Living the spirit of Ramadhan

Let us be honest with ourselves. When the month of Ramadan is mentioned, what do we picture in our minds?

While many would be thinking about refraining from food and other undesired behaviours, many others would be looking forward to the verity of food and desserts, sold at Ramadan bazaars as well as at hotels and restaurants which offer special fast-breaking deals.

While many would expect to eat less as Ramadan is about submission to Allah and appreciating the sufferings of those who are not that fortunate, surprisingly it is also a period where many Muslims would be consuming more food than other months. What could happen is the timing for breakfast, lunch and dinner are re-arranged? On top of that, people are naturally attracted to buy more than what they need when preparing for the fast-breaking.

To Muslims, Ramadan is a month full with blessings. The fast performed during the days will rewarded with blessings, forgiveness and salvation from the hellfire, if the fasting is performed honestly with the sole purpose of attaining the pleasure of the Creator of the Heavens and Earth. During night time, special prayers are offered and other specific deeds would earn multiple rewards compared to normal months. This is the reason why extended fast-breaking events may deter Muslims from exploiting opportunities available during Ramadan.

As what happen to other major activities in our society, slowly simple and meaningful events are turned into commercial opportunities. Once corporates start to turn Ramadan into a commercial exploitation opportunity, its meaning and values are slowly eroded. That is why to some of us, Ramadan is more about having more food rather that the opposite!

Things will be more commercialised towards the end of Ramadan when Muslims are starting their preparation to welcome Aidil Fitri. Ironically, the last ten nights of Ramadan is when Lailatul Qadar will occur. This is a night where any deed is rewarded as if it is performed over 1,000 months. Given the commercial attractions, many may not be able to concentrate of their prayers but busy shopping for cloths and other necessities for the forthcoming festivities. A miss opportunity?

At the end of the day, how we approach Ramadan is dependent on our honesty to seek the pleasure of Allah and using all the opportunities during Ramadan to be closer to Him and obtain his forgiveness. Once this is lost, Ramadan is all about hungry, food and shopping. The choice is with you and me.

Who Got Talent?

Ask any leader of organisations on matters which concern them and the chances are talent would be high on their list. It is amazing that in the world where information is readily available and educational institutions are mushrooming, recruiting and retaining talent appears to be one of the key challenges faced by organisations. This is not a phenomena faced by Malaysia alone, many countries around this region are having the same challenge, notwithstanding the strength of their currencies.

Where have all the talents gone?

Maybe I can start by considering talents at the entry point, the graduates. Despite the differences in approaches taken by organisations in assessing talents, the top scorers would certainly be preferred. However, this group would be only around 20% of graduates entering the job market. Most of the time, the kind of employers who are able to recruit these top talents would be large organisations which have allocations to train and nurture the talents that they recruited.

What will happen to the rest? For those who are at the bottom 20%, regretfully, they would find it difficult to be employed. Those who are stuck at the middle, on the other hand, may ended up with less resourceful employers which may not have comprehensive programmes for talent development.

We could see from the above the kind of "mis-match" between skills and competencies and further talent development. Those who are good will be further nurtured which those who displayed moderate results may not be provided with the same opportunities. Perhaps this is none of the reason organisations which employ graduates from the middle segment would be complaining about the "quality" of graduates without admitting that they themselves may have not made adequate investment in their own people. Organisations at the end of the scale would only be able to employ the remnants of students, based on their inferior grades. I am sure you would be able to anticipate the outcome of such situation.

We may have also heard about the issue relating the quality of graduates. Depending where you are on the supply chain, this issue could be viewed in many perspectives.

Employers would always demand for the best, which to my mind is rightfully so given that through their organisations, economic activities are created, which eventually contributing to our economic growth and providing employment opportunities. On the other hand, those at the institutions of higher learning may not necessarily share the view that graduates that they produce should serve the need of industries. They would argue that our education policy is a holistic one which attempts to equip graduates with knowledge and humanistic values, not necessarily serving the need of employers. 

I do not see any problem with the two views. The only question that I may want to ask is why those who are nurtured to have both education and values could not adjust quick enough when they are employed? In fact, many employers would be complaining about the graduates' thinking' and problem solving skills. I am not sure whether thinking and problem solving are not part of the holistic policy? Or, could it be that the standard set is pitched towards the standard of thinking and problem solving of their educators?

