1. finance
2. accounting and auditing

May / June 2014
Vol. 27 No. 3
HOW TO
SUCCEED
What differentiates a leader
from a follower? What are their
secrets to success? Can these
be replicated and learnt?
UNLOCKING
OPPORTUNITIES IN
BIG DATA
PREPPING FOR
RETIREMENT?
POWERING THE ECONOMY,
LEADING WITH DYNAMISM
4 - 5 November 2014
KL Convention Centre
“POWERING THE ECONOMY,
LEADING WITH DYNAMISM”
ISSN 1394 - 1763
A Bimonthly Publication of the Malaysian Institute of Accountants
9 771394 176008
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Info on page 34
Contents
MAY/JUNE 2014
05 EDITOR’s Note
06 President says
08 TRENDS TO NOTE
n
Stewardship
10 How to Succeed
16 The Business of Innovation
n
Gamechangers
20 Unlocking Opportunities in
Big Data
08
24 Revolutionising Corporate
Reporting
28 GST Guide for Property
Owners and Property
Holding Companies
n
54
Engagement
34 Powering the Economy,
Leading with Dynamism
n
Accountability
40 How to Be Good
44 Changing the
Auditor’s Report
49 MIA Annual Subscription &
Practising Certificate Fee
2014/2015
50 CPA Australia Special
Admission for MIA Senior
Members
52 NACRA 2014 – Towards
Accountability & Excellence
53 BOOK REVIEW
n
Sustainability
54 Prepping for Retirement?
n
BALANCE
58 Step Into My Coffice
58
20
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60 MIA NOTICE
MAY / JUNE 2014 | accountants today
3
Vision and Mission
MIA’S VISION
n To be a globally recognised and
renowned Institute of Accountants
committed to nation building.
MIA’S MISSION
n To develop, support and monitor quality
and expertise consistent with global best
practice in the accountancy profession for
the interest of stakeholders.
Section 6 of the Accountants Act 1967 (the
Act) states that the functions of the Institute
shall be:
• To determine the qualifications of persons
for admission as members;
• To provide for the training and education;
by the Institute or any other body, of
persons practising or intending to practice
the profession of accountancy;
• To approve the MIA Qualifying Examination
(QE) and to regulate and supervise the
conduct of that Examination;
• To regulate the practice of the profession of
accountancy in Malaysia;
• To promote, in any manner it thinks fit, the
interest of the profession of accountancy in
Malaysia;
• To render pecuniary or other assistance to
members or their dependents as it thinks fit
with a view to protecting or promoting the
welfare of members; and
• Generally to do such acts as it thinks fit
for the purpose of achieving any of the
aforesaid objectives.
mia Council
ACCOUNTANT GENERAL
Datuk Wan Selamah Wan Sulaiman
DEPUTY ACCOUNTANT GENERAL, CORPORATE
(Nominee of the Accountant General in MIA Council)
Dato’ Rosini Abdul Samad
Executive Mode Sdn Bhd (317453-P)
Tel: +603-7118 3200, 3205, 3230
Fax: +603-7118 3220
e-mail: [email protected]
web: www.executivemode.com.my
PRESIDENT
Johan Idris
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VICE-PRESIDENT
Datuk Zaiton Mohd Hassan
COUNCIL MEMBERS
Prof. Dr. Ayoib Che Ahmad
Assoc. Prof. Dr. Mohamat Sabri Hassan
Dr. Nurmazilah Dato’ Mahzan
Prof. Dr. Rozainun Ab Aziz
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Ken Pushpanathan
Ooi Thiam Poh, Alex
Dato’ Abdul Rauf Rashid
Mohd Noh Jidin
Mohd Zabidi Md Nor
Eugene Wong Weng Soon
Zahrah Abd Wahab Fenner
Yeo Tek Ling
Dr. Veerinderjeet Singh
Mohamad Azmi Ali
Ahmad Zahirudin Abdul Rahim
Chan Wan Siew, Paul
Dealanathan Joseph Lourdes
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Kua Choo Kai, Simon
Leong Kah Mun
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CHIEF EXECUTIVE OFFICER
Ho Foong Moi
Accountants Today is the official publication of the Malaysian
Institute of Accountants (MIA) and is distributed to all
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Ho Foong Moi
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Accountants Today • Editor’s note
The end of spring and the beginning of summer is
traditionally a time for rebirth. Thus, it’s a timely occasion
to present the new look Accountants Today (AT), which is
brighter and more vibrant, and I hope, more in tune with
the youthful and vigorous dynamics of the 21st century.
A
ccountants today come in many shapes and
sizes. We serve in many different roles and
bring value to diverse sectors. Whether we are
at the peak of our careers or just starting out;
whether we are in public practice, big business,
small enterprise, government, or education; what ties us
together is our training. Fundamentally, as accountants we
are taught to be analytical advisors and ethical decisionmakers who are able to create and preserve meaningful
value no matter where we are.
Regardless of where we are and what we do, we should
strive to be the best and to serve the public interest. This
is the core of the profession’s values. Fittingly, in this rejuvenated issue, we feature two leading accountants in very
different fields – finance advisory and corporate finance.
Lawrence Chia, CEO of Deloitte China, and Syed Ahmad
Taufik Albar, Group CFO of UEM Group Berhad (page
11) both demonstrate discipline, high education levels and
a drive to succeed. In the same article, we try to assess if
there is an x-factor for success and how to replicate it so
accountants can emerge as exemplary leaders.
At its root, the profession is all about people. It is our
behaviour and standards that determine whether the profession is held in high regard or reviled for bad behaviour.
Venue
Dates
Time
:
:
:
Accountants have been culpable for many crises – chartered accountant (ex)-Sir Fred the
Shred brought RBS to its knees at the peak
of the global banking crisis, but the best and
rest of us are taking steps to restore trust and
confidence.
How can we do this? One way is to make
our core product of financial reporting more relevant,
material and oriented towards long-term sustainability and
judicious use of resources to achieve business strategies
– through integrated reporting (see page 24). But at the
heart of the matter, we must behave well (see page 40). Our
actions and decisions must be above scrutiny. Accountants
cannot compromise on ethics and integrity because of
short-sighted greed. We have to be brave enough to be the
watchdog, and if it comes down to it, the lone voice speaking out against malpractices and corruption.
Although ethical principles of good behaviour are ironclad and immutable, fraudsters will always find new methods to subvert justice. To counter these, accountants must
always be in tune with the latest developments in order to
improve risk management and controls. MIA is committed
to keeping our members updated through coverage of the
latest issues – currently we are preparing members intensively for GST, and will run dedicated sections on GST in
AT issues for members’ benefit.
We hope that you enjoy this revamped issue of
Accountants Today, and do feel free to write to us on how
we can further improve for your benefit. n
Happy Reading!
MIA Kuala Lumpur
10 July 2014 (Thu), 20 Aug 2014 (Wed), 10 Sep 2014 (Wed)
10:00am - 12:00pm
MAY / JUNE 2014 | accountants today
5
Let’s work
together to build
a better future
President says | Johan idris
Only through the spirit of ‘KERJASAMA’ or working
together in synergy with our strategic stakeholders
can we increase the talent pool of professionally
qualified accountants.
It cannot be denied that a tertiary qualification does boost the potential for graduate employment, and we must recognise and
thank universities and IHLs for doing an excellent job in accountancy education given scarce
resources. Academia’s role in nurturing talent
is pivotal.
