A Conversation With MyPAC Students And Alumni

The Malaysian Professional Accountancy Centre (MyPAC) was established to encourage and facilitate students, especially Bumiputera, to pursue professional accountancy qualification. While we have more than thirty thousand accountants registered with the Malaysian Institute of Accountants, the number of Bumiputera accountants in Malaysia is only around 2 two thousand only.

I was a director of MyPAC together with a number of senior partners of the Big-4 before I resigned due to work commitment. The whole idea of MyPAc is to enable students to be globally competitive and attain knowledge, skills and values through passing professional examinations of accountancy body of their choice. MyPAC supports professional programmes of ACCA, MICPA, CAANZ and CPA Australia, amongst others.

Yesterday, I was invited to share my views and thoughts on professional accountancy and governance by a group of MyPAC students and alumni. I originally planned to participate from my orchard in Batang Kali. However, due to movement restriction, I joined the virtual meeting from my home.

I shared my journey in becoming a professional accountant through CPA Australia. After graduating in 1986, I worked in accounting firms in Australia and Malaysia before opening my own accounting practice in mid-90's. The firm was then merged with few like minded friends to establish Khairuddin, Hasyudeen & Razi (KHR) which remains as one of a medium-sized accountancy practice until today. I left the firm in 2005 to establish a strategic advisory company before joining the Securities Commission as a founding Executive Chairman of the Audit Oversight Board.

Governance is a very important part of any company or institution. It is supposed to ensure the company or institution to be governed and managed towards its objectives such have having strategy which was properly crafted and effectively executed. Management is responsible to ensure all aspects of business and operation are in line with the strategy and attain the intended outcomes. Hence, governance is about doing the right thing the right way.

Accountants can be involved in strengthening governance is a number of ways. They can be in the board, lead management or in charge of roles and functions which contribute towards good governance and organisational effectiveness. I was the Chairman of Cagamas Holdings Berhad, the holding company of our national mortgage corporation. As mentioned before, I was in the leadership of the Securities Commission which is tasked to ensure the fairness and orderliness of our capital market. I was also a member of the Operational Review Panel of the Malaysian Anti-Corruption Commission. So I encourage all the young accountants and students to be a significant part of ensuring good governance in Malaysia.

Integrity is also one of the professional values of the accountancy profession. Based on this, professional accountants should a natural partner of any effort to enhance governance. However, one has to ensure that he or she is excellent at the workplace and never compromise on any conduct or behaviour which will taint governance or even breaking the law. With excellence track record as a professional and known for integrity and upholding professional values, one should be able to walk away if pressured to do the wrong thing and secure better position elsewhere. Excellence is important in upholding values and principles.

I was asked many questions including dealing with pressure from outside. My view is simple, just focus on doing the right thing for the organisation and stakeholders. If the organisation is not performing, it would be very difficult to influence others. So, we need to ensure we get the right outcomes for the organisation as part of the ways to deal with various ideas and views from outside which are hard to control. Focus on what we can control.

More than 800 professional accountants had been born from the work of MyPAC. They have more than 200 students at various stages of professional programmes for a number of professional accountancy bodies. Even if MyPAC produces 1,000 Bumiputera accountants, they are already successful in doubling up the number.

The journey is ongoing and there are huge potentials for MyPAC to be an active player in nation building. MyPAC will always have my endorsement and support, InsyaAllah.

Recognised By My Alma Mater

I enrolled into the Bachelor of Business (Accounting) degree programme from the Western Australian Institute of Technology (WAIT) in 1984. When I graduated in 1986 the institution was re-named as Curtin University of Technology. Presently, it is known as just Curtin University.

When I completed the Sijil Pengajian Malaysia examination in December 1982, I was told to prepare myself for a placement for the matriculation programme in Australia. I was then offered to go to Kelvin Groove Evening Class in Brisbane. At that time my auntie was studying in WAIT for her accounting degree. I was told by her father that the accounting programme is one of the most practical in Australia.

That started a last minute effort to transfer me from Brisbane to Perth. I was told that I was accepted by Canning College at Bently which was neighbouring WAIT. However, as my ticket was already issued by MARA, I had to pay for the ticket from Sydney to Perth. The Malaysian Consul from Perth, Hussein Ahmad, flew to Sydney to accompany me to Perth.

There were around 40 Malaysian students studying at Canning College. During Fridays we would be performing our Jumaat prayers at WAIT as there were quite a number of Muslim students, predominantly from Malaysia. Hence, I was acquainted very early with WAIT, the institution which I was aiming for to obtain my accounting degree.

We had to sit for the Western Australian Tertiary Examination to be eligible to continue our education at the tertiary level. Before our results we released, we applied to various universities in Western Australia and Eastern states to ensure we secure our preferred programmes. I did not even apply for the accounting programme at prestigious University of Western Australia as I was so convinced about WAIT.

When my results were out, I got a number of offers including from WAIT, the University of New South Wales and Monarch University. However, as I was determined to do the accounting programme at WAIT, WAIT was my choice.