As a taxpayer, I would certainly like to see that money that I contributed towards nation building is well spent. Since many of our institutions of higher learning are funded by public funds, they should not ignore the expectations of people who are funding them, the Rakyat!

Employers should also play their role in nurturing talents and cannot expect all graduates posses knowledge, skills and values which fit exactly with their requirements. For the accountancy profession for example, many accountancy firms will require their staff to complete professional accountancy qualifications, to ensure the baseline standards for accountants are achieved. This is not cheap as it requires investments in terms of money, time and efforts in the form of guidance and mentoring. However, the outcome of such investment would certainly make them more effective and competitive.

Graduates should not expect employment as something which does not require them to further work on their competencies. At the early stages of employment, the focus would be on skills and competency development. At the later stages, their management and leadership skills will determine how far they can grow in the organisations.

I suppose the talent issue will remain with us for a long time. However, this should not deter organisations to review the processes which they deploy to develop talents. Graduates should also not expect everything would be given on silver platters, they need to work harder to fit into the organisations which employ them.

AOB Annual Report 2013: Oversight focus on internal monitoring systems

Audit firms are reminded to perform the necessary audit procedures to evaluate whether the overall presentation of the financial statements is in accordance with the applicable financial reporting framework, according to the Audit Oversight Board (AOB) in releasing its fourth annual report.

The report highlighted that while the presentation and disclosure of financial statements is the management’s responsibility, there are specific ISA requirements that need to be adhered to by auditors.

The AOB Annual Report 2013 has captured its oversight focus in the past year on activities that reinforced the quality control system of audit firms in Malaysia and encouraged best practices which enhance the quality of their audit work.

The oversight board’s inspections activities stressed on key elements including the tone set by leadership of audit firms, consistency of performance of partners within an audit network and the effectiveness of their internal quality monitoring systems.

Audit firms’ internal monitoring processes were given added focus during inspections to allow AOB to have a better picture of their scope, implementation and effectiveness. In his Chairman’s statement, Nik Mohd Hasyudeen Yusoff, Executive Chairman of the AOB said, “Based on our findings, we believe audit firms need to enhance this component of their quality control procedures to ensure better effectiveness.”

AOB’s 2013 Annual Report also lists down potential root causes to audit deficiencies for major firms.

Lack of resources due to continuous high attrition rate, amount of involvement and insufficient supervision and direction by engagement partners, failure of the firms’ monitoring control mechanism to surface relevant issues and lack of application of professional scepticism in evaluating audit evidence continue to be top potential issues.

Meanwhile, the potential major root causes in other audit firms were weak messages on audit quality by their leadership, lack of understanding of the business of audit clients, inadequate technical competencies in both accounting and auditing, insufficient technical support to safeguard audit quality which includes consultation process and internal monitoring reviews, lack of application of professional scepticism in evaluating audit evidence; insufficient involvement, supervision and direction by engagement partners and ineffective Engagement Quality Control Reviewer (EQCR).

“More honest and holistic approaches in identifying root causes and devising appropriate remediation plans to address the actual drivers of the deficiencies would strengthened audit firms’
system of quality control, and position audit firms in better footings.,” Nik said.

In enforcing auditing standards the AOB took enforcement actions against 6 auditors in 2013, mainly for their failing to comply with the requirements of auditing standards in the performance of their audit.

“While the AOB has always been focusing on working with audit firms to enhance their performance, we would not hesitate to take enforcement actions against serious deficiencies and breach of ethical conducts which will affect confidence on the audited financial statements in Malaysia,” Nik said.

The report also found that audit fees charged by top 10 audit firms had increased by 6% and 9% in 2011 and 2013 to compensate for the increase in salary cost which rose 18% and 13%, respectively, in both years, and an increasing trend has been observed in audit fees since 2010.

The AOB was set up by the Securities Commission in 2010 to oversee the auditors of public-interest entities (PIEs), protect investors’ interest and promote confidence in the quality and reliability of audited financial statements of PIEs.

In 2013, the number of audit firms registered with the AOB went down to 53 in 2013 compared to 67 in 2012. However, the number of registered individual auditors has gone up from 293 compared to 302 in the previous year.