In this context, our strategic stakeholders include universiHowever, accountants need to go the extra mile to earn a
ties and institutions of higher learning (collectively acaprofessional qualification that can give them that edge. MIA
demia) as well as professional bodies.
is optimistic that academia and professional bodies workMIA holds both academic institutions and professional
ing together seamlessly can influence young accountants
bodies in extremely high regard. Both are key stakeholders
and convince them to take up professional qualifications.
with complementary strengths who have made invaluable
We need the help of academics to counsel and mentor new
contributions to the profession and national development.
talent to commit to the rigorous professional training which
Both are instrumental in the Institute’s vision to restructure
will equip young graduates with the specialised
the accountancy talent pool to drive Malaysia’s
skill sets that will irrevocably boost their capaeconomic transformation agenda. MIA strongly
bilities, competencies, and thus, their value to
believes that by actively working together to
employers. This agenda of strengthening the
uplift the quality of tertiary and professional
If we pull
profession’s talent pool cannot be achieved withaccountancy education, we can cultivate world
together
out full backing from higher educators.
class talent and enhance competency levels in
to win,
I strongly urge all stakeholders to work
line with global standards.
in synergy because MIA cannot take up this
everybody
How can we achieve global competitiveness
challenge to transform accountancy education
and standards? History shows that the tried and
wins.
and make it relevant single-handedly. This is
tested route is through continuing education
not a zero-sum game where one party wins at
and professional certification. A professional
the expense of others. If we pull together to
qualification delivers that challenging on-the-job
win, everybody wins – particularly our younger generatraining that helps graduates translate theory into practice.
tion, and Malaysia triumphs. We need the full support and
Professional qualifications are the key to bridging the
cooperation of academia and professional bodies because
expectations and competencies’ gaps between universities
these stakeholders possess strategic and complementary
and employers. Practical training required of candidates
strengths which can be synergised and synchronised to
who want that coveted title of Chartered Accountant is
enhance the talent pool for the sake of the profession and
the missing link in producing an ample pool of work-ready
the future of the country. Only then can the profession fulfil
accountants. Furthermore, a widely-recognised and up-toits nation-building agenda - to catalyse Malaysia to reach full
date professional certification can imbue talent with the
fruition as a high income and highly developed nation in the
valued competencies and branding that make them globally
21st century. n
competitive and relevant.
6
accountants today | MAY / JUNE 2014
trends
to
note
Economic and political outlook in and around the world
More Women CEOs in 25 Years?
A new Strategy& study predicts that in another quarter century, one-third of
incoming CEOs at the world’s largest companies will be women.
n In eight out of the last
10 years, the share of women
becoming CEOs of the world’s
biggest public companies has
been higher than the share of
women leaving that office. And,
over the past five years, the
total share of women becoming
CEOs was considerably higher
than in the prior five-year period
(3.6% versus 2.1%), according
to Strategy&’s (formerly Booz &
Company’s) 14th annual Chief
Executive Study, which examines
CEO turnover and incoming and
outgoing CEOs at the world’s
2,500 largest public companies.
Despite the upward trend,
women made up just 3% of new
big-company CEOs in 2013, a 1.3
percentage point drop from 2012.
However, more progress can be
expected over the next quarter
of a century. “As much as a third
of the incoming class of CEOs
will be women by 2040, based
on a 10-year trend in our data,
ever higher education of women,
continuing entry of women
into the business workforce and
changing social norms around
the world,” said study co-author
Ken Favaro, Strategy& senior
partner.
The Knowledge Advantage
n Eight out of ten business
leaders believe their future commercial success will be dictated
by how they best harness their
knowledge — the way they
share and apply the insights contained in their people, best practices and operating environment
— according to a new survey of
300 business leaders, commissioned by EY.
The survey of business leaders from across China, Germany,
India, UK and US forms part
of the report ‘The knowledge
advantage’, which explores the
interplay of the three key factors
behind business success in a
changing economic environ-
8
ment: bottom-line financials,
product and knowledge. The
research has identified that
knowledge is now rated more
highly than the more traditional capabilities of product
management and a financially
driven focus, with 81 per cent of
accountants today | MAY / JUNE 2014
respondents naming knowledge
as a key to their success.
When asked about their successes over the last 12 months,
61 per cent of respondents
identified maintaining customer
satisfaction as the key driver, with
knowledge-related capabilities
firmly supporting it. Fifty-seven
per cent of business leaders said
that capturing and using their
people’s skills and experiences
effectively had been a driver of
success, followed by improving
understanding of their market,
customers and products, which
was identified by half of those
interviewed.
However, despite the value
that leaders recognised in their
knowledge-based work, the
majority admitted their primary
concern over the last 12 months
was still the bottom-line, with
half most worried about the
financial issue of having to keep
business costs low.
•The six largest middle income economies
– China, India, Russia, Brazil, Indonesia
and Mexico – account for 32.3 percent of
world GDP, whereas the six largest high
income economies – United States, Japan,
Germany, France, United Kingdom, and
Italy – account for 32.9 percent.
•Asia and the Pacific, including China and
India, accounts for 30 percent of world
GDP, Eurostat-OECD 54 percent, Latin
America 5.5 percent (excluding Mexico,
which participates in the OECD and
Argentina, which did not participate in the
ICP 2011), Africa and Western Asia about
4.5 percent each.
Innovating
for High Asian
Growth
•China andfrom
India make
up two-thirds
of the
n Shifting
low-cost
manufacturing
Asia and the
Pacific
excluding
to economies
based
on economy,
knowledge,
innovaand South
Korea, iswhich
are part
tion,Japan
and high-end
services
imperative
if of
the OECD
comparison.
developing
Asia
is to sustain its high growth
rate.
•Russia
accounts
for more can
thanreach
70 percent
“Asia’s
emerging
economies
CIS, and
Brazil for 56 percent
of Latin
and of
gothe
beyond
- middle-income
levels by
America.
becoming
knowledge-based economies like
Japan, the Republic of Korea, and Singapore.
•South Africa,
Egypt,inand
account
Systematic
investment
newNigeria
information
about half of the
African economy.
and for
communication,
manufacturing
and other
technologies is needed for these countries
to create and innovate themselves,” Bindu
Lohani, ADB’s Vice-President for Knowledge
Management and Sustainable Development
said in advance of the recent ADB seminar
‘Innovative Asia: Advancing the Knowledge
Economy.’
Developed economies have spent time and
resources to move up the value chain. By
drawing on best practices and latest technologies, Asia can leapfrog by, for example, shifting
to smart energy grids, cloud computing, 3D
manufacturing, and mobile rather than fixedline communications.
At the same time, growing regional trade and
the likelihood that the region will account for
half of the global middle class and 40% of the
global consumer market by 2020 means it is
well placed to assimilate those technologies.
28%
of the world’s population lives
in economies with GDP per
capita expenditures above the
$13,460 world average and
72 per cent are below that
average.
The cheapest
economies are
Egypt, Pakistan,
Myanmar,
Ethiopia and
Lao People’s
Democratic
Republic, with
indices ranging
from 35 to 40.
The most
expensive
economies in
GDP terms are
Switzerland,
Norway,
Bermuda,
Australia and
Denmark, with
indices ranging
from 210 to 185.
numbers
Which are the
largest economies?
to
note
The SIX economies with the highest
GDP per capita are Qatar, Macao
SAR, China, Luxembourg, Kuwait, and
Brunei. The first two economies have
more than $100,000 per capita.
27%
China now has the largest share
of the world’s expenditure for
investment followed by the
United States at 13 per cent.
World Cup to give
very modest boost to
Brazil’s economy
The month-long tournament
will probably add just 0.2
percentage points to Brazil’s
economic growth this year,
according to the median of
116 estimates in a global
sample of economists polled.
• Source from Reuters
MAY / JUNE 2014 | accountants today
9
Stewardship
n By Accountants Today editorial team.
10
accountants today | MAY / JUNE 2014
How to Succeed
What differentiates a leader from
a follower? What are their secrets to
success? Can these be replicated and
learnt? Accountants Today attempts to
isolate some of the common underlying factors that link two of Malaysia’s
accountants of merit – in the hopes
that this will inspire and motivate
all accountants in Malaysia to rise
beyond the ordinary and be the best
that they can be.