I never regretted that choice as I was introduced to accountancy in a very pragmatic manner. During the first year, we were introduced to the practical part of accounting including preparing various financial reports. As we progressed to the second and third year, we were then introduced to the theoretical part of accounting. Perhaps during that stage we were matured enough to digest the concepts and principles which remain relevant until today.

There were around 10 Malaysian-sponsored students in my batch which did the same course. Only two of us, me and another colleague sponsored by TNB who managed to pass in 3 years. I was so thankful to Allah for his blessings.

Since I left Curtin in 1986, I have not been back to Perth and did not contact the university at all. When I was the Executive Chairman of the Audit Oversight Board, a representative from the university came to see me and we discussed possible ways for me to be involved with its alumni activities. Last year my name was shortlisted to be the Malaysian Alumni of the year. 

Last week Curtin University published an article about my responsibilities at Tabung Haji. It was a well researched article about the role of the Pilgrim Fund in assisting Malaysian Muslims to fulfil their Firth Pillar of Islam, the Hajj. I shared how the education which I had at Curtin and my stay in Western Australia assisted me in building my character and career. I hope the article will inspire many more Malaysians to find their sweat spot in contributing towards nation building.

The article can be downloaded here.

Disrupting A Profession

Where on earth could be a better place to learn about disruption other than Bali? The so called "Island of Gods" provided the right setting about the future which is highly volatile and exciting, full of the unknown unknowns. I was there to attend the IAI-AFA-IAESB International Conference 2019 with the theme "Professionalism of Accountants in the Disruption Era".

The conference was held in conjunction with the meeting of the International Accountants Education Standards Board's (IEASB) meeting held at this famous tourist destination.

It was also a reunion of sort as I managed to meet colleagues and friends from the accountancy profession who were together with me in the leadership of regional accountancy bodies. The guest of honour was Dr In-Ki Joo, the President of the International Federation of Accountants. In-Ki was together with me when we served the Executive Committee of the Confederation of Asia-Pacific Accountants (CAPA). My Indonesian best friends, Pak Ahmadi Hadibroto and Pak Djoko Susanto, were there as well. They were my "partner in crime" when we led the Asean Federation of Accountants.

While we are fully aware of the rapid changes in the ways we live and work, particularly driven by technology and globalisation, the focus of the conference was how accounting education should evolve in meeting the demands arising from these changes. When industries are disrupted, accountants who are serving employers and clients within those industries must be able to create value using new competencies which are relevant, especially in using volumes of data and information which are captured through various means. 

I was impressed with the thoughts of Prof. Ainun Naim who was representing the Minister of Research, Technology and Higher Education of Indonesia. In facing the 4th industrial revolution, competitive graduates should be literate in data, technology and humanity instead of the old literation of reading, writing and arithmetics. Universities should develop the cognitive capacity of students such as critical and systematic thinking skills, nurture cultural agility and enhance their entrepreneurship abilities. Indonesia will liberalise their eduction systems and allow education institutions do deliver education through various means including social media.

The other key focus area was professional scepticism and judgment of accountants which are widely discussed and challenged worldwide. This is also my favourite topic as I was closely involved in dealings with auditors' judgments when I was the Executive Chairman of the Audit Oversight Board. While the panellists shared the latest updates of the area, I sensed some reluctance in acknowledging that profits as one key drivers which caused professionals not to ask pertinent questions when performing their work. I suppose the debate will continue especially with some latest developments in the United Kingdom in reforming the auditing industry.

The topic of education reform and nurturing new key competencies were discussed in great details by experts from IAESB committee members and industry players. Telekom Indonesia is really serious in embarking on projects which not only change the ways their employees work but maximising their new competencies which are blended with technology in creating value for its customers.

What was clear to me is the importance of lifelong learning. While accountants may complain about their Continuing Professional Education requirements, that is the only way for them to acquire new skills and competencies which are critical in a highly disruptive business environment. At the same time, the time tested professional values such as integrity and courage to do the right thing will remain relevant for accountants to be respected as trusted professionals.

Ibu Elly, the Executive Director of Ikatan Akuntan Indonesia (IAI), and her team from IAI were really great hosts, not only in ensuring the conference went smoothly but also in providing us with their Indonesian hospitality. As usual, food was great!

Proposed MIA Competency Framework: Why industry should care

The Malaysian Institute of Accountants (MIA) this month had issued a draft competency framework for public exposure and comments. Based on my recollection, this is the first time MIA attempts to develop a formal and structured competency framework to ensure accountants who are registered with MIA are able to perform and deliver professional services to their employers and clients.

In coming up with the proposed competency framework, MIA took into considerations the recommendations of the Committee to Strengthen the Accountancy Profession (CSAP) and the Report on Observation of Standards and Codes for Accounting and Audit which was conducted by the World Bank in 2012. It engaged the Accounting & Audit Research Consultants to draft the framework (MIA CFM).

According to MIA "The MIA CFM is a set of principles that defines the baseline competencies and skill sets required to become accountancy professionals who are able to demonstrate their proficiency at different levels namely “Foundation”, “Intermediate, and “Advanced” as defined by the framework issued by the International Accounting Education Standards Board (“IAESB”). The development of MIA CFM helps to assure the market that the title refers to accountancy professionals who have demonstrated the achievements of the baseline competencies required to excel in a specific role".

