guarantees or covenants given.

Related party transactions

• Schedule of all transactions during the year with related parties (directors, shareholders, connected entities): description, amounts, terms, and any outstanding balances at year-end.

• Confirmation that all inter-company balances are agreed between counterparties - mismatched inter-company balances are one of the most common audit delays.

• Any loans to or from directors: amounts, terms, interest (if any), and repayment plans.

Post-balance sheet events

• A note of any significant events between the year-end and the date the accounts are approved. Auditors are required to consider post-balance sheet events and will ask.

• Relevant events include: material asset disposals, significant new contracts, litigation commenced or settled, refinancing, key personnel changes, and events affecting going concern.

6. Corporate documentation

Auditors review the corporate governance record of the entity alongside the financial records. Have the following available:

• Memorandum and Articles of Association, including any amendments since incorporation.

• Board minutes for the entire year under audit: all board meetings, written resolutions, and material decisions.

• Register of members confirming the share structure at year-end.

• Register of directors and company secretary.

• MBR annual return confirmation and any notifications lodged during the year.

• Any significant contracts entered into during the year (acquisitions, disposals, new financing, major supplier or customer agreements).

• Latest version of the beneficial ownership register.

7. Going concern: a director's responsibility

Going concern is one of the most consequential judgements in the financial statements. Directors are responsible for assessing whether the company can continue as a going concern for at least 12 months from the date the accounts are approved. Auditors must independently evaluate that assessment and consider whether the going concern disclosures (if any) are appropriate.

Auditors will request the following going concern evidence from management:

• Cash flow forecasts for at least 12 months from the signing date, with underlying assumptions clearly documented.

• Evidence of available financing: committed credit facilities, shareholder funding commitments, intercompany support arrangements.

• Sensitivity analysis: how the forecasts change under reasonably plausible adverse scenarios.

• Details of any covenant compliance position with lenders.

• Orders in hand and pipeline revenue (for trading businesses).

If the company has experienced recent losses, negative net equity, tight working capital or refinancing needs, the auditor will scrutinise the going concern basis more closely. Directors should not wait for the auditor to raise this - preparing the cash flow analysis proactively reduces the risk of audit delay and ensures the directors have themselves done the governance work the situation requires.

8. Working with your auditor effectively

Engage early and agree the timetable

Contact your auditor before year-end to agree the fieldwork dates and the schedule for providing documents. Early engagement allows interim audit procedures to be done in advance of year-end (for example, testing transaction controls in the months before December), reducing the post-year-end workload. It also allows you to identify any accounting issues before the year is closed, when there is still time to resolve them.

Deliver a complete, clean trial balance first

The trial balance is the auditor's starting point for every procedure. A trial balance with unreconciled items, unposted accruals or suspense accounts requires the auditor to do additional work before substantive testing can begin. Providing a clean, fully reconciled trial balance on day one of fieldwork is the single most effective way to reduce audit time.

Prepare schedules that reconcile to the trial balance

Every schedule you provide - fixed asset register, aged debtors, accruals, payroll summary - should cross-reference to a specific line in the trial balance. If the schedule already reconciles to the general ledger, the auditor does not need to do that work. This is a significant time saving across a typical audit.

Designate a single point of contact

Appoint one person internally to manage audit queries. This prevents duplicate or conflicting responses, allows the auditor to track outstanding items efficiently, and reduces the internal time cost of the audit. The contact should have the authority to pull documents and get answers from all departments without unnecessary escalation.

Respond to queries within 24-48 hours

Audit fieldwork runs on a schedule. Delayed responses push the auditor into idle time while waiting, which extends the engagement and increases cost. Committing to a 48-hour response on standard queries and flagging anything that will take longer is the most practical way to keep the audit on track.

Understand the management representation letter

At the conclusion of every statutory audit, directors are asked to sign a management representation letter. This letter confirms representations made by management during the audit - for example, that all related party transactions have been disclosed, that there are no undisclosed liabilities, that the going concern basis is appropriate, and that all subsequent events have been brought to the auditor's attention. Directors should read this letter carefully; it is a formal legal document and signing it with knowledge of inaccuracies creates personal liability.

9. Common issues that slow audits down

• Incomplete bank reconciliations with unexplained differences that the auditor cannot clear from the records.

• Missing purchase invoices for capital additions, requiring the auditor to seek alternative evidence (site visits, subsequent payment verification).