AUDIT OVERSIGHT BOARD

The AOB 2013 annual report can be downloaded here

A Close Encounter With the Power That Be

I was prepared for the worst based on the information that was related to me by friends. Long queue, being throughly scrutinised and even being denied entry. To my relief, none of that happened. Our flight was the first to arrive on that Saturday morning and I cleared immigration and custom within half and hour. I was then on the soil of the United States of America!

Given that my hotel room was not ready, I had around 5 hours to kill. This worked quite well as I had the time to explore Washington DC, one of the most powerful capitals of the world where many decisions were made that affected millions of lives elsewhere around the planet. The weather was very kind, the sun was shinning and it was right in the middle of cherry blossom, something which I did not appreciate until I saw the nice beautiful flowers around the Tidal Basin.

My first stop was the White House, the residence of the President of the United States of America. Incidentally on the plane, I watched the movie The Buttler, a recollection of experience of a black American who served a number of American Presidents even before blacks were treated equally in the United States. That certainly helped me to appreciate the 1600 Pennsylvania Avenue better. I picked up few souvenirs from the shop besides White House. That allowed me to take few photos as if I were the most person in the world.

The White House

Am I this powerful?

Next was the Smithsonian Complex where all the interesting museums are located. The Smithsonian's National Air and Space Museum was my choice as I have been interested in planes since I was a kid. It was a very interesting place to visit as we are able to see the development of aerospace industry since the Wright Brothers tried to fly for the first time.

The space capsule at the Smithsonian's National Air and Space Museum

The museum is not that far from Capitol Hill, the symbol of American democracy. While the building was certainly elegant, the politicians and lobbyists  who make this place their first home were not visible from afar. Nevertheless, buildings located around the park are not only historically significant but are still influencing the lives of people who may be living thousands of miles away. This is where power is concentrated!

The Capitol Hill

My visit was perfectly timed when the Cherry Blossom Festival was celebrated. The flowers around the Tidal Bay was certainly beautiful and the number of visitors who were there to experience the occasion was amazing. to a certain extend, it camouflage the atmosphere of power in Washington DC, very deceiving indeed.

In the next few days I met a number of individuals who had strong influence in DC and the rest of the world. One of the person who I met was Senator Sarbanes, the co-writer of the Sarbanes and Oxley Act which created the Public Companies Accounting Oversight Board, a structure which influences audit regulation until today.

I did not miss the opportunity to experience the american past time activity, enjoying a baseball game where the Washington Nations was playing. I could observe how sports and leisure intersected especially how much hotdogs and burgers were consumed during the game. Unfortunately we left the game venue at the seventh inning, when one of the players hit a grand slam at the very next!

Cheering the Nations

My stay was certainly a great opportunity to provide me with the insights of the American way of thinking, especially in a place where many major decisions were made and will continue to be made which affect us, a place well remote from Washington. There are also many universities and institutions in Washington, which reflect the amour of intellectual power as well. It is not a surprise to me that such existence may be necessary given the kind of community which Washington attracts.

In summary, my first encounter with the place where the power that be are operating was a very pleasant one.

IFIAR 2013 Global Survey on Inspection Findings

Washington, DC, April 10, 2014 – Audits of public companies around the world suffer from persistent deficiencies in critical audit areas, raising increasing concern among international audit regulators, the International Forum of Independent Audit Regulators (IFIAR) reported today.
“The high rate and severity of inspection deficiencies in critical aspects of the audit, and at some of the world’s largest and systemically important financial institutions, is a wake-up call to firms and regulators alike: More must be done to improve the reliability of audit work performed globally on behalf of investors,” said Lewis H. Ferguson, IFIAR Chair and Board member of the U.S. Public Company Accounting Oversight Board.

Report on Inspection Findings

IFIAR’s Report on 2013 Inspection Findings Survey summarizes key inspection results from audits of public companies, including systemically important financial institutions, submitted by 30 IFIAR members. These results came from inspection reports issued during the members’ most recent annual reporting periods that ended by July 2013.

• The leading areas of deficiency in inspected audits of listed public interest entities, or public companies, relate to auditing fair value measurements; internal control testing; and procedures to assess the adequacy of financial statement presentation and disclosures.
  
• The leading areas of deficiency in audits of systemically important financial institutions, including global systemically important banks, relate to auditing of allowance for loan losses and loan impairments; internal control testing; and auditing of the valuation of investments and securities.
  
• Audit firms' own quality control systems had the highest number of inspection findings in the areas of engagement performance; human resources; and independence and ethics requirements.
  

