Consultation on the Revised Audit Service Provider Guidelines

CLOSED CONSULTATION

From:	Ministry for the Economy and Industry (Malta Gaming Authority)
Published:	14 October 2021
Running till:	17 December 2021
Last Updated:	30 November 2022

1. Background

The pace and scale of technological advancements in the gaming industry and the sophisticated IT systems that the operators make use of require constant monitoring and upskilling from any person who wishes to provide services to the dynamic gaming sector.

In order to safeguard and maintain the quality of audit services, in 2018 the Malta Gaming Authority (’MGA’ or ‘Authority’) introduced a process whereby the service providers interested in performing relevant auditing work (‘Service Providers’) are required to apply to the MGA for their suitability to be assessed and approved. To this end, operators licensed by, or that are in the process of applying for a licence from the Authority, may engage any approved Service Provider of their choice, on free commercial terms, when a system and/or compliance review of their operations is required by the MGA within the required timeframes. The 2018 Guidelines for Audit Service Providers are applicable to the system and compliance audits.

Currently, twenty-one (21) local and international firms are eligible to perform such audits in line with the quality standards set by the Authority. The process proved to be effective, providing the MGA with the appropriate mechanism to approve independent and competent Service Providers as well as remove or suspend providers in case of unsatisfactory performance. The Authority has recently reviewed the requirements applicable to audit Service Providers to ensure that they remain up to date in view of the ongoing developments in the sector and in line with the MGA’s expectations. The amendments that have been affected are listed in Section 3 of the Consultation Paper.

Over the past years, the Authority has been carefully monitoring the quality of the statutory audits submitted by its licensees in view of non-existent requirements or guidelines in relation to the suitability of Service Providers interested in conducting such audits. The concerns that have transpired from the Authority’s observations, as well as discussions held with different stakeholders, relate mainly to the lack of technical system expertise and knowledge relevant to the gaming industry by some professionals conducting statutory audits. To ensure a consistent approach to such audits and satisfactory quality of services, the Authority is proposing to extend the applicability of the revised Guidelines for Approved Audit Service Provider to statutory audits.

In view of the above, the Authority encourages the gaming industry, Service Providers as well as wider interest groups to express their views and provide their feedback in relation to the updated Guidelines, so as to ensure that decisions are taken, and policies are adopted in a transparent and accountable manner.

2. Consultation Questions

In line with the Authority’s commitment to an open and transparent decision-making process, the MGA is issuing this consultation to communicate and refine its proposal in relation to Guidelines for Audit Service Providers and promote a greater understanding of the proposal itself.

The MGA used the current version of the Guidelines as the basis for the proposed changes. No major amendments have been made in terms of general structure of the document. The full amended text of the Guidelines can be found in Annex 1 of the Consultation Paper.

The amendments to the Guidelines aim to clarify the existing text and framework. The main amendments that have been introduced are:

The extension of the applicability of the Guidelines to statutory audits as per Section 1 of the amended Guidelines.
New applications are to be submitted via the Authority’s Licensee Relationship Management System as per Section 2 of the amended Guidelines.
The validity of the authorisation has been extended from two (2) to five (5) years as per Section 2 of the amended Guidelines.
Specification of the twenty (20) day period (commencing from the day of identification of the conflict) within which conflicts of interest must be reported to the Authority as per Section 4 of the amended Guidelines.
Requirement to disclose a list of all entities related to the gaming sector in which the partners/directors of the Service Provider have a financial interest, both directly and indirectly as per Section 3 of the amended Guidelines.

The requirements related to the extension of the applicability of the Guidelines to statutory audits (I) will be applicable in relation to the submission of Audited Financial Statements for the accounting year ending 31 December 2022, that are to be submitted in 2023, and any submissions that are due thereafter. All other requirements (II-V) will start to apply from the date that the MGA publishes the amended version of the Guidelines following this consultation process.

Any comments and feedback in relation to the amended Guidelines are to be submitted in writing on policy.mga@mga.com.mt.

3. Documents

Click here to download the Consultation on the Revised Audit Service Provider Guidelines.

Approved Audit Service Provider Policy.pdf

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4. Submission of input

Any queries and requests for clarifications that contributors had in respect of the contents of the consultation paper and feedback from the interested parties were sent to the following email address: policy.mga@mga.org.mt.

Submissions were received by 17 December 2021.

We thank you for your input.

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