AS THE statutory body responsible for the regulation of the country’s accountancy and auditing profession, the Malaysian Institute of Accountants (MIA) would like to express deep concern over Datuk Shireen Muhiudeen’s article titled, “Who audits the auditors?”(StarBizWeek, April 20, 2013).
The article has questions and commentaries that we feel need to be clarified in the public interest.
In it, Shireen highlights, among others, that auditors of a company have committed errors in the disclosures in a company’s audited financial statements. We have written to the writer to seek information on the company and their auditors to enable us to investigate this matter.
The MIA has always cooperated with other relevant regulatory bodies such as the Audit Oversight Board, Bursa Malaysia, the Securities Commission, Bank Negara and the Companies Commission of Malaysia to ensure that the integrity and professionalism of the accountancy profession is upheld.
In any circumstances where the public has knowledge of any form of misconduct or misdemeanour of any member of the accountancy profession – in this case, it would be the auditors of this company – it is highly advisable and prudent for the public to come forward and lodge a complaint with the MIA, to enable appropriate action to safeguard public interest.
The points raised in the article also seem to blur the distinction between the roles and responsibilities of the preparers of financial statements and those of the auditors.
The Companies Act 1965 clearly provides that the directors are responsible for the preparation and fair presentation of the financial statements, while the duty of the auditors is to form opinions on the financial statements.
The financial statements are performed by the company’s finance function, which should be staffed by professionally qualified accountants well-versed in current accounting standards and the operations of the company. In our view, they should not be merely “book-keepers” and should play an important role in the company’s governance.
The auditors’ responsibility is to express an opinion on the financial statements. They conduct an audit on the financial statements to obtain reasonable assurance as to whether the financial statements as a whole are free from material misstatement.
Accordingly, they express an opinion on whether the financial statements are prepared, in all material respects, in accordance with the applicable financial reporting framework.
It is also important to note that the auditors are not supposed to be involved in the preparation of financial statements, which would otherwise affect their independence (as provided for in MIA’s by-laws).
We wish to emphasise that the integrity of financial statements and the efficacy of financial reporting are dependent on effective board of directors, senior management, internal auditors and external auditors who are fully cognisant of their respective roles and responsibilities within Malaysia’s legislative and corporate governance framework.
The MIA, as the regulator of the accountancy profession, will do our part in ensuring that the integrity of the financial reporting will not be compromised.
Malaysian Institute of Accountants