PPC Meeting Highlights August 18, 2010
1.
Audit and Liquidator Licensing Framework
The meeting was informed on the following:
a) Further works need to be done on the proposed new audit licensing framework,
prior to submission to PPC.
b) The liquidator licensing framework will only be drafted after the courtesy visit to
Malaysian Department of Insolvency (MDI) on August 25, 2010.
2. Revised Practice Review (PR) Framework
The Audit Practice Sub-committee (APC) has submitted the revised PR
framework to Practice Review Committee (PRC) for deliberation during its
meeting on Aug 23.
3.
Revised Bank Confirmation Letter
The meeting was informed that the revised template has been submitted to
Auditing and Assurance Standards Board (AASB) for approval. However, the
AASB has yet to meet and approve the template due to the fact that its present
Chairman has since resigned.
Member also raised concern on the increasing expectations of lawyers’
responsibility in providing external confirmation under the clarified ISAs. The
PPC decided to arrange for a meeting with Bar Council (jointly with members
from AASB) to consider some forms of guidance notes / template to assist
lawyers in issuing confirmation letters.
4.
Letter by SSM to Company Director
The meeting was informed that SSM has taken cognizance of the issues raised
and the questionnaires will be redrafted. SSM also clarified that this exercise
only involved auditors who were frequently requested to resign or being
terminated by their clients.
5.
Provision of secretariat support to IPAM
The meeting was informed that the EGM of IPAM has been postponed to early
next year. The IPAM will only request for secretariat support from MIA after the
EGM.
6.
The Expansion of the Coverage of the Pembangunan Sumber Manusia
Berhad (PSMB) ACT 2001 to the Profession
The Secretary reported that he has attended the PSMB briefing on July 16 and
was informed that the coverage of PSMB Act 2001 will be expanded to cover the
accounting and auditing industries, effective from 1 April 2011.
The meeting deliberated and decided on the following:
a) MIA will submit a memorandum to PSMB on its own, based on the past
experience of handling the same issue. Feedback from member firms on the
difficulties they encountered when dealing with PSMB and some statistics on the
training expenses will be obtained from member firms to support the position of
MIA.
b) On top of that, MIA will seek support from other professional services industries
to consider a joint submission to the Ministry of Human Resource through the
Professional Services Development Corporation (PSDC).
7.
Merger and Affiliation (M&A) Seminar
The M&A Task Force met on August 11 after the approval of EXCO (for the
formation of task force) and Nomination Committee (for the appointment of task
force members) in May 2010.
As the terms of reference revolved around the e-merger portal, the task force
members deliberated and identified some areas for improvements such as
removing onerous information requirements for online registration, categorising
the database to make it more presentable and user-friendly, etc.
However, the revision of e-portal might take some times to develop in view of the
current workload of MIA IT Department.
The task force meeting also proposed to conduct M&A seminars in 5 locations,
i.e. KL, JB, Penang, Kota Kinabalu and Kuching, in order to create awareness for
the M&A e-portal.
8.
Capital Market Working Group (CMWG) and the Proposed Revision to the
Terms of Reference
The meeting duly approved the revised terms of reference for CMWG, following
the first meeting of CMWG on July 20:
a) To serve as key liaison between the Institute and regulators on capital
market related matters;
b) To consider practical problems faced by members relating to the
application and compliance with the regulations of the capital market and
made recommendations to the relevant authorities;
c) To formulate and provide guidance notes for the Council to be issued to
members on the application of auditing and accounting standards in
various aspects of capital market practice but mainly limited to the
submission of documents to the authorities of the Capital Market;
d) To consider and recommend principles of good practice on issues not
covered by Auditing & Assurance Standards Board (AASB), Financial
Reporting Standards Implementation Committee (FRSIC) and the Ethics
Committee;
e) Matters related to auditing standards and its principles (excluding any
derivative materials to be developed) will still fall under the domain of the
AASB.
The meeting was informed that the exposure draft for 3 issues raised by SC has
been issued out to MIA members and the deadline for comment is 31 August
2010. Any comments received will be dealt with by the CMWG and thereafter a
circular on the accounting treatment of the 3 issues will be issued out to all
members of MIA as a guideline.
9.
MEMBERS ENGAGEMENT SESSIONS (MES) 2010 AND THE AUDIT
ROUNDTABLE
Members Engagement Sessions (MES) 2010
The Chairperson reported that the MES in Kota Bharu and Penang have been
conducted on August 9 and 13 respectively. The MES in KL will be held on
September 22 and she requested a second email blast on the MES in KL since
the number of participants is not encouraging.
For MES in Sabah and Sarawak, the meeting decided to hold the M&A seminars
in conjunction with MES. The Secretary was requested to revise the budget by
taking into account the M&A Seminar for MIA CEO’s approval. The incremental
cost should not be too prohibitive.
MIA-ACCA Audit Roundtable Sept 22
The meeting was informed that panellists have been fixed and MIA is in the midst
of inviting the remaining guests.