Qualify as a
Professional
Accountant
Accountants work with numbers, so
it makes sense that advancement
requires a fundamental love of numbers and an analytical mind. Beyond
earning a tertiary degree, do strive for
a professional qualification. “A person
with a reputable accounting profes-
sional qualification stands out not just
for their expertise, but also for their
drive and determination – given how
tough it is to get through all the exams
while also holding down full-time
employment. Employers that realise
this will open doors for you to not only
join in but also progress and prosper
with their organisation,” related Syed
Ahmad Taufik Albar, a CIMA and MIA
member who was appointed as Group
Chief Financial Officer, UEM Group
Berhad effective November 2013.
Pick the qualification that fits
you best - international or local. “It is
important that aspiring accountants be
suitably qualified and the Malaysian
qualification (MIA) is as good as
any,” recommended Lawrence Chia,
an ICAEW and MIA member who
was appointed CEO of Deloitte China
effective 1 October 2013. Previously
How to
Succeed
Accountants play a pivotal role in enterprise
and government today. Two of Malaysia’s
leading accountants who’ve made a name for
themselves in divergent sectors share their
secrets to success.
from 2003 until late 2013, Chia served
as Deloitte’s Asia Pacific and China
Financial Advisory Leader during
which time he led many landmark
M&A transactions, such as the first
overseas acquisition by a Chinese auto
manufacturer, where Geely bought
Volvo for USD1.8 bn.
Never Stop
Learning; Soak Up
Experiences
No matter how high the climb, never
stop learning. “Passion for knowledge is important not just for passing
the exams but also for excelling in
one’s job. Challenges in the corporate
world are aplenty so your learning
doesn’t and shouldn’t stop at the point
of entry. The learning will continue
and in many ways is even more intensive and results-driven than in university,” urged Taufik.
Technical skills must be complemented by soft skills, particularly
communications. Formerly a champion debater, Taufik stressed the need
to be able to speak well and communicate your ideas.
Starting out in audit is a good
entry-level choice “as it helps you to
gain insights into why some businesses of the same type are successful
and some not. It gives you access to
C-suite decision makers and you can
certainly learn from them,” said Chia.
Be prepared for the long haul.
“The accounting profession is highly
demanding, requiring long working hours, and its worth is often
understated. However, it can be very
rewarding as one can see how advice
from accounting professionals brings
value to clients’ businesses,” said
Chia.
MAY / JUNE 2014 | accountants today
11
Stewardship
How to Succeed
Keep Abreast
of Global
Developments
In a world with porous borders, global
developments greatly affect industries
and markets.
One key development is increased
reputational risk and growing stakeholder demands. Accountants have
had to endure greater scrutiny in the
wake of many global and regional
crises. “In particular, the spotlight
has fallen on the multi-disciplinary
services offered by the audit firms
and on audit quality. Audited financial information is the cornerstone
of capital market integrity. Conscious
of our responsibility, the profession
has responded positively. Firms like
Deloitte have invested and continue
to invest more than ever in people
and processes. At the same time,
our engagement in proactive and constructive dialogue with global regulators and country oversight bodies is
driving enhancements to audit quality,” said Chia.
Despite these efforts, increasing
pressures are being placed on the
profession, especially in audit. “Public
expectations are not always realistic
about what reliance can reasonably be
placed on an audit of financial statements in terms of spotting financial
problems or fraud within a company.
The economics of performing audits
in this environment are challenging
and new regulations like mandatory
audit firm rotation putting additional
pressure on fees do not help.”
Meanwhile, Taufik identified multiple factors like technology, global
economic growth, the price of raw
materials, the stability of the supply
chain, funding availability and costs,
and the war for talent as exerting varying degrees of influences on business.
12
accountants today | MAY / JUNE 2014
One key development is
increased reputational risk
and growing stakeholder
demands. Accountants
have had to endure greater
scrutiny in the wake of
many global and regional
crises.
“In such an environment, ready-made
answers or solutions are hard to come
by. Often, you must go through the
struggle of synthesising various data
points, think things through from multiple angles as well as manage competing views from the people around you
before you can effectively figure out
the best course of action for a particular situation. Hence, the thirst for
knowledge especially in areas outside
of your core expertise, learning agility, strong determination and skills at
managing various stakeholders are
crucial ingredients for success.”
Anticipate
Challenges,
Leverage Change
Accountants, regardless of their sector, cannot evade challenges and
change.
Increasingly byzantine standards
are a major hurdle. “The accounting industry has become much more
challenging than when I first entered,
with more complex rules and regulations. Since 2013, the Financial
Accounting Standards Board (FASB)
has issued 20 updates in accounting standards as a reference, and
in a globalised marketplace we are
exposed to multiple regulations and
public oversight boards, both locally and internationally. In my early
days, I think there were only 25 or
26 SSAPs (Statements of Standard
Accounting Practice as issued by the
UK Accounting Standards Board),
and you dealt only with your own
regulators,” said Chia.
“Accordingly, the time demanded
of an auditor these days is rigorous
given the need to be attentive to regu-
How to Succeed
latory changes and updates, notwithstanding the fact that reporting deadlines have not relaxed either. This
engenders an increased tendency to
over audit as opposed to under audit,”
explained Chia.
Taufik noted that his biggest challenges revolved around effectively
managing change. No surprises here,
since corporate organisations are
focused on change to enhance performance.
“There is no single one-size-fitsall blueprint for managing change,
especially in the context of process,
systems or organisational transformation as each one is unique. The key is
to never let your focus on the “why”
to waver. Some people would immediately dive into the steps and mechanics of delivering the change, and as a
result, the very reason for doing it in
the first place gets lost along the way.
You need to avoid this and maintain
absolute clarity and relentless focus
on why exactly you are embarking on
the change. And in doing so, a lot of
the answers to questions on how, what
steps to take and which stakeholders
to engage will become apparent,” said
Taufik, who participated in leading
roles in major change programmes
including process streamline project
and SAP implementations in Malaysia
and Australia.
Communicate
and empower
Manage talent, the prime organisational asset, by keeping communications
open. “When you engage with people,
you have to communicate, empower
and make them accountable. This is a
key part of my work as CEO. One of
my management philosophies is that
we should be approachable and have
an open door policy where our people
Change Manager,
Finance Leader
From the young age of 17, Syed
Ahmad Taufik Albar Group
Chief Financial Officer, UEM Group
Berhad, already knew that he
wanted to become a successful
corporate leader helming a large
organisation. His parents advised
him that an accounting qualification would give him an edge and
open doors for him to achieve his
ambition.
But it couldn’t be just any
accounting qualification. He
sought a qualification that
wouldn’t be too focused on technical accounting aspects but also
provided “a more holistic knowledge framework to help me further
my career in finance and help me
become a more effective corporate
leader.” Taufik considered several
qualifications, including an MBA,
but personal and professional reasons swung him in favour of CIMA.
While working for Shell, Taufik
discovered that CIMA was highly
regarded in the global oil giant.
“When so many of the finance
leaders in Shell that I looked up to
at the time had the CIMA qualification, it was a pretty straightforward
decision for me to choose CIMA.”
Taufik was based in The Hague,
Netherlands at that time, but travelled to London every weekend to
visit his wife while attending the
many CIMA preparatory courses
conveniently available in the UK
capital on Saturday and Sunday.
“The CIMA qualification gives
me the added dimension of being
more than just an accountant who
only focuses on financial reporting
but one who is also seen as having
an eye for what drives a business’s
profitability, and over time as a
strategic business partner and key
enabler.”
Interestingly, Taufik has always
been a high achiever and gogetter, which is perhaps another
trait differentiating accountants of
merit. Shell thought very highly of
his potential, and Taufik was the
youngest ever staff to have performed a CFO role in the only public-listed Shell company in Malaysia
from 2004 to 2006. He holds a
Masters degree in Economics from
the International Islamic University
Malaysia (IIUM) and an upper
second class honours degree in
Accounting from IIUM, graduating in the top 10 in a class of 120
students.
MAY / JUNE 2014 | accountants today
13
Stewardship
How to Succeed
should feel that our firm’s leaders are
accessible to them and can discuss
issues affecting them,” explained Chia.
Don’t shun social media. Chia estimates that social media platforms such
as Yammer or WeChat have enabled
him to connect with some 3,000 colleagues.