“The survey makes clear that these important inspection findings are prevalent across many nations and firms,” said Chair Ferguson. “IFIAR has an important role to play in monitoring and promoting audit quality across borders.”

Inspection findings are deficiencies in audit procedures that indicate that the audit firm did not obtain sufficient appropriate audit evidence to support its opinion. Most of these findings are consistent with the results of IFIAR’s inaugural survey issued last year, although the survey does not provide an adequate basis for year-to-year comparison of the quality of audit performance.

The findings discussed in the survey are primarily from inspections of audit firms affiliated with the six largest international audit firm networks, which are BDO International Limited, Deloitte Touche Tohmatsu Limited, Ernst & Young Global Limited, Grant Thornton International Limited, KPMG International Cooperative, and PricewaterhouseCoopers International Limited. In many cases, a regulator’s response to an inspection finding is to require the audit firm to perform additional procedures necessary to complete the audit satisfactory.

Root-Cause Analysis Needed

Measures undertaken by IFIAR to improve global audit quality include meetings with global network firm leaders to discuss inspection results and actions the firms will take to show demonstrable improvement in audit performance; and using the survey results in members’ home countries to inform their respective inspection and standard-setting activities.

In its meetings with global audit firm leaders, IFIAR expects the firms to provide information about the results of root-cause analyses, the performance measures used to assess progress, and whether measurable improvements are being made. The global network firms with which IFIAR meets have agreed to provide such information.

“The firms should develop robust root-cause analysis to gain a clearer understanding of the factors that underlie inspection findings and to take appropriate remedial actions,” said Janine van Diggelen, IFIAR Vice Chair, and Head of the Audit & Reporting Quality Division at the Netherlands Authority for the Financial Markets.

“Only with a thorough understanding of the underlying factors that have led to findings can audit firms take appropriate measures. These measures should be aimed at improving their auditing techniques, as well as their oversight policies and procedures, but also consider the cultural and behavioral influences in the firms that were relevant to the deficiencies. Both audit firms and regulators must do more to improve audit quality,” added Vice Chair van Diggelen.

In monitoring the firms’ progress in these areas, IFIAR hopes to gain insight into whether the firms are successful in addressing firm-wide issues and, accordingly, promoting consistency in the execution of their audits.

A fact sheet on the 2013 survey also is available.

2

About IFIAR
IFIAR is comprised of 50 independent audit regulators from jurisdictions in Africa, the Americas, Asia, Europe, the Middle East and Oceania. It was formed in 2006 to provide a forum for regulators to share knowledge of the audit market environment and the practical experience gained from their independent audit regulatory activity.
IFIAR publishes the results of its surveys to inform regulators, investors, the financial community, and the public about the current state of inspections of audits of public companies, including financial institutions, around the world. For further information about IFIAR and its activities, visit ifiar.org. 

Are we serious about sustainability matters?

How do you feel when there is no running water at your home while it has been raining regularly lately? What more when you are living near the equator where rainfall is aplenty? This is certainly a mystery to those who are not that educated about how we are living our lives and how much we care about the surroundings which we are living in.

Those who are living around the Klang-Valley would certainly appreciate this kind of question which is bothering my mind. Can we have rainfall and drought at the same time? Or it is simply a matter of mismanagement on the part of people who are responsible to manage our water resources. Have we, the society, been so indifferent so much so that those who are supposed to do the work (and get paid, not free ya) are also indifferent about the quality of their performance?

Perhaps one of the indicators of this indifference attitude is when we observe how Muslims, generally, perform their ablution, a practice of washing certain parts of their bodies with water, before performing prayers. Notwithstanding that Islam requires Muslims not to be wasteful, so many of them would use unnecessary amount of water. Some even leave the pipes running while they are folding the sleeve of their shirts before performing ablution. Here, we could observe the disconnect between the teachings of Islam and the practice of Muslims.

If this is extended to the society at large, we can see how our daily routines result in the waste of resources. What more when it involves things which provide us with wealth. For example, property development is a hot thing around Klang-Valley. Definitely this is a very profitable venture resulting in developers building houses on high grounds including those with high slopes. Not only our water catchment areas are slowly being encroached, hill slope failures do occur from time to time. It will be on the front pages of our newspapers for a while but when the incidence is forgotten, business will be carried out as usual.