• Shareholder or director loan accounts with no written loan agreement, no agreed interest rate and no repayment terms.

• Accruals that are not supported by a calculation - a figure in the ledger without any working that explains how it was derived.

• Inter-company balances that do not agree between the two counterparties' records.

• Prior-year audit queries or management letter points that have not been resolved before the current-year audit begins.

• Tax returns not filed for the prior year, creating uncertainty about the current provision.

• Payroll records that do not reconcile to the FSS returns submitted to the MTCA.

• No going concern cashflow prepared, meaning the auditor has to pause fieldwork and wait while management prepares one.

• Board minutes that are incomplete, undated, or unsigned - particularly significant for authorisation of major transactions.

10. Frequently asked questions

When should we start preparing for the audit?

Ideally before year-end. Pre-year-end preparation includes reconciling key balances (especially bank accounts and inter-company balances), ensuring payroll reconciles to FSS returns, listing known accruals, and flagging any accounting judgements that will need documentation. After year-end, allow 4 to 6 weeks to produce a complete set of schedules before inviting the auditor to begin fieldwork.

How long does a statutory audit take for a typical Malta company?

For a straightforward private limited company with clean records, audit fieldwork typically takes 5 to 15 working days (depending on size and complexity), spread over a 2 to 4 week period. The total elapsed time from the auditor receiving records to issuing the final report is typically 6 to 12 weeks, assuming prompt responses to queries. Delays in providing documents or responding to queries extend this materially.

What is the difference between a statutory audit and a review engagement?

A statutory audit provides reasonable assurance and results in an audit opinion under ISAs. A review engagement (available to qualifying companies under LN 139/2025) provides limited assurance based primarily on inquiry and analytical procedures, and results in a review conclusion under ISRE 2400. The review is less extensive, typically cheaper, but carries less weight with lenders, investors and regulators who may specifically require a full audit opinion.

Do we still need an audit if we qualify for an exemption?

Legally, no - if you qualify for one of the exemption pathways under LN 139/2025, you are not required to have a statutory audit. However, many companies that technically qualify still elect to have one for commercial reasons: lender requirements, investor expectations, franchise or licensing obligations, or simply because audited accounts carry more credibility in negotiations. The exemption is permissive, not mandatory.

What happens if we cannot locate all supporting documents?

Where original documents are missing, auditors use alternative procedures: bank confirmations for cash positions, supplier confirmations for creditor balances, management representations as a last resort. A management representation is the weakest form of evidence, and a pattern of missing documentation may result in a qualified opinion. Missing documents should be reconstructed from supplier records or corroborated by alternative evidence before the audit begins - not left to the auditor to work around.

Can we reduce audit fees by doing more preparation ourselves?

Yes, significantly. The audit fee reflects the auditor's time. Providing clean, reconciled schedules that agree to the trial balance, prompt responses to queries, and a well-maintained accounting system all reduce auditor time. The inverse is also true: providing incomplete records transfers work to the auditor at their billing rate, which is typically higher than the equivalent internal cost. Investing in a proper year-end close process is almost always more cost-effective than paying for extra audit time.

Will the auditor find problems with our accounts?

A well-prepared set of accounts, reviewed by management before handover, should have no material errors for the auditor to find. Auditors do find issues in the course of most audits - minor misclassifications, accruals that need adjustment, disclosure gaps - and these are addressed through correcting entries agreed with management. The management letter records recommendations for improvements in controls and procedures. Finding and fixing issues during the audit process is the purpose of the engagement; it is not a failure.

Related guides from EGM Assurance

• Statutory Audit in Malta: 2026 Guide for SMEs

• GAPSME vs IFRS: Which Framework Applies

• Corporate Filings and Beneficial Ownership: Directors' Guide

• Payroll and FSS Obligations for Maltese Employers

Authoritative references

• International Standards on Auditing (ISAs) - IAASB

• International Standard on Review Engagements 2400 (ISRE 2400)

• L.N. 139 of 2025 (Accountancy Profession Exemption and Review Engagement Rules)

• Companies Act (Cap. 386)

• Malta Business Registry

Need help? EGM Assurance provides Malta audit firm - partner-led, transparent, on time. Get a quote.

This article is prepared by EGM Assurance for general informational purposes and reflects the legal and regulatory position in Malta as at April 2026. It does not constitute legal, tax or professional advice. Always confirm current obligations with a qualified professional before acting.