Recognise merit. Malaysian professionals make up no more than 1% of
Deloitte China’s multinational, multicultural workforce. As an equal opportunities employer, Deloitte focuses on
selecting “the right person for the job
at hand,” said Chia.
In his role as Group CFO, Taufik
provides leadership to the entire
finance team, which includes Group
Accounts, Treasury, Tax, IT and
Procurement.
“If I have to pick two things that I
feel are key to success in the corporate
world, it would be trust and accountability, i.e. having trust in your own
abilities and taking accountability for
the results you are meant to deliver…
and extending these same values to
your team and empowering (and trusting) them to get on with their jobs,”
remarked Taufik.
Give Back
Generously
Research has shown that altruism
can be very rewarding. Chia believes
in sharing knowledge generously to
upskill others, despite difficult barriers. “In 1991, I helped to organise and
conduct a series of accounting seminars in China in Chinese. Prior to 1990,
there were no accounting courses in
any tertiary institutions in China. I had
to gather Chinese speakers who were
accountants from SEA, HK and Taiwan
to give the seminars and they had to
translate all international accounting
standards into simplified Chinese for
14
accountants today | MAY / JUNE 2014
In addition to
understanding standards
and analysing numbers,
accountants must strive
to differentiate themselves
given that many young
talents today are
choosing to pursue
accountancy.
the attendees!”
Taufik meanwhile actively participates in “graduate attraction programmes” for his current employer
and has given career guidance and
motivational talks to both university
and school students..
March to
the Beat of Your
Own Drum
Perhaps the most unique aspect of
these leaders is how different and
diverse their paths were, despite similar training as professional accountants. Chia excelled in professional
services and finance advisory in
China, and Taufik in corporate finance
in different industries and countries, with Shell in Australia and the
Netherlands, Axiata in Cambodia, and
back in Malaysia with UEM.
The message here is that each
accountant should find a niche where
they can shine. In addition to understanding standards and analysing
numbers, accountants must strive to
differentiate themselves given that
many young talents today are choosing to pursue accountancy.
Put another way, do add value to
your accounting degree to stand out.
Don’t become just another brick in
the wall. n
How to Succeed
Conquering China
Engineering’s loss is accountancy’s
gain. Lawrence Chia, CEO of
Deloitte China, had initially read
engineering in the UK in the 1980s.
He changed his mind when he
vacationed back home in Malaysia
and saw unemployed engineers
and students hanging out in the
local coffee shops.
“I thought: ‘Wow! It’s tough to be
an engineer!’” shared Chia via e-mail
recently from Beijing, China, where
he’s based. That epiphany prompted
him to become an accountant
instead.
After graduating from university,
Lawrence joined Deloitte in the UK
where he qualified professionally
as a Chartered Accountant of the
Institute of Chartered Accountants
in England and Wales (ICAEW).
Upon returning to Malaysia, he
joined HRM (the now-defunct
Arthur Andersen) and subsequently
became a member of MIA. In 1987,
he rejoined Deloitte in HK and
became a CPA of the HKICPA. “A professional accountant needs to keep
updated and abreast with developments in the profession in order
to be competitive, which is why
joining the respective professional
accounting bodies at the place of
work is so valuable,” recommended
Chia.
Notably, Chia was the first
Malaysian to be made a partner in
a Hong Kong Big Eight firm. “I had
to master the Cantonese language,
develop business contacts and
prove my worth in a foreign country.”
In 1997, after 15 years
in auditing, Deloitte gave
him the challenge of
starting up the Corporate
Finance business for
Deloitte China in the
midst of the Asian financial crisis. “I helped build
the Deloitte China
Financial Advisory
businesses literally from just two professionals,
comprising myself and another
colleague. Today, this business has
a team of about 1,000.” The opening
up of China’s market and nurturing
talent are among the key highlights
of his career. He takes pride in
developing PRC Chinese professionals to excel in advisory. “During
an IPO for one of my earliest PRC
clients in the early 1990s, I led a
team of 16. Today 13 of them have
also been made partners of Deloitte
China.”
In 2000, he was made Deloitte’s
Head of Financial Advisory Services
in Asia Pacific, serving clients in
the region. Last October 2013, he
was elected CEO of Deloitte China,
managing a firm of over 10,000 professionals offering the full spectrum
of attest and non-attest services. In
this landmark move, Chia is the first
ever advisory partner to be elected
as CEO for Deloitte China.
But that’s not all. At the start
of 2014, Chia was recognised by
Accounting Messenger, a national
accounting weekly in Mainland
China, as one of the ten most
prominent finance professionals in
China. The who’s who on this list
included China’s Minister of Finance
Luo Jiwei, General Director of State
Administration of Taxation Wang
Jun, Auditor General of National
Audit Office Liu Jiayi, and CFO of
Baidu Jennifer Li.
Despite slowing growth, China is
still the place to be. Chia believes
that China will continue to play
an increasingly important role in
the world’s economy. Analysts predict that China will emerge as the
world’s biggest economy by 2020,
despite becoming part of the global
economy only in the 1980s, or in
less than fifty years.
Opportunities in China’s professional services are equally
astounding. A recent global study
undertaken by Deloitte on addressable market opportunities for
professional firms in 2020 saw the
likelihood of China overtaking the
UK and Germany to be the second
biggest professional services market
after the US.
MAY / JUNE 2014 | accountants today
15
Stewardship
n BY Majella Gomes
The Business
of Innovation
Innovation and being different will
be the keys to success in business and
life in the 21st Century.
Innovation and the willingness to be different is the glue that ties together Sahar
Hashemi, Charles Leadbeater, Christian Gansch and Pierluigi Collina, all world leaders
in their respective fields: coffee entrepreneur, management guru, orchestra conductor
and soccer referee. While each comes from very different backgrounds and industries,
they are acknowledged as world leaders in their field. Each taught important lessons
based on personal experiences that are relevant and inspiring at the recent ‘Business of
Innovation’ forum organised by the London Speaker Bureau with MIA on board as its
strategic partner.
An innovative group: Christian Gansch, Pierluigi Collina, Sahar Hashemi, Datuk Ismail Ibrahim,
Chief Executive Iskandar Regional Development Authority (IRDA) and Charles Leadbeater.
16
accountants today | MAY / JUNE 2014
The Business of Innovation
Coffee Epiphany
Mad is Obvious
By her own admission, coffeepreneur
Sahar Hashemi was the furthest thing
from an entrepreneur as anyone could
ever be. “Twenty years ago, Richard
Branson was considered an entrepreneur,” she said. “I certainly didn’t see
myself as one; I was a lawyer.” But as
she progressed in her career, she found
she couldn’t be herself. “Law wasn’t
suited to my personality, and I found
myself being more and more ‘switched
off.’ Work wasn’t about personality or
passion; it was just about making a
Apple makes things
that are designed to be
used without thought;
they are simple and
intuitive. You need to
have a sense of purpose.
Good design is not
enough.
Formerly a journalist, Leadbeater
is widely considered as one of the
world’s top management thinkers, and
his client list includes organisations
such as the BBC, Vodafone, Microsoft,
Ericsson, and the Royal Shakespeare
Company, whom he advises on innovation. Speaking on the subject of ‘Design
Thinking’, Leadbeater quipped that:
“Innovation is a kind of religion these
days”, pointing to Apple as an example.
“The new Apple stores actually look
like cathedrals, with soaring columns
of glass and steel but the beauty of
Apple instruments lies in their design.
That’s why people buy them. Apple
makes things that are designed to
be used without thought; they are
simple and intuitive. You need to have
a sense of purpose. Good design is not
enough.”
living. I was totally disengaged from
my job.” Then, a death in the family
became a wake-up call, and she decided
to leave law and do what she wanted
to do. A trip to New York to visit her
brother turned into an epiphany of
sorts when, jet-lagged, she walked into
a café and “the smell hit me!”