When MIA was established in 1967, it was empowered by the Accountant Act, 1967 to register accountants in Malaysia and to conduct examinations to assess their level of competencies. However, the examination power was never exercised, instead MIA recognised those who are members of professional accountancy bodies to be registered with MIA as Registered Accountants and Public Accountants. In early 70's, graduates from recognised institutions of higher learning started to be recognised for registration as well. The reasons for the inclusion of these graduates were never properly documented and remains as a contentious issue until today as this is not practiced in economies where the accountancy profession is considered matured.

What makes this issue worse is when most of the graduates of the recognised university qualifications are given partial exemptions by various professional accountancy bodies, sending a signal to the market that they are not equal. These graduates would need to sit for additional professional papers before given full membership.

In 2000, the Accountant Act was amended to abolish the examination power of MIA and those registered with MIA are known as Chartered Accountants. This created a perception which is different from the original intention of the law. Other than MIA, I am not aware of any other bodies which refers to their registrants as Chartered Accountants, without a proper professional assessment.

While the exposure draft on MIA CFM focuses on the competencies of the three levels of membership as proposed, we as the stakeholders in the industry, should also consider the whole membership framework to ensure it is robust enough to produce accountants as envisaged in the MIA CFM.

Malaysia had been benefiting from the services of accountants trained by various professional accountancy bodies from Commonwealth countries which are recognised here. These bodies do not only train our accountants to achieve their baseline competencies but those competencies were regularly reviewed to ensure they meet the demands in the various markets they serve. This is very important as not only we get our accountants to be close to the curve but their perspectives and specialisations provided huge value to our companies and institutions which need to compete with global peers and competitors. It would be unfortunate if this arrangement is made more difficult due to pressure from interested groups within the accountancy profession.

I really hope that market participants and industry players would take this opportunity to provide feedbacks and expectations for MIA to seriously consider. It is important to note that the reason MIA exists is to be the guardian of professional standards through registration. This is a statutory requirement which requires MIA to place public interests ahead of any sectoral interests within the accountancy profession. MIA should not abdicate this responsibility.

The exposure period ends 10 May 2019.

Responding to Disruption in Banking, Finance and Accounting

I was invited to a forum at the Asia Pacific University of Technology and Innovation in Bukit Jalil last week. The forum was held in conjunction with their Open Day where prospective students and their parents were invited to participate in the discussion.

The topic was about Disruption in Banking, Finance and Accounting and apart from myself, other panellists were banker, auditor and company secretary. I was supposed to share my experience as an accountant who are now involved in the financial services industry.

I started by sharing where things were when I was studying as an accounting student in Perth, Australia. I was using Multiplan for worksheet and Words for word processing when the present popular solutions were not there yet. When I worked in a Charted Accountants firm in Perth, I was asked to work out a cash flow projection for a client for the purpose of a loan application. We used broad paper sheets for that work. I asked by boss why don't we use electronic spread sheet? He agreed and I used the knowledge from university to complete the work. After that, all similar work ended up on my desk! That was a small innovation, so to speak.

Fast forward, I am now the Chairman of BIMB Investment Berhad where one of our funds uses artificial intelligence and Big-data to make investment decisions. The assets of the fund are re-balanced on a daily basis, without any human intervention. It reads 50,000 news sites in 15 languages to find news on the counters we track and would decide to buy or sell based on their Environmental, Social and Governance practices. BIMB Investment had just collaborated with CIMB to promote further the fund which is one of the largest Shariah-compliant ESG fund in the world.

I also shared my observation as a director of Bank Islam where we are preparing ourselves to compete with various fund-raising platforms enabled via technology and liberalisation of rules. While financial services companies are using technology to make their businesses more effective, technology companies are also coming into the industry and offer financial services. Which one would survive?

My advice to the audience was to continuously upscale ourselves with knowledge and skills which are required and relevant to the disruptive environment. No two-way about it. Otherwise, we would be irrelevant to the fast moving financial industry. I shared the recent request for proposal exercise by one of the companies which I am on the board. All audit firms which participated proposed auditing approaches which leverage on data analytics. Even a slow moving profession in terms of innovation is forced to innovate.

On the other hand, integrity and professional values would remain core to the accounting profession. One must be willing to do the right thing at the expense of losing a good position. That is what professionalism is all about. We mus walk the talk.

Goodbye Goh Joon Hai, a True Friend in the Accountancy Profession

As I was preparing to wrap another year, I received a message from a friend about the passing on of Goh Joon Hai, a senior accountant who I have a lot of respect. Although I had not been hearing from him for a long time, he was instrumental in providing me with the insights and guidance in discharging my responsibilities in the leadership of the Malaysian Institute of Accountants (MIA).

When I was voted into the MIA Council in 2000, I was assigned the responsibility to chair the Public Practice Committee (PPC), a committee which was tasked to look into matters related to public accounting practitioners in Malaysia. As a young rookie, it was certainly a heavy task. Furthermore, some of the heavyweights from the previous committees were still there, including Goh Joon Hai.