I am not going to write about governance matters as it warrant an article on its own. However, sufficient to be mentioned here that in the absence of good governance, don't expect public interests to be the highest priority of those managing our water resources. So if we don't bother and do not indicate our interest about sustainability issues, who should we blame for any misgiving which we are facing?

Where do we go from here?  

Is the MIA’s latest report a clear snapshot of audit quality in Malaysia?

By Errol Oh

IT’S easy to be sceptical about self-assessment exercises. How many people can be wholly critical and objective when evaluating what they see in the mirror? And surely fewer still are secure and honest enough to share the full results with the rest of the world.

So how should we view the Practice Review Report released this week by theMalaysian Institute of Accountant (MIA)?

The tricky element here is that the institute is a regulator as well as a professional body. Is the report an authoritative, warts-and-all survey of the profession that the institute oversees, or is it something that promotes the interests of MIA members?

Then again, these objectives don’t have to be mutually exclusive. When steps are taken to elevate the standards of the profession – starting with identification of problems – the accountants have much to gain.

In his message in the report, MIA president Johan Idris (who also chairs the institute’s Practice Review Committee) wrote, “The findings of practice review have significant educational content and are beneficial to practitioners. They serve to guide our practitioners in training their staff and alerting them to many pitfalls that may derail them in the course of carrying out the policies and procedures of the firm.”

The institute’s media release expanded this point: “This quality assessment programme will drive consistency and raise the bar on audit quality, thereby underpinning public confidence in the accountancy profession.”

The MIA’s practice review applies to all member firms that conducts audits. Practice review refers to the evaluation of the work performed by the auditors and of these firms’ internal quality controls.

The institute’s practice review programme began in 2004. The first report came out in 2009 and it was for 2004 to 2008. The latest Practice Review Report covers the period 2009 to 2013. Of the 1,363 audit firms registered with the MIA, 639 (47%) had been reviewed as at June last year. Here are some noteworthy details from the new report:

Rating the auditors

The review reports are assigned ratings. Type 1 and Type 2 are labelled ‘Satisfactory’ and ‘Assurance to be provided’ respectively.

Both ratings denote a pass in practice review.

But when a firm gets a Type 3 rating, that means a follow-up review is required.

The report hasn’t been glowing so far. Only 8% of the firms reviewed have been rated Type 1. That’s about 50 companies. Type 2 firms make up the largest group, with 48%.

The rest (44%) are, of course, in the Type 3 category. After follow-up reviews of the Type 3 cases, the MIA found that half of them had improved on their audit quality and thus passed practice review.

The others would be referred to the institute’s Investigation Committee.

The survey says

In August 2012, a survey was conducted to get feedback that may be useful if there’s a revision of the practice review framework. This involved responses from 60 practitioners whose firms were reviewed and for which final reports were issued.

The results are rather confusing. For example, 90% of the respondents say the Practice Review Programme is effective in enhancing their firms’ audit quality subsequent to the review, and 80% consider the practice review report a useful reference material for staff training purposes.

Yet, almost half of the respondents agreed that the same practice review report is fault-finding.

In addition, only 43% say the practice review findings are useful in improving the audit quality of their firms. Another 52% says the findings are “somewhat useful”.

And you know for sure that accountants are the respondents when 62% deem the practice review fee as high.

A new approach

In January this year, the Practice Review Programme adopted the risk-based approach in selecting firms for practice review. The MIA is sending out risk assessment questionnaires to the firms so that it can determine the level of risk associated with each firm.

Another new initiative is to hold dialogue sessions with practitioners to create awareness on issues relating to the implementation of the revised practice review framework. These sessions double up as an avenue to address the practitioners’ grouses about practice review.

What they found

Chief among the report’s general observations is this: “The documentation of working papers is still a key factor which is not taken seriously by some practitioners.

“Our practice reviewers find that inadequate attention is given to writing down audit procedures performed, the findings made by the auditors with respect to the sufficiency and appropriateness of the audit evidence gathered and the conclusions reached by the auditor.”

Executive editor Errol Oh is waiting for the Audit Oversight Board’s annual report 2013. That should be more interesting when read together with the MIA’s Practice Review Report.