Completely smitten by the New
York café experience, she discussed
setting up a similar establishment
with her brother but “I didn’t want
Starbucks,” she said. “I wanted to replicate the whole experience of that
New York café – the décor, the ambience, the smell – in London, where I’d
never had anything like it before. I just
wanted to make good coffee available
to everyone in the UK.” The entrepreneurial spirit kicked in; she returned
to London, did extensive research and
raised enough money to start one
retail outlet, which opened its doors
on 1 November 1995. In 1996, they
opened a second outlet and by 2000,
they had 60 shops. In 2001, Coffee
Republic was named one of the Best
British Brands of the Millennium.
Urging participants to “start where
‘mad’ is obvious”, Leadbeater illustrated his point with the example of
Chester Carlson, who invented the
photocopier, which he tried to sell
to his then-employer Kodak. Kodak
turned him down because it saw the
photocopier as a mad idea, and he went
on to establish Xerox. However, Xerox
later turned down Steve Jobs when he
tried to sell them his first computer.
“The moral of the story is that revolutionary ideas come from places which
are unexpected,” Leadbeater said.
MAY / JUNE 2014 | accountants today
17
Stewardship
The Business of Innovation
“It doesn’t always come from the
experts. Take mountain bikes for
instance. They weren’t developed by
people in the industry. The first mountain bike was a hybrid developed by
cyclists who just wanted to ride on
rough terrain.”
He exhorted everyone to find
people they could work with, if they
wanted to succeed in their chosen
field. “Don’t be a lone ranger,” he
cautioned. “You need other people to
make it real. You also need to learn
from criticism and failure, not just success.” Using learning to swim as an
analogy, he said that “you know you’re
innovating when you can’t touch the
bottom of the pool. But you don’t learn
to swim holding on to the side of the
pool. You have to get into the water,
let go, and swim from one side to
another.” He also urged aspiring business innovators to dare to stand for
something they believed in, because
businesses are built on values. “You
have to believe that what you have is
better and more valuable than your
competitors,” he stressed.
Orchestrating an
organisation
Can organisations learn from orchestras? Christian Gansch, internationally renowned conductor, producer and
music consultant, described orchestral
performances as a metaphor for how
to run an organisation effectively. He
has worked with the BBC Orchestra,
the Berlin Symphony, Russian National
Orchestra, Orchestre Philharmonique
de Radio France, and Tokyo’s NHK
Symphony. Gansch is also a four-time
Grammy winner. “Managing orchestras is a very complicated business,
rather like managing an organisation,”
he remarked. “It’s a question of con-
18
accountants today | MAY / JUNE 2014
What the (paying)
audience is concerned with
is that they get what they
paid for, and if the whole
experience falls short of
their expectations, they are
unlikely to return.
sciousness or awareness about creating
unity. On his own, the conductor cannot
do anything. He needs strong leaders
within the orchestra to make things
happen.”
While some people may think the
conductor is not necessary, he actually
has a difficult job because he needs
to understand the different roles of
the musicians – and each role comes
with problems peculiar to that situation. Different musicians require different things, and different environments affect these needs. All musicians deal with pressure. “International
orchestras have only three rehearsals,”
Gansch divulged. “Each rehearsal is
only about two and a half hours, so
we have just seven hours or so to get
everything right. Players need to be
flexible and adaptable, and be able to
change very quickly. They also need to
be able to listen to each other and work
together. Last-minute changes are the
norm, but regardless of all this, everything has to be perfect when we are on
stage.”
Indeed, conducting an orchestra
is a major exercise in organisational
management. The audience is not concerned about the problems that individual musicians may be having with the
score, the stage, the other musicians
or the conductor, he added. What the
(paying) audience is concerned with
is that they get what they paid for, and
if the whole experience falls short of
their expectations, they are unlikely to
return. Even worse, they may spread
negative reviews about you, and make
your future performances very difficult indeed. Similarly, stakeholders
of any organisation know what they
want, and if they feel dissatisfied for
any reason, they will make this dissatisfaction known, probably at the worst
possible time.
“Conductors conduct in advance;
the orchestra follows,” stated Gansch,
drawing further parallels between
conducting and leading an organisation. “Similarly, leaders have to think
in advance and give space to others
to perform. Performers have to listen to each other and work together
to achieve optimum performance. As
strange as it may seem, harmony never
comes from harmony. Harmony comes
from friction.”
The Business of Innovation
have two seconds to do it, and the
rest of your life to live with the consequences – which can be painful if
you make the wrong decision!” He
added that the situation which warrants a quick decision is inevitably a
difficult one, and public scrutiny is
always intense. All decisions have an
economic impact; the referee’s decision during a match can influence the
life of a club.
The Science of
Decision-Making
Perhaps one of the most difficult
things that management is responsible
for is making decisions. In this day
and age, any decision made has farreaching consequences but because
of the dynamics of business today,
decisions have to be made quickly and
speedily implemented so that firms
can seize opportunities, stay in the
game, and stay ahead of the competition. But how do you make the call
when there are so many factors to
consider, and so little time to consider
them in? Pierluigi Collina, billed as
“The World’s Most Famous Football
Referee”, spoke frankly on making
decisions, and taking responsibility for
the consequences. Widely considered
the best referee of his generation, he
is renowned for his sense of fair play
and being calm under the worst of
pressures.
“Making a decision involves handling crises,” he said. “You recognise
and identify the problem, consider
the nature of it, analyse and develop a
possible solution. Then you select the
best possible alternative and execute
it. Laid out in this fashion, it sounds
workable. The only problem is that
when you’re on the playing field, you
Like the other speakers, he
emphasised that there is no secret
to success; it cannot be programmed
– you can only prepare for it. If the
same things don’t work the way they
used to, you have to change strategy. “Being successful is all about
details and teamwork,” he advised.
“Talent wins games, but teamwork
wins championships.” The good news
is that referees today (like CEOs,
Boards and senior management)
don’t have to decide alone; they have
people and technology to help them.
“But each team member must know
what to do,” he cautioned. “Each
has to understand his/her role and
be able to interact with teammates
effectively. You need self-confidence
to make decisions, and you have to
trust yourself. In any moment of decision, the best thing you can do is the
right thing. The next best thing is the
wrong thing – but the worst thing is
not to make any decision at all, and
do nothing.” n
MAY / JUNE 2014 | accountants today
19
Gamechangers
n By CIMA
Unlocking
opportunities in
Accountants need to be able to add value to Big Data
and data analytics to optimise business performance,
and fast-forward their careers in the new data economy.
20
accountants today | MAY / JUNE 2014
Unlocking Opportunities in Big Data
Data has become a key focus for
corporate leaders today, according
to a recent report ’From Insight to
Impact - Unlocking the Opportunities
in Big Data’ jointly released by
the American Institute of Certified
Public Accountants (AICPA) and the
Chartered Institute of Management
Accountants (CIMA). The report
draws on research conducted by CIMA
and the AICPA including a survey of
over 2,000 CFOs and other finance
professionals working in a broad range
of business sectors across more than
80 countries, and a programme of
interviews with senior executives.
According to the research, data
holds the potential to change the way
business is done, in the view of nearly
nine in ten (87%) of the finance professionals surveyed for this report.
Other research highlights that just
over half (51%) of corporate leaders
now rank big data and analytics as a
top ten corporate priority.
This is all part of a wider shift
towards a data-driven era of business,
building on the ongoing IT revolution
of recent decades. The volume and
variety of data available for analysis is
expanding exponentially. Meanwhile,
increasingly powerful technologies
have emerged to enable more sophisticated data management and analytics. The wealth of data sources available today is almost unlimited, and
includes call-centre recordings, external data feeds, machine-generated
data, customers’ social media posts,
and a huge amount more. These related trends popularly summed up by
the term ’big data’ are combining to
enable today’s organisations to unlock
new sources of insight and value.
New Skills Needed,
New Benefits
Accrued
Inevitably, taking advantage of these
opportunities with data will be challenging for companies, creating the
need for new skills, tools and ways of
thinking. So what does the data-driven era imply for business leaders, and
finance professionals in particular?
