Disciplines on domestic regulation for the accountancy sector Malaysias Perspective

1
Disciplines on domestic regulation for the
accountancy sector Malaysias Perspective

• Nik Mohd Hasyudeen Yusoff
• Director, Professional Services Development
  Corporation Sdn. Bhd.

2
Discipline on Domestic Regulation for the
Accountancy sector

• Scope
• Accounting, Auditing and Bookkeeping (CPC 862)
• Licensing Requirements and Procedures
• Qualification Requirements and Procedures
• Technical Standards
• Principles
• Domestic Regulations are not more
  trade-restrictive than necessary to fulfil a
  legitimate objective
  
• Transparent
• Competent authorities and contact points
• Scope of regulation
• Rationale for regulation
• Opportunity for comment
• Review procedures

3
Regulatory Framework for Accountancy Services in
Malaysia
4
Regulatory Framework for Accountancy Services in
Malaysia
5
Practising accountancy in Malaysia

• Membership of MIA
• Recognised local accountancy degrees, membership
  of recognised professional bodies or qualifying
  examination
  
• 3 years relevant work experience
• Practicing Certificate (PC)
• Issued by MIA and annual fee applied
• Members of MIA with relevant experience
• Principal or only place of residence in Malaysia
• Must have minimum professional indemnity
  insurance (RM 100,000)
  
• Practice only through sole-proprietorships and
  partnerships except for taxation services
  
• Name of firms must be approved by MIA and
  restricted to names of partners or former
  partners only
  
• Holders of (PC) are entitled to provide public
  practice services except for auditing,
  liquidation, taxation and financial planning
  services where additional licences are required

6
Practising accountancy in Malaysia

• Approval as companies auditors
• Licence issued by the Ministry of Finance
• Holders of valid PC and passes an audit
  interview
  
• Audit firms must be registered with Companies
  Commission
  
• Approval as cooperatives auditors
• Approved companies auditors with relevant
  experience in auditing cooperative societies
  
• Approval as tax agents
• Automatic approval for approved companies
  auditors
  
• For holders of PC without audit licence, approval
  from the Ministry of Finance through the Inland
  Revenue Board is required, normally after passing
  the interview process

7
Views on implementing the disciplines on domestic
regulation for the accountancy sector in Malaysia

• Domestic regulation is a sovereign right of
  Malaysia and the processes in the enactment of
  our laws and regulations should be respected
  
• Almost all of the laws and regulations applicable
  to the accountancy services in Malaysia are
  formulated
  
• To address the domestic needs of the economy and
  ensure the quality of services and integrity of
  accountancy practices
  
• Residency requirements, not necessary citizens
• Method of practice Corporate entities not
  allowed, only natural persons which would assume
  personal professional liabilities
  
• To align our practice with global best practices,
  among the forthcoming changes would be
  
• Whistle blowing provisions for auditors
• Anti Money Laundering requirements
• Independence rules for auditors

8
Views on implementing the disciplines on domestic
regulation for the accountancy sector in Malaysia

• The Necessity Test
• From whose perspective? Benchmark?
• Specific needs of developing economy (structure,
  domestic issues)
  
• Is there a single way of achieving a particular
  objective in regulating accountancy service
  sector?
  
• The arbitrator in the event of dispute?
• Mutual Recognition Agreement
• Enables two countries to recognised each others
  professional qualification or licensing
  structures by acknowledging the differences
  within them
• Main enabler for market access
• Accreditation process in recognising
  qualification and licensing critical and could be
  expensive

9
Views on implementing the disciplines on domestic
regulation for the accountancy sector in Malaysia

• Most information on the practice of accountancy
  is available from the Malaysian Institute of
  Accountants (MIA) as the Institute has to provide
  the information to its own members
• MIA would normally be consulted by other
  regulatory authorities on proposed changes to
  laws and regulations which would affect
  accountancy practices
• MIA would then communicates to its members on
  proposed amendments, to the extent it is
  practical under any given circumstances (exposure
  draft, consultation through specialised working
  groups)
• The regulatory authorities may amend or introduce
  laws or regulations based on their own internal
  processes and authorities
  
• Certain procedures may have inherent limitation
  e.g. to obtain an audit licence in Malaysia,
  candidates have to go through interview process,
  which rely heavily on the integrity and opinion
  of the interviewers. Unsuccessful candidates are
  allowed to re-apply after certain specific
  period

10
Views on implementing the disciplines on domestic
regulation for the accountancy sector in Malaysia

• Regulation vs. economic needs
• International Financial Reporting Standards
• Only persuasive standards but lately accepted by
  many countries to be more attractive in
  attracting investment
  
• Presence of Big-4 globally
• The big global accountancy firms have presence in
  most countries which practice different
  structures of domestic regulation
  
• Commercial presence need not necessarily through
  holding equity
  
• Control through licensing of Intellectual
  Property ownership Branding, Methodology,
  Knowledge base

11
Views on implementing the disciplines on domestic
regulation for the accountancy sector in Malaysia

• Convergence of standards in the accountancy
  sector
  
• International Federation of Accountants
  membership obligations
  
• Education
• Professional qualification
• Ethics
• Quality Assurance of firms
• Auditing standards
• Accounting standards
• Enforcement through Compliance Committee
• Assessment of level of compliance by member
  bodies would be performed on periodical basis

12
Issues on extending the accountancy disciplines
to other professional service sectors

• Differences in scope of professional services in
  different jurisdiction
  
• Certain functions are performed by different
  category of professions
  
• Multiple layers of competent authorities
• National
• State
• Local authorities
• No central regulatory authority
• Citizenship and residency requirements
• Driven by professional liability issue and ethics
  issues
  
• Require legal reform which would take a long time
  for certain countries
  
• Technical standards
• Possibility of having uniform technical standards?