Source: The Star Online http://www.thestar.com.my/Business/Business-News/2014/03/29/Auditing-the-auditors/

MIA: Audit firms need to improve documentation process

PETALING JAYA: Audit firms should take stringent steps to improve on the documentation of audit procedures performed and the gathering of sufficient audit evidence to establish a solid and firm basis to support their audit opinions, according to the Malaysian Institute of Accountants (MIA).

In its Practice Review Report, the accountancy body found that in many firms, the partner’s involvement in the audit at the planning stage was not evident.

It also found that there were no formal policies and procedures on professional independence requirements, nor was there formal documentation of the procedures performed during the evaluation and acceptance or continuation of prospective and existing clients.

On human resources, many member firms did not maintain record on professional development for staff or documentation on performance evaluation conducted on the employees.

Other common findings it came across were a lack of audit planning documentation, no indication of any documentation to show the auditor had considered the risks of material misstatements in the financial statements due to fraud or error.

Customised audit programme was also not used in the execution of audit engagements, and if audit programme was used, there was no cross-reference to the respective detailed audit working papers where work is performed.

There was no working paper prepared to summarise the significant audit findings that form the basis for the audit opinion. “Such working papers should document the firm’s decision on any major issues of an engagement to support the audit opinion expressed,” the report said.

President Johan Idris said in a note in the report that firms were encouraged to comply strictly with procedures and international standards on auditing in order to mitigate risks.

He added that Malaysia had been resilient in the face of tidal waves of uncertainty in times when many Western economies faced a financial and currency crisis. “Malaysia’s diligent manning of her venerable financial institutions and the establishment of a well-integrated regulatory eco-system has contributed to our resilient economy.”

The findings are derived from MIA’s ongoing efforts through practice review, mainly conducted on small and medium size member firms.

The report can be downloaded here.

Source: The Star Online 28-3-2014 

https://www.blogger.com/blogger.g?blogID=5408308662061359052#editor/target=post;postID=9151991394833061742

Audit Oversight Board raps, fines two auditors for non-compliance

The Star Online

Published: Tuesday February 18, 2014 MYT 6:41:00 PM 
Updated: Tuesday February 18, 2014 MYT 6:46:02 PM

KUALA LUMPUR: The Securities Commission’s Audit Oversight Board has rapped two registered auditors Lim Kok Being of Ong Boon Bah & Co and Chan Kee Hwa of Khoo Wong & Chan for non-compliance.

The Securities Commission said on Tuesday the two auditors for not complying with the International Standards on Auditing while auditing the financial statements of public interest entities.

The two were also found to have breached the registration conditions imposed by the AOB under section 31O(4) of the Securities Commission Act 1993 (SCA).

In addition to the reprimand, a monetary penalty of RM10,000 was imposed onLim Kok Beng of Ong Boon Bah & Co. 

The SC said the two auditors are the first to be reprimanded by the AOB in 2014.

The audit regulator had in previous years taken action against eight individual auditors for failing to comply with auditing and ethical standards.

“The Audit Oversight Board emphasises that the reprimands do not necessarily suggest that the financial statements of the affected public interest entities contained any material error or their financial reporting controls are weak,” it pointed out.

"While we are pleased with the overall efforts taken by the auditors in Malaysia in ensuring the quality of their work, the AOB will not hesitate to take action to ensure auditors comply with relevant standards. The value of audit is the reliability of the reports issued by the auditors," said Audit Oversight Board executive chairman Nik Hasyudeen.

The Audit Oversight Board was set up by the Securities Commission Malaysia in 2010, to oversee the auditors of public interest entities, protect investors' interest and promote confidence in the quality and reliability of audited financial statements of public interest entities.

Benefitting From Internship

Many academic programmes now have internship or practical attachment as one of the modules which has to be undertaken by students in pursuing their degrees. In Malaysia this idea was introduced to expose students to the real world environment.

As we all know, knowledge could be divided into two groups, tacit and explicit. What students learn from their lecturers are predominantly explicit knowledge, those which could be formalised. Tacit knowledge on the other hand is knowledge that is attained through experience and can only be transferred through experience. This is the kind of knowledge that students will gain through practical training as classroom cannot replicate the real work environment and many lecturers do not have real life experience in applying the theories and concepts imparted during classes. As what I always share when meeting students, in the classroom the problems are defined for you, in the real world you have to decide whether there is a problem is the first place before thinking what problem to be resolved.