What benefits are being derived from
new approaches to data analytics?
And what role should accountants
seek to play in this area?
The wealth of data
sources available today
is almost unlimited,
and includes call-centre
recordings, external data
feeds, machine-generated
data, customers’ social
media posts, and a huge
amount more.
In seeking to answer these
critical questions, the
report reached some key
conclusions:
1 Data is becoming a core business
asset which business cannot afford
to ignore. Companies of all sizes and
types are already generating material
value from data in a range of ways.
This spans all industries, with examples emerging from social media and
internet companies, food and beverage companies, fast food chains,
banks, manufacturers and hotels,
among many others.
Furthermore, academic research
reveals the scope for productivity
gains on the back of data-driven decision-making. The finance professionals surveyed for this report agree,
pointing to greater efficiencies and
better KPIs as some of the benefits
they expect from data.
2 Firms face a steep learning curve
in harnessing their data for commercial benefit. For most companies,
fully adapting to a data-driven era of
business remains a work in progress.
Eighty six per cent of the finance professionals surveyed agree that their
businesses are struggling to get valuable insight from data, not least due
to issues such as organisational data
silos, challenges relating to data quality, or the ability to work with unfamiliar non-financial data. To help counter
this, the software industry continues
to develop a growing range of tools
and applications to help companies
of all sizes find and extract insights
from their data. But this remains
challenging because businesses must
first determine how they will use data
to improve their performance before
selecting a technical solution.
MAY / JUNE 2014 | accountants today
21
Gamechangers
Unlocking Opportunities in Big Data
3 On the bright side, finance professionals are well placed to help translate data into commercial insights
and value. More than 90% of survey
respondents agree that finance has
an essential role to play in helping
their organisations benefit from datarelated projects. But there is also often
uncertainty as to what that role might
be. Advanced types of data analysis
will often require the expertise of data
4. Delivering on the potential of data
will make closer finance/business
partnering more important than ever.
To truly unlock the opportunities in
big data, accountants will need to
partner more closely with three sets
of key stakeholders: their colleagues
in IT who capture much of the data;
the data scientists who can perform
advanced types of analysis on that
data; and finally business leaders who
The finance professionals
who deliver best on this
will be those willing
to adapt their focus to
include big data, and
push to become a more
proactive business
partner to the rest of the
business.
scientists, who may hold a PhD in a
relevant discipline, and it is rare for
finance people to have the specialist
skills required in this area.
However, where finance can add value
is by applying their combined knowledge of finance and the business to
help translate new analytical insights
into commercial impact, for example,
through planning, budgeting, forecasting and performance management.
“It is not the accountant’s job to go
down to the lowest level of data, but
to know how to aggregate outcomes
so it can be converted into an insightful report,” said James Miln, Senior
Finance Director, Global Operations
Finance, Yahoo!, in the report.
22
accountants today | MAY / JUNE 2014
can ensure new ideas are turned into
concrete action. This requires finance
professionals to have a broader range
of management skills: clear communication, the ability to lead and influence, and a strategic understanding
of the business - all of which are
essential for the business partnering
role that many firms want finance to
play.
5 Data also holds opportunities for
finance professionals to unlock new
career openings. The data-enabled
era creates an opportunity for
today’s management accountants to
develop new skills and competencies. Indeed, 85% of survey respon-
dents believe that increasing their
ability to work with big data will
enhance their career and employability. Although some will no doubt
seek to bolster their data analysis
skills, the ability to play a central role
in converting the potential of data
into real commercial value could act
as a boost for those with an aspiration to play a more strategic role in
the organisation.
6. Delivering on new data insights is
as much an opportunity for small and
mid-size companies, as it is for large
ones. Companies of all sizes see the
scope to benefit from building a more
data-centric business.
Although smaller businesses have
fewer resources for data projects, they
have less legacy IT complexity to deal
with, as compared with their larger
counterparts, along with a willingness
to move quickly. They can also tap
into a growing number of easy-to-use
applications and data services, which
can help them benefit from data at
minimal cost or risk. However, the key
to success for small as well as large
firms is to develop clear objectives
for their data projects, and only then
to select the tools or services that are
best aligned to their particular goals.
Challenging
Finance
The challenges outlined above are
substantial, and will certainly stretch
finance professionals’ skills into unfamiliar areas. Finance needs to look
beyond traditional business metrics
and recognise the commercial potential of embracing a wider set of data.
In addition to the essential financial
and enterprise data they already work
with, finance will need to review other
Unlocking Opportunities in Big Data
CPA Practice
Bridging Program
Building Your Own
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7. Established firm with developed ISQC1 system and
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non-traditional sources of data in order to gain a
more thorough understanding of business performance.
The finance professionals who deliver best on
this will be those willing to adapt their focus to
include big data, and push to become a more proactive business partner to the rest of the business. The
implications of the shift to data-enabled businesses
for finance are far-reaching. Companies need their
finance teams to play a pivotal role, working with
data specialists to drive meaningful commercial
insights from corporate data and, most importantly
of all, helping the broader management team to
interpret and apply the power of that data to make
better strategic decisions. Inevitably, this will push
finance professionals into new and unfamiliar areas,
and require them to develop new skills and new
ways of thinking. For those who can manage that
transition successfully, however, there are clear
opportunities to play a decisive role in an area that
will become an increasing source of competitive
advantage for firms of all types and sizes in the coming years. n
8. Cross border business capabilities – public listing,
corporate advisory and asset protection.
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T: (603) 2284 5126
F: (603) 2284 7126
E: [email protected]
w: www.weldasia.com
We welcome any potential opportunities for possible merger and
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benefits together. Please feel free to contact our Mr. CK LEE on his
Hong Kong number (852) 6491 9889 or email: [email protected]
MAY / JUNE 2014 | accountants today
23
Gamechangers
n by Majella Gomes
Revolutionising
Corporate Reporting
Integrated Reporting is set to transform
the way Companies Communicate Value
While Integrated Reporting (IR)
may not yet be the norm for the
majority of Malaysian companies, it
is already proving its worth in other
countries which are early adopters.
Results of efforts implemented in
the past five years are becoming
tangible, and the trend is expected
to grow as more companies come
to realise the real value of IR.
This was the primary message of
‘Integrated Reporting: Revolutionising
the Way We Communicate Value in
Malaysia’, a key event which was a
collaborative effort of MIA, ACCA,
the Securities Commission and the
International Integrated Reporting
Council (IIRC). On hand to deliver
presentations were Paul Druckman,
IIRC CEO, Mikkel Larsen, MD and
Head of Tax & Accounting of DBS,
and Chiew Chun Wee, ACCA’s Asia
Pacific Head of Policy.
24
accountants today | MAY / JUNE 2014
The Way Forward
In his welcoming address, Goh Ching Yin,
Executive Director for Market Development,
Securities Commission said this inaugural IR
Forum was essentially a platform on which to
create momentum for the shift towards the
application of IR. “Stakeholders are demanding
higher-quality information, and companies have
to be more transparent about their operations,
while using their resources sustainably,” he said.
“IR can create value because it articulates the
interdependencies of all factors. It’s not about
more reporting; it’s about better reporting. Many
countries have already adopted and successfully
operationalised it. IR can be the way forward for
corporate reporting in Malaysia.”
Druckman provided an overview of IR and what
organisations can hope to achieve by implementing
it. Starting out as an initiative of HRH The Prince of
Wales in 2004, IR has been gaining rapid momentum on a global scale. In December 2013, the IIRC
released the International Integrated Reporting
Framework following extensive consultation and
testing by businesses and investors in all regions
of the world, including the 140 businesses and
investors from over 25 countries that participate in
Revolutionising Corporate Reporting
GOAL
The long-term goal
is to make a lasting
contribution to the
sustainability and
development of
the business
environment.
the IIRC Pilot Programme. Druckman
said, “The IIRC’s mission is to
embed IR in mainstream business.”
