Timeliness of the Financial Reporting Among Maltese Licensed Voluntary Organisations
Timeliness of the Financial Reporting Among Maltese Licensed Voluntary Organisations

Summary/Abstract: The voluntary sector in Malta plays a vital role in supporting communities and delivering essential services. However, delays in financial reporting by voluntary organisations can weaken governance, reduce the usefulness of information, and erode stakeholder trust. This study investigates the financial reporting lag (FRL) among Category 2 and 3 voluntary organisations in Malta from 2018 to 2020 (n = 103), aiming to (i) measure the extent of the lag and (ii) identify the key factors influencing it. A quantitative, hypothesis-driven research design was adopted, employing non-parametric statistical tests and a neural network model to detect both linear and nonlinear relationships, marking the first application of neural networks to this topic. Findings reveal that Category 2 organisations consistently exceeded the allowable FRL during the study period, with compliance improving only in 2020 due to extended filing deadlines. Category 3 organisations generally demonstrated better timeliness, except in 2019, when COVID-19 disruptions led to significant delays. Compared with Belgium and the UK, where late filings range between 5% and 24%, Malta’s compliance levels were notably lower, reflecting structural and regulatory challenges. The analysis identified “Year” as the most influential variable, capturing pandemic-related effects, policy changes, and learning curve dynamics. Profitability and equity were also strong predictors, while reliance on donations or grants and liquidity had a moderate impact on the results. The organisation’s category and gearing exerted minimal influence on the model’s predictions. The study provides evidence-based insights to guide regulatory and policy reforms in Malta’s voluntary sector, particularly in light of the recent INPAS, the International Non-Profit Accounting Standard, and ongoing reforms. By integrating neural networks into the analysis of financial reporting timeliness, the research enhances our understanding of the complex factors that shape reporting behaviour. It contributes to strengthening transparency and accountability in Malta’s voluntary sector.

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