Marketing Campaign for the Clarity Project
Member raised concern on the awareness level of auditors as well as the general
public on the clarified ISAs. Given the importance of understanding the clarified
ISAs, the meeting decided to launch an awareness campaign to ensure MIA
members and the general public be educated appropriately inter alia, the impact
of clarified ISAs on the quality of auditors’ works and the subsequent impact on
the audit fee due to the higher responsibilities of auditors.
Among activities that could be organised are dialogues with members, press
conference, articles in Accountants Today, publication of clarified ISAs in CDRom format and briefing on clarified ISAs for the media, etc.
The PPC will propose to council for the appointment of the following council
members to champion the Clarity Project:
a) En Mohamed Raslan bin Abdul Rahman – as he is also a member of AASB, who
is well-versed in the clarified ISAs;
b) Mr Billy Kang – as he is also a Chair of APC and a good representative for
SMPs.
10.
Report from Sub-committee Chairs
Audit Practice Sub-committee (APC)
a) Audit Licensing Framework: the APC has deliberated on the proposed new audit
licence application framework. However, further works need to be done prior to
submission to PPC.
b) Awareness Campaign: the committee agreed that an awareness campaign on
Clarity Project need to be championed by MIA to create awareness on ISAs
among auditors and the general public.
c) External confirmations: meetings shall be scheduled with ABM and Bar Council
on the rising expectation of bankers / lawyers’ roles in providing external
confirmation, in line with the new clarified ISAs.
Taxation Practice Sub-committee (TPC)
a) Submission of Memorandum to MOF on recognition of post budget seminars
organised by MIA: this has been done on July 15.
b) Collaboration with CTiM for thought leadership programme: TPC members shall
email the possible topics to the Secretariat for consideration;
c) Tax Practice Guidance Notes: the TPC is considering the issuance of sample
engagement letter, professional clearance letter and a guide for charging of fee.
d) Appeal on the extension of tax return submission deadline: the MIA Taxation
Committee jointly with MICPA and MAICSA Taxation Committee will appeal to
IRB on granting of 7 days grace period after the official deadline of July 31.
Insolvency Practice Sub-committee (IPC)
a) Next Joint meeting: Sept 1, 2010 where there will be some updates from SSM on
the changes to Companies Act and the relevant licensing framework.
b) Courtesy visit to Malaysian Insolvency Department: this has been scheduled on
Aug 25, 2010 to meet up with Datuk Karim, CEO of MDI.
c) Closing of Business meeting with MDI: the meeting on creditors’ voluntary
liquidation and court sanctioned liquidation has been postponed to some other
date due to lack of responses received from MIA members.
10.
Malaysia-India Comprehensive Economic Co-operation Agreement (CECA)
and its Impact on the Accounting Firms
The Malaysia-India CECA is expected to be signed by the end of this year. This
will open up trade opportunities between the two countries. One of the areas
member firms might want to think of is the impact of CECA on their practices.
A circular will be sent to all member firms on any difficulties they encountered
when trying to set up offices offering accounting and other related services in
India, so that the MIA can bring up such issues for discussion or for Malaysia to
draw up a request to India based on members’ respective issues during the ongoing trade negotiation. The issues might be on entry barriers for foreign
professionals in all segments of professional practice. It should cover areas such
as licensing for foreigners, equity shareholdings, asset ownership, business visa
etc. Different treatments, if any between national and foreign professional can
also be highlighted for negotiation.
Concern was raised on the reciprocal rights for Malaysia in the above deal.
Professional qualification of Institute of Chartered Accountants of India (ICAI) is
recognised by Malaysia but this is not reciprocated by India. As an example, our
Malaysian’s Qualifying Examination (QE) is not recognised by ICAI.
11.
Any other matters
Human Capital Issues
Members raised concern on the human capital issues as there is an alarming
attrition rate in the number of auditors / accountants to countries like Singapore,
China and Australia. This exodus will leave a vacuum of experience that will lead
to issues of succession in the profession and developmental opportunities cost
for the nation.
The meeting agreed to propose to council that a council member should be
appointed to look into the above issue. Among the activities that could be
organised are interviews with users on the reason why the local graduates are
not employer-ready. Funding from MAREF can also be considered. A council
paper will be prepared to get the Institute to agree on the course to be taken.
IFRIC 15
The meeting was informed that the endorsement of IFRIC 15 ‘Agreements for the
Construction of Real Estate’ has been deferred due to its potential conflicts with
the Revenue Standards IAS 18. Besides that, other countries like Singapore,
Taiwan and Belgium are also complaining about the same issue pending
convergence.
Practice Management Guide
The Chairperson informed that the SMP Committee of the IFAC has issued the
‘Guide to Practice Management for SMPs’, which provides guidance on how
this sector can better manage their practices and ultimately operate in a
professional manner. Members are urged to download the publication from the
IFAC website.