The long-term goal is to
make a lasting contribution to the sustainability
and development of the
business environment.
IR is becoming increasingly regarded as having the ability to drive
changes in behaviour
and demonstrate how
organisations can think
in an integrated manner
by providing information
that helps people understand better, thereby creating value for them. “We
are talking about sustained
delivery of value creation,”
Druckman pointed out. “The
cohesive approach to reporting
embodied in IR communicates all
factors that enable companies to create value, which can enable more efficient
distribution of resources. There is a need to
ensure clarity at all times while enhancing
stewardship of a range of capitals – financial, manufactured, human, intellectual,
social and relationship and natural.”
MAY / JUNE 2014 | accountants today
25
Gamechangers
Revolutionising Corporate Reporting
Three or four decades ago,
companies quantified their value
primarily via their physical
assets. Today, business models
have evolved, and more than just
tangible assets have to be factored
into doing business. Reporting
thus has to evolve in parallel,
and demonstrate the connectivity
between factors.
Making
comprehensive
connections
Exactly how are all these connected?
“IR is not easy,” he conceded. “There
are no easy solutions that support
integrated thinking and decisionmaking in organisations.” But the
main reason for implementing IR is
that the global economy is in a state
of transition. Manufacturing and the
production of physical assets used to
be the main generators of value; these
are declining in importance today.
Three or four decades ago, companies quantified their value primarily via their physical assets. Today,
business models have evolved, and
more than just tangible assets have
to be factored into doing business.
Reporting thus has to evolve in paral-
26
accountants today | MAY / JUNE 2014
lel, and demonstrate the connectivity
between factors.
This gives rise to another issue:
how do organisations ensure that
IR creates value for the company?
“Transparency alone is not enough,”
emphasised Druckman. “You have
to have transparency within context.
Sometimes more transparency is
not necessarily better. It has to be
intelligent transparency. Corporate
reporting influences behaviour, and
investors are usually not as far ahead
(in recognising issues) as the companies they invest in. IR is associated
with long-term, not transient investors.” He noted that Europe and other
regions had already embraced IR,
and that it was good to see that adoption in Malaysia is being encouraged
by the stock exchange and regulator.
“IR is not brand new,” he concluded.
“But there is a lot of potential in
Malaysia for building more financial
sustainability, so you have to look
carefully at what is being done and
take it from there.”
Singapore’s Development Bank,
DBS, was held up as an example of
how business benefits can be realised
through IR. Mikkel Larsen, MD and
Head of Tax & Accounting at DBS
recounted how DBS had instituted IR
as part of an IIRC pilot programme.
DBS adopted IR as part of its efforts
to align its vision and strategy, Larsen
said, because it helped articulate values and further crystallised the valueadded component for stakeholders.
“There is no right time to implement
IR; what should be considered is the
early mover advantage,” Larsen said.
“If you’re waiting for the right time to
implement, the environment will have
Revolutionising Corporate Reporting
Panel Discussion Session on Integrated Reporting (L-R): Wan Ahmad Ikram Wan Ahmad Lotfi, Johan Idris, Nik Mohd. Hasyudeen Yusoff, Paul
Druckman and Mikkel Larsen.
moved on by the time you find it. But
you will benefit as one of the first to
start IR.”
A Long-Term Vision
It is imperative to understand that
the vision for IR is a long-term one,
he added. Although initial acceptance
may be slow, IR will come to be valued
by investors over time. It has to be
taken step by step, and improved upon
gradually. Advocating care when disclosing information, he said that there
was no need to disclose confidential
information. Larsen highlighted also
that DBS had taken the opportunity to
adjust the presentation of its balance
sheet and note disclosures to make it
more succinct and relevant with focus
on material issues. The DBS KPI was
disclosed over a five-year period, and
many KPIs were non-financial. Larsen
described IR as “a journey, not a destination. It takes time and resources,
but has proven worth it.”
Observing that leakage of trade
secrets is a concern among business
leaders with regards to IR, ACCA’s
Chiew pointed out the IR framework
has provided that material information need not be disclosed if such
disclosure will result in competitive
harm. In any case, “… competitors
can ‘copy’ strategies and even future
plans, but they will not be able to fully
replicate the resources and execution
of those strategies and plans.”
Chiew shared that IR has already
been incorporated into ACCA’s syllabus. “While we continue our efforts
to keep the business and finance
leaders updated on the development,
we want to also ensure that the next
generation of qualified professional
accountants are familiar with the concepts of IR and will be able to act as
catalysts within their organisations to
introduce this evolved form of corporate reporting.”
The forum’s subsequent panel
discussion included Druckman,
Larsen, Chiew, MIA President
Johan Idris and Wan Ahmad Ikram
Wan Ahmad Lotfi, CFO of PIDM,
on the issue of “Advancing the IR
Agenda in Malaysia.” Moderated
by Nik Mohd. Hasyudeen Yusoff,
Executive Chairman of the Securities
Commission’s Audit Oversight
Board, the panellists responded to
questions tweeted by participants.
Queries were varied, from what
decisions have to be taken before
implementation, to what incentives
are given to companies for its adoption, as well as what the Security
Commission’s future plans relating
to IR were.
Responding to the query about
the SC’s role in IR, Goh said that SC
regarded IR as market-driven, not
mandatory. “We will try to create
momentum for its adoption,” he said.
“We will gauge how industry takes
up the idea.” MIA President Johan’s
advice was to get the framework
right. “It has to be fair and balanced
reporting; not just about the things
you did, but your mistakes too,” he
said.
Larsen, on the other hand, cautioned, “Don’t put up a report with
a lot of pretty pictures. Do the job
consistently and honestly, or your
report will be just another marketing
brochure.” n
MAY / JUNE 2014 | accountants today
27
Gamechangers
n BY MIA PROFESSIONAL STANDARDS AND PRACTICES
GST Guide for Property Owners
and Property Holding Companies
This article provides some insights on the application of GST for property transactions
following the issuance of the Guide on Property Developer (the Guide1).
Real estate for this purpose refers
to land and everything attached to
it, whether on or below the surface. Land includes buildings, trees,
vegetation and other structures
and objects in, under or over it.
Real property is the right to use
real estate and includes activities
concerned with ownership, use and
transfers of immovable property.
What is defined as
supply in property
development?
The GST Bill 2014 provides that the
tax “shall be charged and levied on
(a) any supply of goods and services
made in Malaysia, including anything treated as a supply under this
Act and (b) any importation of goods
into Malaysia.”
Land that is under charge (mortgage), lien or caveat is not a supply.
Likewise, entering or lifting of caveat
is not a supply by lender or borrower. A land title charged to the lender
by the developer to obtain a loan is
regarded as security for payment of
Table 1: What constitutes supply of goods or services
Supply of Goods
Any transfer of the whole right of ownership in land, land under an agreement
for the sale of such land, land under an
agreement which expressly stipulates
that the ownership of such land will
pass at some time in the future, any
interest under Deed of Assignment or
any strata title i.e. sale or disposal.
debt and thus is not regarded as a
supply, and hence is not subject to
GST. However, when the lender sells
land under power of sale in satisfaction of debt or foreclosures on the
land of the developer, the developer
is regarded as making a supply and
the tax will be accounted for by the
lender. Converting an inventory to
investment property per se is not
a supply as it is not considered as
disposal.
The supply of land and buildings
used for commercial, administrative
and industrial purposes such as shop
Supply of Services
Any lease, tenancy, easement,
license to occupy land or
transfer of undivided share in
land
lots, offices, retail business, small
office home office (SoHo), small
office virtual office (SoVo), small
office flexible office (SoFo), factories, hotels, motels, inns, hostels
and warehouses is subject to GST.
Whereas land used for agricultural,
residential (such as link houses,
semi-detached houses, detached
houses, apartments including serviced apartments and condominiums) or general purposes such as
burial grounds, playgrounds and
religious purposes is exempt from
GST i.e. exempt supply.
1. The Guide on Property Developer provides GST treatment that involves activities of property developers, including housing developers
licensed under Housing Developers (Control and Licensing) Act 1966, and any person engaged in or undertaking a property development.