While I was adapting to the dynamics of the committee, Goh Joon Hai provided me with counsel and explanations about the histories or principles behind the many policies and practices of MIA with respect to public practitioners. Sometimes, he would be disagreeing with my views, albeit in very professional and fatherly ways. That sort of interactions hastened my progress in chairing this committee, which had the reputation of being the toughest in MIA.

As the chairman of the PPC, I was also involved in trade negotiations which were ongoing at many levels those days. These negotiations were very important to accounting practitioners in Malaysia as they involved market openings and recognition of qualifications for market access in various markets of the trading partners of Malaysia.

Goh Joon Hai helped me to understand the mechanics of trade negotiations and the various commitments made by Malaysia at the World Trade Organisation, Asean and a number of bilateral and multilateral negotiations which we were involved in. We travelled together to attend meetings of regional and global accounting bodies. During the free time at those meetings we became closer and I learned a lot from his past experiences which he shared.

No many people realise that Goh Joon Hai was among the first set of lectures in University of Malaya who taught the pioneer students in the Advance Diploma in Accounting programme which later allowed them to be members of the MIA. Goh Joon Hai was sent to Canada to understand the concept of the professional programme offered by the Canadian Institute of Chartered Accountants, a body which he is a member of. This is a significant milestone in the history of the development of the accountancy profession in Malaysia.

While we celebrate the progress of the accountancy profession in Malaysia as it is today, we should not forget the contributions of those many accountants in building the profession over the years. Goh Joon Hai is certainly one of those who had given his best contribution and for that we thank him from the bottom of our hearts.

As far as I am concern, Goh Joon Hai was one of the accountants who held tight to his professional values and personal principles. We wouldn't mind to lose out to maintain what he believed.

Goodbye Mr. Goh. I will always remember you as one of the friends who helped me to be who I am today.

Pengiran Mokhsein, A Friendly and Professional Accountant

Last week I received a sad news of the passing away of Pengiran Mokhsein, the President of the Brunei Institute of Certified Public Accountants (BICPA), a friend and a professional colleague.

We know each other due to our involvement in the Asean Federation of Accountants (AFA) where we were council members. At one stage, Pengiran was the President of AFA while I was his deputy. Another Bruneian, Hajjah Ning was the Secretary General.

Myself, Pengiran Mokhsein and Hajjah Ning at AFA Council meeting in Manila

Although the membership of BICPA is small, Pengiran Mokhsein managed to make their contributions felt at AFA. He was a nice and friendly but would express his views without hesitant. He was willing to listen to opposite views and would make decisions professionally.

When I left the accountancy fraternity to be a regulator, our contact was reduced. However, we would normally try to meet each other when he was in Kuala Lumpur attending meetings or conference.

Few years ago I was told that he had cancer and went for surgery. It was very devastating for me to hear the news. When he recovered, he resumed his activities as a council member of AFA. I could recall that I met him 3 times, twice in Kuala Lumpur and one in Bangkok, for the last time. He was in high spirit and looking forward to a full recovery.

Apparently, his cancer relapsed late last year and Pengiran had to stay at home beginning of this year.

With Pengiran Mokhsein and Priya Terumalay (General Manager of CPA Australia) in Bangkok at a conference on small and medium sized accounting firms

A number of years earlier, Hajjah Ning also succumbed to cancer when she was holding the post of the Secretary General of the Ministry of Finance. A Bruneian delegation was in Kuala Lumpur and I was expecting to see her after so many years. Instead, I was told that she had passed away few months earlier.

With the passing of both Hajjah Ning and Pengiran, the Bruneian accounting profession had lost two towering figures who had contributed a lot to the profession. It would not be easy for the two of them to be replaced. This also means that I had lost two great friends and colleagues whom I had worked together in promoting the interests of accountants in Asean.

I pray to Allah that both of them would be accorded His forgiveness and be showered with blessings.

IAI Is 60!

Ikatan Akuntan Indonesia (IAI) is the national accountancy body of Indonesia. I was first introduced to IAI when I was the representative of the Malaysian Institute of Accountants (MIA) to the Asean Federation of Accountants (AFA) in 2000. Three personalities whom I could recall representing IAI were Pak Ahmadi Hadibroto, Pak Djoko Susanto and Pak Hanief Arie.

Since them my relationship with the office bearers and executives of IAI became close. We shared a lot of common positions at the regional level including in trade negotiations under the purview of the Asean Framework Agreement in Services (AFAS).

The peak of the relationship was the signing of the Mutual Recognition Agreement between MIA and IAI signed in 2006 where auditors from both institutions are recognised for the purpose of membership provided they fulfil certain requirements. This was the first agreement of its kind amongst accountancy bodies in Asean.

I was invited by IAI to join their 60th anniversary celebration in Semarang, Central Java  last week. I was very meaningful for me as I observed for myself how my accountant friends in Indonesia are recognised as a key pillar in the success of Indonesia. The theme "kejayaan akuntan profesional, kejayaan negeri" or "the success of professional accountants are the nation's success" captures the role of accountants in Indonesia in value creation, strengthening governance and providing career opportunities for Indonesians to develop a successful professional career.