Different organisations view internship differently. Some are honest in imparting the knowledge and knowhow, some see this as an opportunity to have access to cheap labour. Hence, students may have different experience with the organisations, depending on how those organisations see the benefits of internship to them.

So, if you are one of the many accounting students placed at all sorts of organisations for this purpose, what do you do to maximise the benefit of internship? Let me share some of my thought on this subject, based on my experience as an employer as well as a professional accountant who wishes to see the profession to grow further.

Understand the business

It is important to understand the business of the organisations which you are attached to. Do not assume you understand them before doing some research about what they actually do and what are their value propositions. This can be done through web-based research or simply having chat with their key personnels. Try also to understand what are their key business processes in attaining their objectives. With such understanding you will be able to better relate the work that you do with the overall business of the organisation.

Understand the function of your work

If you are not clear of the function of the work assigned to you, you may not be able to focus on what will help you to learn. If you are assigned to the accounting department, try to understand the overall functions of the department and how does the work assigned to you relate to the overall function. You should be clear of the expected outcome of the tasks. Many students fell into the trap of doing what they were told to do without understanding the overall context of the work. Again, you can have this understanding by talking to your direct report. Learning to ask the right question is already part of the overall experience of internship.

Don't assume simple task is not important

Many students complained in the past that they were not given enough serious work during internship. For example, they were only required to make copies of documents for their direct report. However, if one were to take a step back and ask why those documents are important enough to be duplicated, reviewed and filed, then one could find the work is not necessarily that unimportant. Read those documents and try to figure out the key parts which make them important. Minutes of meetings can contain reach discussion about a particular decision made by the organisations, contracts contain terms and conditions that the organisation has to complied with. It could also exposed the organisation to risks. So, never assume a simple task as not meaningful.

Make friends with people who are more senior than you

You may have a lot of friends but the chances are most of them are your contemporaries. In an organisation, you have to be able to work with many people and many of them are older and more senior. This is the opportunity to develop your human skills and try to be able to relate with people who may have different background, roles and functions as well as interests. This skill is very important when you have graduated and join the work force later. The insights from people who are more senior could be interesting and normally acquired over the years of their working life. Sometimes, this helps you to acquire those insights without going through those experience yourself.

Never be a shame to ask questions

In my professional career, the most important part of the work that I do is to ask the right questions. Many students are afraid to do this during internships because they are scared to be perceived as not knowing the subject. The whole point of an internship is for you to learn and learning is at best if you can ask the right question. However, before asking, you may need to do some research to ensure you have enough information about the issue and able to pick up the question which will clarify the matter. Asking question without thinking will not help.

The able are some of the tips which I could share. I am sure there are many other advice which will help students to gain the most during internship. I wish all of you the best in the pursuit of your dream to be professional accountants.

The Benson Principles: The building blocks of the accountancy profession

I was told about the speech by Lord Benson by Martyn Jones, the President of the Institute of Chartered Accountants of England and Wales during his visit to Kuala Lumpur recently. The speech clearly provides the foundation of the accountancy profession which sometimes may not be understood by those who are in the leadership position of the profession itself.

Interestingly, Lord Benson mentioned the concept of public benefit, instead of public interest which we are accustomed to.

I trust accountants out there would benefit from this speech.

Myself with Martyn Jones and Ramesh Rajaratnam at the
welcoming dinner of the MIA Conference 2013

Hansard of the speech by Lord Benson at the House of Lords on 8 July 1992

My Lords, I should perhaps declare an interest. I am a member of the accountancy profession and have been practising that profession for the past 66 years. Around eight years ago my profession set down what it believed were its obligations to the public. It is worth recounting them because they are the foundation on which all professions must be built and on which their futures depend. Moreover, any profession which follows those obligations will have no need to fear the future. The Government can always be satisfied that it is healthy.

The nine obligations to the public are these. First, the profession must be controlled by a governing body which in professional matters directs the behaviour of its members. For their part the members have a responsibility to subordinate their selfish private interests in favour of support for the governing body.

Secondly, the governing body must set adequate standards of education as a condition of entry and thereafter ensure that students obtain an acceptable standard of professional competence. Training and education do not stop at qualification. They must continue throughout the member's professional life.

Thirdly, the governing body must set the ethical rules and professional standards which are to be observed by the members. They should be higher than those established by the general law. Fourthly, the rules and standards enforced by the governing body should be designed for the benefit of the public and not for the private advantage of the members.

