Committee to Strengthen the Accountancy Profession (CSAP)

Key issues and recommendations26 August 2015

• The World Bank issued the Report on the Observance of Standards and Codes – Accounting and Auditing in 2012

• The establishment of the Committee to Strengthen the Accountancy Profession (CSAP) in relation to the ROSC AA findings was approved by the MOF

• The members of the CSAP are:

– SC (Chairman of the CSAP)

– MOF

– BNM

– SSM

– Accountant General Office

– MIA 2

Background

Source: Diagram from IFAC 2012 Annual Report, Transparency and Accountability : Past, Present and Future

4

CSAP’s Approach

How would the accountancyprofession servesthe future needsof our economy?• ETP, GTP• CMP2• Financial Sector

Blueprint• SME Masterplan

How should the profession be regulated?• Governance of

MIA• Licensing• Other regulatory

reform

How wouldaccountancyeducation supportsthe developmentof the accountancyprofession?• Framework• Competency

Expectations• Roles and

responsibilities

The overriding aim of CSAP was to ensure the accountancy profession serves national interests through performance and maintenance of professional standards and values

The Present Accountancy supply chain in Malaysia

Institutions of higher learning

Entry level programmes offered by professional accountancy

bodies

Malaysian Institute of Accountants

Professional accountancy bodies

Private sectorAccountancy

practicesPublic sector

Required working experience period

Professional accountancy programmes

Competency assessments

Employers and approved training providers provide work experience and mentoring to

accountancy graduates

Ensures baseline competencies are attained before admission to membership

Employers provide regular feedback to ensure baseline competencies remains

relevant to employers

MIA sets ethical standards and regulates the conducts of members

Admitted based on Part 1 of the First Schedule of the Accountants Act

Admitted based on Part 2 of the First Schedule of the Accountants Act

Demand and Change drivers

CapitalMarket

Masterplan2

EconomicTransformation

Plan

FinancialSector

Blueprint

GovernmentTransformation

Plan

SMEMasterplan

External factors

* Other than Malaysia, countries which recognise graduates without further assessment are Bahrain, Ivory Coast, Dominican Republic, Malta and Swaziland

Distribution of MIA membership – 30 June 2014

N=36,000

Demand model for accountants required in Malaysia by 2020

2014

2020

• Baseline distribution across economic sectors• Sectorial growth rates and demand• Specific sectorial demand for accountants• Complexity and sophistication of businesses

E

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36,000

60,000

2.0 3.0 4.02.5 3.5

Minimum requirement forBig-4, GLCs, Multinationalsand large corporations whohave the resources to train professional accountants

Cut-off point where graduatesmay not be successful in pursuingprofessional accountancy

2.7-2.8

CGPA

Annual number of graduates: 5,000

Students with no interest to pursue career in accountancy

Distribution of students’ performance and it’s relation to professional accountancy enrolment

Issues in nurturing more professional accountants in Malaysia

Increasing the talent pool

• Number of graduates• Interest to be professionals• Competency gap• High hurdle for non-

accountancy graduates

Professionalaccountancy bodies

Professional accountancy programmes

Competency assessments

Employers and approved training providers provide work experience and

mentoring to accountancy graduates

Ensures baseline competencies are attained before admission to

membership

Inclusivity of professional accountancy programmes• Cost charged relative to the salary of graduates• Availability of the training providers across Malaysia• Availability of competent trainers

Support for professional accountancy programmes• Limited number of employers recognised by professional bodies• Quality of mentoring and supervision and values imparted• Not all employers support employees to gain professional recognition

Accountancy practices

Private sector Public sector

Standards and recognition

• Compliance with international education standards

• Different recognition accorded by employers

Professional accountants in key leadership and management roles

What key employers want to see in Professional Accountants

What Employers

Want?

Strong written and spoken communication

skills

Possess soft skills such as management,

problem solving ability, technology savvy

With practical and market relevant

knowledge

Broad skills, not limited to finance and business

only

Qualified as professional accountants

Employers’ views on adequacy and quality of accountants

N=189

Students interests in pursuing professional accountancy qualification

N=477

Reasons for graduates not pursuing professional accountancy qualification

N=496

The present regulatory framework and MIA governance arrangements

Minister of Finance

Accountant General Office

Members in general meeting

MIA Council

Membership and Education• Determine membership

qualification • Involve in regional and

international activities• Provide membership

services• Provide education and

training• Oversee Qualifying Exam

Appoints 20 MIACouncil membersElects 10 MIA

Council members

Advises Minister ofFinance on MIA Councilmembers appointment andsupervises MIA

Professional standards• Set auditing standards• Set ethical standards• Set practising rules and

issue practisingcertificate

• Deals with technicalmatters in accounting, auditing , ethicalstandards and market related matters

Investigation and DisciplinaryCommittees and DisciplinaryAppeal Board• Conduct investigation and

disciplinary proceedings• Hear appeals from members

Enforcement• Conduct practice review• Review financial statements• Assess compliance with

continuing professionaleducation requirements

Members of committees and board aremembers of MIA Council

Malaysian Accountancy Research and Education

Foundation

MIA Councilappoints the Trustees of MAREF

Aims of the recommendations• Resetting the accountancy profession by introducing a new

regulatory structure which will strategise and lead the accountancy profession and ensuring professional standards are observed;

• Meeting the demand for the economy to be supplied with adequate number of professional accountants who meet the market expectations in terms of knowledge, skills and values;

• Strengthening the accountancy education sector in meeting the above objectives as well as capturing the opportunities to position Malaysia as the hub for accountancy education and training for this region;

Aims of the recommendations

• Ensuring public interests are protected through a more effective and efficient disciplinary structure;

• Reinforcing the competitive edge of Malaysia through the development of specialised competencies and skills such as in the areas of Islamic Finance;

• Strengthening the Small and Medium Practices so that that could be able to provided relevant support and services to the Small and Medium Enterprises which are important for the economic growth for Malaysia, moving forward;

Aims of the recommendations• Ensuring a financial mechanism to support education,

research and capacity building of the accountancy profession is available;

• Making the accountancy profession an inclusive profession by building adequate infrastructures for education and training to enable Malaysians who wish to pursue the professional accountancy profession would be able to do so; and

• Accountants are provided with support to ensure they are able to provided services at the quality expected out of them and their competency and skills could be enhanced based on the needs of the market.

Reset of the accountancy sector in Malaysia

CorporationsFinancial markets

Small Medium Enterprises

Public SectorExternal Markets

Recommendation 2Align professional

designation with global standards

Recommendation 3Professional

programmes available widely

Recommendation 4Increase number of

ATOs

Recommendation 5Pathways for Non-

Accountants

Recommendation 7Accountancy as the Profession of Choice

Recommendation 8Establish Centre of

Excellence

Recommendation 9Encourage Cross

Fertilisation Programmes

Recommendation 10Review Lecturers’

Reward and Promotion structures

Recommendation 11Malaysia as Hub of

Accountancy Education

Recommendation 12Strengthen Post-

Qualification Education

Recommendation 13Nurture SMPs to serve

SMEs

Recommendation 14 Capture sectoral

opportunities

Recommendation 15Make accountancy

inclusive

Recommendation 1 New regulatory bodywith adequate power

Recommendation 6Strengthen MAREF

Revised Governance Structure of the Malaysian accountancy profession

Professional Conducts Board Standards Board Education Board

Management team of the new regulatory body

Recognised professional accountancy bodies

Recognised universities offering relevant accountancy degrees

Supervisory board

Malaysian Institute of

Accountants

Registered accountants