Jusuf Kalla, Indonesian Vice-President, giving his keynote address at the opening ceremony of the IAI 60th Anniversary Conference

A conference was held in conjunction with the anniversary celebration and it could be easily observed how much the profession is recognised by the nation's leaders and the society at large. The conference was officiated by the Vice-President, Jusuf Kalla representing the President who was attending the OIC emergency conference in Turkey. Indonesia Finance Minister Sri Mulyani presented about the state of the Indonesian economy. There were another 5 ministers and 2 deputy ministers who were panellists at the conference covering topics ranging from the contribution of the accountancy profession to the nation to future of government accounting in strengthening public accountability.

A gala dinner was organised by the IAI to commemorate the event including a cultural performance. What was interesting regarding the performance was the participation of a number dignitaries including the Governor of Central Java, the Deputy Finance Minister and a Commissioner of the Financial Services Authority as the casts.

A cultural performance casted by high-powered Indonesians including the Governor of Central Java and the Deputy Finance Minister

I was also invited to be a panellist on the session on The relevance of Small and Medium Sized Practices (SMP) for Accountability in the New Economic Era. Together with me on the panel was Pak Langgeng Subur, the Head of the Center for Supervision of Financial Services Professional and Pak Suhartono, the representative from the Indonesian Certified Public Accountants.

I urged SMP to be meaningful and significant to their clients. This could be achieved by providing services which could help their clients to be better business in addition to the traditional services such as accounting, audit and taxation. I shared the outcome of a servey done by Inovastra which confirmed that small and medium sized enterprises need assistance in the areas of strategy, marketing, talent management, operations, financial management and compliance.

SMPs must be Significant and Meaningful to their clients

It was really an honour for me to be invited and I would like to thank IAI's Executive Director, Elly Zarni Husin for inviting me and would like to congratulate her and her team for a very successful organisation of the anniversary celebration.

Reporting Excellence Means Effective Organisations?

I always believe that when you are new at something, you are entitled to ask the most basic questions. That was exactly what I did when I was the MIA President. I asked about the value of excellence awards such as the National Annual Corporate Report Awards (NACRA) and the National Awards for Management Accounting (NAFMA) where MIA was co-organisers for both.

As for NACRA, listed companies are not required to apply. All their annual reports would be screened by dedicated accountants until winners are determined. Not a bad deal for those companies, the accountancy profession takes all the trouble. Only when they are shortlisted, they have to pay for attending a dinner where the winners would be announced.

NAFMA, then, differed slightly where companies are required to apply and disclose their management accounting practices. The panel of judges would visit them to verify and understand more their practices. One organisation kept on winning for the first few years until they were gently encouraged to give way for others.

Of course I got strong responses from the other partners which were very clear of their positions in defending those awards. Among the arguments were the awards encourage companies to be more transparent in corporate reporting and would continue to enhance their management reporting practices because of the awards.

I am not denying that these kind of awards could generate benefits. There could be real progress where the winners become better companies. However, does this rule apply to all companies? How many award winners had troubles later and are no longer listed? Someone should look into this aspect.

So, does reporting excellence correlate to organisational effectiveness? I am not yet convinced. My scepticism applies to even organisations which managed to implement integrated reporting. 

If organisations have specific mandates and key information about the mandate are missing, what is the point of telling lengthy stories about "value creation" when certain fundamental information are not there? With the present printing capabilities, readers might be fascinated with beautiful graphics and could miss the "missing links or points".

Doing the same thing over and over again without challenging their meanings and ascertaining outcomes is not my cup of tea. Isn't this the cause of why many great companies failed? They got very nervous when their flagship products were criticised. Until the market really shifted and competitors have secured huge chunks of their markets with superior products or solutions, then only the reacted, albeit too late.

Well, I am still wondering about the nexus between excellence in reporting and organisational effectiveness. I could be alone. What the heck!

A New Accountant in the Family

I have been advocating professional accountancy as a career of choice for many years. Benefiting from the qualification myself, I thought it is appropriate for me to spread the virtues to other aspiring accountants.

While I never tell my children what should be their career paths, three of them decided to take up accountancy from our local universities. Two graduated from the Internal Islamic University and one from University ITM. Fortunately, all of them started their career in accounting firms, where the real actions are and where high-end accounting concepts and knowledge are applied on daily basis.

My eldest decided to pursue one of the professional accountancy qualifications from the UK. He did that while he was with one of the Big-4. However, his interest in Triathlon distracted his focus. He eventually started his own cake company with his wife and their business is growing steadily. What could I say?

It was my second daughter who managed to complete her Malaysian-Australian professional accountancy programme. I suppose the support she had from her firm, another Big-4, and the exposure she gained from her work helped her to succeed. So, last week, me and my wife attended the event where she was awarded her certificate of completion. She needs to work for another few months to clock the necessary hours before she could join the Malaysian Institute of Certified Public Accountants and possibly the Chartered Accountants in Australia and New Zealand. Finally, I am not the only qualified accountant in the house.