Fifthly, the governing body must take disciplinary action, including, if necessary, expulsion from 1209 membership should the rules and standards it lays down not be observed or should a member be guilty of bad professional work.

Sixthly, work is often reserved to a profession by statute —not because it was for the advantage of the members but because, for the protection of the public, it should be carried out only by persons with the requisite training, standards and disciplines. Seventh, the governing body must satisfy itself that there is fair and open competition in the practice of the profession so that the public are not at risk of being exploited. It follows that members in practice must give information to the public about their experience, competence, capacity to do the work and the fees payable.

Eighth, the members of the profession, whether in practice or in employment, must be independent in thought and outlook. They must be willing to speak their minds without fear or favour. They must not allow themselves to be put under the control or dominance of any person or organisation which could impair that independence. Ninth, in its specific field of learning a profession must give leadership to the public it serves.

It is one thing to define the obligations, it is another to see that they are observed. It is an unending battle for the members of my profession and its governing body to see that its 100,000 members observe those obligations at all times. There will never be perfection but the striving is there.

For my part I believe that on the whole the professions in this country have served the public well. I have only one reservation on that point. But as far as I know all of them seek to improve their standards year by year; to tighten their disciplines and to give better service to the public. The one reservation that I have is that in recent years I believe that some professions have paid too much attention to marketing themselves and selling themselves to the public.

That has been exacerbated—in fact it has been to some extent caused—by the doctrine of government which, as far as I can detect, regards the professions as an undesirable monopoly which must be broken open. These two factors together are unfortunate. I believe that they have damaged the image of the professions. Some of the members have fallen below the standard of professionalism which is necessary for the conduct of their profession. In short, some of the nine obligations are at risk.

If there is time I should like to mention five other subjects. The first is that I do not share the rosy views of the noble Viscount, Lord Ullswater, who in an earlier debate expressed great satisfaction with manufacturing industry in this country. For those who move in the inner circles of industry it is common ground that our manufacturing base is too small and has been diminishing for a long time. The average productivity in manufacturing is below that of our competitors. In that respect all the relevant professions, particularly my own and the numerous branches of the engineering profession, have something vital to contribute. All of them ought to 1210 concentrate on introducing a much higher standard of professionalism into the management of manufacturing industry than has been the case in the past.

The second point is one which I believe other noble Lords have mentioned tonight. I believe that a professional body, provided it observes the obligations which I have mentioned, should be self-regulating. In my experience the members who are engaged in the cut and thrust of professional practice every day of their lives and in open competition are the persons best fitted to set the standards for the profession and to see that they are observed by all of them.

The third point is that in my view all the professions should be guided by written standards. Several professions have not gone far enough in that respect. I believe that they should close the gaps in their armament. My own has been fairly active in that and has done a good deal. But it is an unending road—we shall never reach the end of it. We have been fortunate in that we have been able to establish an international code of accounting standards. That is a good step forward. It has been a help in assisting international finance and trade.

The fourth point is that everybody makes mistakes and the professions are not free of that. Errors of judgment arise, as does negligence in varying degrees of severity. Negligence must be punished. Of that I have no doubt. But the country is now developing into a litigious society and whenever there is a breath of an error of judgment or negligence actions for damages are immediately launched. Usually they are launched against the professions if they possibly can be because it is known that we are covered by insurance for the most part. These claims have become so extravagant and the legal cost involved in dealing with them so enormous that I believe that in due time they will have to be restricted by statute. If that does not happen we shall not be able to recruit into the professions the quality of person whom we want. Already America has found that it is unable to recruit in some professions for the reasons which I have just given.

The last point is this: I believe that in every profession the citizens should be allowed to join irrespective of colour, creed, class or money. Several of the professions have not been able to achieve that. I believe that they should direct their attention to it very carefully. We have only one bar in my profession and that is this: the standards we set require a certain quality of intellect before a member can join. He must also be subjected to a proper educational and training standard which we have defined. We can do nothing about intellectual capacity because that is a matter for nature. But the training and education which are needed, not for our benefit but for that of the public before we can admit anybody to a profession, must be dealt with in the schools and universities. We have found grave defects in some of those fields which prevent members of the public from joining our profession. We have had a wearying afternoon and my time is up. I shall leave the matter there.