My second son joined the accounting firm that I established, Khairuddin Hasyudeen & Razi (KHR). Although it is not that large, the firm has a policy of encouraging and sponsoring its staff to become professional accountants. So far, more than 30 young Malaysians had passed or are in the process of qualifying. While many other firms fear that by having professional accountancy qualifications the market value of their staff would be enhanced and they might move on for better opportunities, KHR believes that if such event happens, those well trained accountants would be its ambassadors and would shape a good perception of the KHR brand. Many had actually left, including going overseas but KHR remained as a growing business. Hence, my son is sponsored to pursue CPA Australia, the same qualification with his father.

I am amazed with some Malaysians who are seeing professional accountancy as a mean colonisation especially when smart Malaysians obtained well-recognised accountancy qualifications from the UK or Australia. If they care to study the history of our nationhood, many overseas-qualified accountants contributed to the progress of Malaysia. Tan Sri Hanafiah Hussin, Tan Sri Azman Hashim and Tan Sri Abdul Samad Alias are amongst the living examples who we can still meet and ask them questions.

In fact, the Malaysian Association of Certified Public Accountants (MACPA) was established in 1958, a year after we achieved our independence. Unfortunately the nay sayers somehow do not recognise MICPA (its present name) as a Malaysian body!

In 2000, the Malaysian Institute of Accountants (MIA) changed the title of accountants registered with it from Registered Accountant or Public Accountant to Chartered Accountants. This has mislead many accountants! While many of MIA members had set for the many professional accountancy exam available like MICPA or ACCA, there is a group who had never taken any professional accountancy examination in their life. Hence, the registration title should be reviewed.

Employers in Malaysia are smart. They are able to differentiate the "Chartered Accountants" of MIA with others. So, while some MIA members could be smiling with their title, many employers ask these "Chartered Accountants", which examination did you pass? How to answer?

Again, I am stressing that I have benefited from being a professional accountant and I am mindful of the potentials brought by these qualifications. While I recognise that not all accountancy graduates would like to pursue this path, those who have the opportunities should not forego them simply because they are tough. Let me ask you this question, apart from being a Chartered Accountants of MIA, what else is easy in life?

I would like to thank my daughter's lectures, employer and friends for your contribution in her achievements. I wish every family in Malaysia to have an accountant in the house, a professionally qualified one.

Does Leadership Define The Accountancy Profession?

How do you assess the values of a group of people? Especially those professing that they would be protecting public interests?

It is not an easy question to answer unless there are some sort of observable behaviours and standards which we can compare with.

One natural occurrence when people with some common interests gather as a group is for them to select or elect leaders to represent them. In formal arrangements such as clubs or associations, it would be customary, and in many cases legally required, for the leadership of the groups to be elected.

I would certainly view that whoever that is voted in as Presidents or any other similar positions to reflect the hearts and minds of the people who supported those leaders. In a situation where there are a number of groups with different world views and interests, the majority of them would prevail. So, the leadership would reflect the majority of people in such groups.

Like it or not, the standards expected from professionals such as the accountancy profession would be higher than for others, the man on the street. The accountancy profession professes to protect public interests through ensuring their members are competent and uphold the values of the profession. Integrity stands as the key ideals of the profession, above other principles such as objectivity, confidentiality and due care.

In fact, just recently, the accountancy profession adopted a new code of conduct which relates to actions to take in public interest when accountants are aware of potential illegal acts, non-compliance with laws and regulations committed by clients or employers.

Among other matters, the new standard, which becomes effective on 15 July 2017, provides a clear pathway for auditors and other professional accountants to disclose potential non-compliance situations to appropriate public authorities in certain situations without being constrained by the ethical duty of confidentiality. It also places renewed emphasis on the role of senior-level accountants in business in promoting a culture of compliance with laws and regulations and prevention of non-compliance within their organisations.

So, if that is the standard which they agree to live by, anyone elected to the leadership of the profession should also live and breath compliance culture and detest any breach of the law or regulation. It would much more better if the person had demonstrated such qualities in his or professional career.

In situations where any appointed leader does not carry the values promoted by the profession, doubt would be casted on the profession as a whole. Didn't the professionals exercised their membership rights without due consideration to their own professional values?

I suppose it if fair to judge a profession based on the standards which they impose on themselves. In the case of the accountancy profession, the approach has always been from the perspective of a third party who has reasonable information and understanding of the situation. Unfortunately, this high bar has been set as the "smell test" for accountants. They have to keep on training to jump higher that the bar. Otherwise, the whole profession could be tainted and perceived as abandoning their own professional standards, smelly.

Go Beyond the Rainbow, Forget Small Company Audit

In conjunction with its 50th anniversary, the Malaysian Institute of Accountants (MIA) held its 2nd commemorative lecture last week. It was given by Tan Sri Azman Mokhtar, the Managing Director of Khazanah Nasional Berhad, a social wealth fund set up by the Malaysian government (Khazanah does not like to be referred to as a sovereign wealth fund as it does not manage the reserve of the country).

True to his form, Tan Sri Azman challenged accountants in Malaysia to ride the various waves of change which the country as a whole has to face. Using football as an analogy, accountants have various roles to play, from its traditional roles as custodians, standard bearers and measurers to more strategic roles as cheerleaders and thought leaders.

He urged accountants to join his journey in valuing companies based on their true values, beyond the fair value model which is predicated on the potential cash flow streams over the live of those companies. This would require more philosophical and conceptual understanding of value which would not be easy to figure out. In this respect, Khazanah has embarked on Project Chronos with PricewaterhouseCoopers and has started to field test its valuation model. Views from accountants would be sought to validate and improvise the model when it goes into the Beta stage.

In reinforcing his message about true value, Azman used the metaphor of a rainbow. True value is like the golden chest, believed to be there, beyond the rainbow. Hence, accountants have to do the necessary to be able to go beyond the rainbow and secure the golden chest.

Possible?

Let's go down to earth and consider the reality of the day. If asked, what is the main issue before MIA today? Without doubt, I would say, "Small company audit!".

Why such a small matter is hindering Malaysian accountants to go beyond the rainbow? I have a number of reasons as listed below:

• MIA is a statutory body set up to regulate the accountancy profession in Malaysia. Its present mission is to be a "partner in nation building". While it is not expected to agree will all the initiatives of the government, it should consider all issues from the perspective of the benefits to the nation, not with the view of protecting a particular segment of the accountancy profession.

• The issue of exempting small companies from audit had been on the table even when I was involved with MIA, easily for the past 15 years. It is not a pioneering piece by the Companies Commission. This is a standard practice in many countries, developed or developing. What matters to the economy is for small companies to be successful in their businesses until they reach certain scale where their financial statements start to be significant. The audit requirement is to protect investors, not to provide business for accountants. If you do not believe me, just read the limited clauses on the audit report, something introduced by MIA. It sounds like this "this report is made solely to the members of the Company, as a body, in accordance with the Companies Act in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report".

• The world keeps on changing and by not letting this issue go, it is starting to hinder MIA from becoming current with the more pressing challenges. Even the law itself has changed and the Companies Act now even allows for a single shareholder, single director company. I would certainly laugh if audit is made mandatory for such companies. Do I have to get may financial statements audited so that they would be tabled to myself? The argument that audit is also for other purposes such as taxation would not hold water due to the limitation described above. At the same time Inland Revenue has its own audit unit and many companies have been subjected to such audit.

• This does not mean that small companies need not be audited at all but it should be a choice, either because entrepreneurs love audit or they need to submit audited financial statements for their business dealings. That would make small company audit market-driven, rather than regulatory driven. What is wrong with that?

While the issue of small company audit looks "small", it reflects the constraint imposed on MIA by its own membership. That makes MIA unique. The law forces accountants in Malaysia to join MIA as a member but MIA itself cannot force its regulatory responsibilities on those members. Just look at the practice review structure of MIA. Is it as independent as the Audit Oversight Board? Who do the reviewers reporting to? 

The country really need a strong accountancy profession with members who are keeping themselves abreast with new developments and provide their services, as firms or individuals, professionally by adhering to the professional values of the profession. This requires MIA to be clear of its role, structure themselves appropriately to avoid conflicts, set performance standards with the interests of the nation in mind and enforce those standards without fear or favour. 

We need MIA members to be able to reach beyond the rainbow. However, for that to happen, they need to free themselves from the baggages of self-interests. They need to place the interest of the nation above all other interests and do whatever it takes to make Malaysia great!

Our Accountancy Profession Has A Bright Future

Tan Sri Samad Alias is a 74 year old accountant. What has he got to do with a  symposium for young accountants? Well, when he was asked about the impact of blockchain technology, his answer was very convincing. His role in the conference was to share with the audience what does it take to be a great accountant. He did that very well. His life story was a compelling example of how far trust and integrity would help professionals in building their career.

Tan Sri Samad sharing his views and experience

The Young Accountants Symposium was organised by the Malaysian Institute of Accountants (MIA) for the first time. Most of the participants were below 40 years old and came from many economic sectors. The idea of having this symposium is to provide them with the exposure of what's coming and how they could seek opportunities while managing any risk to their career paths. Dato Yusli Mohamed Yusof, the President of the Malaysian Institute of Corporate Governance gave his keynote address while Dato Zaiton, the MIA Vice-President, welcomed the participants. Both of them also touched on integrity and upholding professional values in their speeches.

The opening gambit

I was on the first panel where we discussed digital economy. Well, I was the oldest. However, I shared with the audience my experience which required regulators to leverage on technology and why accountants, me included, had to step up and be comfortable in dealing with changes and complexities. At the same time, my message for young accountants was for them to uphold professional values at all cost, while acquiring knowledge and skills which are required by their work places and industries to ensure they remain relevant.

Sharing my ideas. Look how old I was compared with the rest of the panellist.

The questions that were asked by the young accountants showed how mature they were. While some were concerned in dealing with change, especially with the advancement in technology, all questions were relevant and required the panellists to dive into their knowledge banks and experience for answers. They were active participants in discussing present and future challenges of the accountancy profession.

I was seated with Tan Sri Samad during lunch and we were accompanied by many young accountants. We discussed many interesting topics including fundraising in the future, regulatory frameworks, industry disruption and its impact on society as well as corporate social responsibility and sustainability. Tan Sri Samad told me that the issues covered were very different from those discussed over lunch in other MIA events where senior accountants would be raising old issue such as audit exemption, as if there were no other pressing challenges to the profession. 

The depth of our discussion and the familiarity of those around the table with what were discussed really convinced both of us about how much potentials are there in those young accountants. We suggested more informal activities to be organised so that more knowledge and experience could be transferred and shared, with one caveat. Please do not invite senior accountants who are not keen to re-invent themselves in the ever changing environment.

I suppose if these young accountants are able to decide for themselves how the profession should evolve with time, they would be able to drive the accountancy profession to greater heights, beyond the imagination of their senior counterparts who are happy burying their heads in their imaginary sand. This is where any regulatory reform around MIA should consider having more young accountants to be in the driving seat, with minimum oversight from the seniors. Possible? Nothing is impossible, as what they were told in the symposium.

True and Fair: A View From the Boardroom #2

Accountability and Reporting

When a company is incorporated, there are at least three parties involved. The shareholders who invest their monies and assets into the company, directors who are elected as stewards of the company and management who are appointed by the directors to run the company's day to day business in achieving the objectives set by directors.

Shareholders can only exercise their power at the general meeting of the company. While the article of association may reserve some power to them especially in approving transactions involving substantial assets, most of the power of the company are vested with the directors. While  directors could delegate some of these power further to management, in most cases they are ultimately responsible for the conduct and affairs of the company. 

Public companies raise funds from the public to finance their business and growth. They issue prospectuses to convince future investors about their prospects. Most of the investors who are investing in public companies are pure investors and have no ability to influence and know its activities unless information is provided by the companies. Hence, it is a fair expectation that they provides their investors with true and fair financial statements to enable their performance to be judged and financial positions assessed.

The principle is crystallised in the Companies Act, the Capital Market Services Act and the Financial Services Act, amongst others. Not only these laws require the tabling of financial statements but it must also be audited by independent auditors. Directors, who are responsible over the affairs of companies and the utilisations of their assets, are required to prepare financial statements which comply with financial reporting standards and provide a true and fair views of performance and financial affairs.

For companies which are listed on stock exchanges, their share are traded on a daily basis. In most cases their share prices reflect their future prospects. This is the reason why for some companies the value of their shares are above the values of their net assets and some for some others, the values of their net assets exceed their share prices.

As investors who are not directors or management do not have first hand information of the plans and activities of listed companies which could affect their prospects, it is very important for companies to share those information with the market on a timely basis. This is to enable existing and prospective shareholders to make decisions in buying and selling the shares of listed companies on equal footing. Otherwise, those who are privy to such information would have an edge over others. This is the principle behind the requirement of stock exchanges requiring listed companies to announce material information on a timely basis.

Hence, directors are accountable on at least two fronts when it involves reporting, performance reporting and making material announcements. As companies could be large and having complex operations, it would be incumbent on the directors to ensure management have put in place systems and processes which would enable those two responsibilities to be met effectively.

This will be discussed in the next posting.

True and Fair: A View From the Boardroom #1

When I ended my tenure as the Executive Chairman of the Audit Oversight Board and Executive Director of the Securities Commission last year, one of my ambitions was to write a book. I wanted to share my experiences in the areas of financial reporting and corporate disclosures, two important areas which contribute to the smooth functioning of our capital market. This idea remains an idea until today.

Hence, I have decided to take a different approach. Many of my Facebook friends write regularly on the topics of their choices with the intention to publish books based on these regular postings. Why not? If I post regular enough on the subjects here, I would have enough to publish as well.

I would be sharing my views and ideas on corporate reporting and disclosure from today onwards, a sort of a new initiative for 2017. This adds to another project of mine on Wattopers, my batchmates from MARA Junior Science College, Kota Bharu, where we would be celebrating our 40th anniversary of friendship next year.

Tentatively, I have chosen True and Fair: A View From The Boardroom as the title. It is about the board taking responsibility over the quality of financial reporting and disclosure, a delicate subject to directors due to the ways boards work. They have to rely on management who run the daily business and have depth understandings of corporate issues. How would boards balance their responsibilities with the amount of time they spend in boardrooms? Are there ways and means to ensure the fulfilment of their obligations under various laws?

At the same time reporting, particularly financial reporting, is becoming more complex. As companies carry more financial assets and liabilities on their balance sheets, their existence and valuations are amongst key issues which require attention. Many of these assets and liabilities are premised on projected cashflows which are based on assumptions and models which pose risks on their own. What adds to the challenge is the convergence of regulatory requirements with these complex standards.

The expectation on auditors to perform their statutory functions have led to the establishment of oversight structures within and outside of corporations. From this year, audit reports of public listed companies would have to comply with the new standards which require auditors to share more light regarding their audits. Would some of the new standards unearth issues beyond financial reporting and audit issues?

As share prices reflect forward looking prospects of companies, investors need high quality information on a timely basis. This has exert pressure on listed companies to come out with relevant information which could affect their prospects on a more forthcoming basis. We had situations in the past where companies have to provide additional information after their initial announcements, suggesting that they did not disclose enough beforehand.

In addition to discussing financial reporting and disclosure issues, I hope the book would provide directors with insights and ideas on what they could consider to enhance their performance. 

This would be a long journey but unless I make the first step, it would remained just an intention.

I am making that first step today.