As the GST Guides are still being revised or fine-tuned by the Royal Malaysian Customs Department (RMCD), information contained herein
may be subject to changes. Readers are advised to look up the GST Guides at the RMCD’s website regularly for latest updates.
28
accountants today | MAY / JUNE 2014
GST Guide for Property Owners and Property Holding Companies
Do I have to
register for GST?
A person is required to be registered
for GST if he makes taxable supplies
where the annual taxable turnover2
exceeds RM500,000 in the previous
12 months. Alternatively, if a person
is currently making taxable supplies
and expects to make taxable supplies
exceeding RM500,000 in the next 12
months, he is also required to be
registered.
GST
The supply of land
and buildings used
for commercial,
administrative and
industrial purposes
such as shop lots,
offices, retail business,
small office home office
(SoHo), small office
virtual office (SoVo),
small office flexible
office (SoFo), factories,
hotels, motels, inns,
hostels and warehouses
is subject to GST.
2. Taxable turnover means the total value of taxable supplies excluding GST. Taxable supplies here include the sale, lease, disposal
and rental of non-residential property.
MAY / JUNE 2014 | accountants today
29
Gamechangers
GST Guide for Property Owners and Property Holding Companies
Calculation
of Taxable
Supplies for GST
Registration
The value of taxable supplies should
be calculated on all taxable supplies3
(standard-rated and zero-rated supplies) made by any person, for a
period of twelve months excluding
the value of:
a) capital assets4 disposed;
b) imported services; and
c) disregarded supplies made in
relation to warehousing scheme
or disregarded supplies made
within or between designated
areas.
All supplies in respect of charges
and fees imposed by the Government
related to real estate such as quit rent,
premium, survey fees (by the Survey
Department), registration of titles and
other payment are regarded as out of
scope. The same goes for assessment
rates imposed by the local authorities,
the conversion premium and all other
premiums and fees imposed by the
Federal and State Authority related to
real estate. Interest on late payment
is regarded as a penalty and is considered to be out of scope and hence, not
subject to GST.
Do I have to charge
and account for
GST?
Generally, the treatment of sale, purchase and rental of residential properties is an exempt supply5. On the other
hand, all transactions involving sale
and lease of non-residential properties are subject to GST. Hence, if a
person is GST-registered, he will have
to charge GST on the sale and lease
of such properties and account for the
GST as output tax in the GST returns.
For GST purposes, whether the
property is a residential or non-residential property depends on the approved
usage of the building or structure i.e.
the usage stated in the document of
title. The zoning of land is disregarded
in this instance. This means if a residential building is built on the commercial land title, it will be treated
as residential and such transaction is
exempted from GST. Conversely, if the
residential building has been used for
commercial purposes, GST is chargeable on the sale of this building.
For instance, shophouses will
be treated as partially commercial
and residential if one floor is used
for commercial and the other floor
is for residential. Apportionment is
required between the commercial
and the residential usage as the former is subject to GST while the latter
is not.
3. For property under construction, the total value of taxable supplies and exempt supplies refers to the Gross Development Value of the whole
project.
4. Capital assets may refer to a property that is used for conducting the business or held in the name or recorded in the books of the business for
rental purposes.
5. This means you can neither charge nor collect GST on the sale or lease of these properties. Thus, if you are a GST registrant, you will have to
report this supply as an exempt supply in the GST return.
30
accountants today | MAY / JUNE 2014
GST Guide for Property Owners and Property Holding Companies
Table 2: Circumstances where GST is applicable
Property Transaction
Sale and Transfer of Property/a completed non-residential
property
Time of Supply
GST is charged on the whole value of the property when
the land is made available to the purchaser i.e. the date of
conveyance.
Deposit or booking fees incurred to secure the purchase
of a property are not subject to GST. However, if it is partpayment, then it will be subject to GST, at the earlier of
when payment is received or when a tax invoice is issued.
GST applies on the remaining sum at the earliest of the
following events when:
i) payment is received,
ii) a tax invoice is issued,
iii) the title of the property is transferred upon legal
completion; or
iv) the property is made available for occupation
Property under construction
GST has to be accounted for :
• when payment/ part-payment is received; or
• when a tax invoice is issued for each progressive payment, whichever is the earlier.
Lease and rental6
GST is imposed on each successive lease or rental payment
i.e. whenever the consideration is received or the developer issues a tax invoice relating to that lease or rental.
Any lease inducement payment to attract a key tenant may
also be subject to GST.
Management and agency services
Property management and agency services will be subject
to GST. The facilities and services provided by a management corporation are likewise subject to GST.
Property managers and agents need to take care where
items invoiced to clients are classified as ‘reimbursement7 ’
or ’disbursement8 .’
6. If the lease agreement contains clauses which will transfer the title of the asset to the lessee at the end of the leasing period, it is a supply of
goods. If there is no transfer of title at any time of the leasing period, then it is a supply of services. * In the event a lease spans the start date of
GST, tax will need to be levied on the rent payable from the start date. The impact and pricing implication of the GST needs to be considered
in relation to these contracts.
7 Reimbursements are expenses incurred in relation to goods and services consumed to enable the performance of services to clients such as
printing, photocopying, and telephone charges. These expenses are deemed to form part of the cost of supplying services to clients, thus GST is
chargeable. If GST is incurred by the property manager on the original expenses, this will be recoverable as an input tax credit provided a tax
invoice is obtained from the supplier.
MAY / JUNE 2014 | accountants today
31
Gamechangers
GST Guide for Property Owners and Property Holding Companies
How to claim
input tax
Any input tax incurred on the purchase of land and development of
non-residential properties is claimable, provided the person is GST registered and the property is used for:
• furtherance of his business;
• leased out for the purpose of business; or
• developed into non-residential
properties for the purpose of sale
or lease.
Property developers are generally
involved in making mixed supply9.
Hence, developers will only be allowed
to claim input tax that is directly
attributable in making taxable supplies. Input tax on goods and services
which are not directly attributable to
making taxable and exempt supply is
regarded as residual input that needs
to be apportioned i.e. partial exemption. This concept will be discussed
in the next Accountants Today issue.
For property under construction, the
property developer will have to make
adjustment on the input tax claim if
there is a change in the value of taxable and exempt supplies over time
based on the Gross Development
Value of the whole project.
Where a development project
involves both residential housing and a commercial building,
the residual input tax that can be
claimed are GST incurred on utilities, rental, office equipment and
stationeries etc., infrastructural and
recreational works such as landscaping, community hall, car park
facilities, playgrounds and incidental ser vices. As provided in the
Guide, while the supply of a residential condominium is an exempt supply, sales of extra car park lots, air
conditioners and refrigerators are
standard rated supplies and hence
is subject to GST. Giving a free car
park lot is a supply of goods and it is
deemed to be a supply even though
there is no consideration. Input tax
incurred on clubhouse and car park
building cost, air conditioner and
refrigerator can be claimed as these
are used for making a taxable supply. However, input tax incurred
on overhead expenses (site office
rental, utilities) for making of residential property is not claimable.
Property used for business without consideration is not a supply but
input tax can be claimed because the
property is used for the purpose of
business. Conversely, if the property
is used for private purposes, it will
constitute a deemed supply and the
developer will have to account for output tax. Where the property is used
by a developer who makes mixed
supply, the developer will have to pay
back the input tax earlier claimed by
making the necessary adjustments.
Conclusion
By designating residential land as
an exempt supply, the government
aims to reduce the GST burden
on buyers of residential properties
– a well-intended move. However,
property developers who supply
a mixture of residential and commercial properties will face the
difficult challenge of splitting the
direct input taxes and apportioning
the residual input taxes between
residential (exempt) and commercial (standard-rated) properties as
required by the GST rules.
In view of the fact that most developers are involved in mixed projects,
property developers need to familiarise themselves with such mechanisms
i.e. the rules on Partial Exemption and
Capital Goods Adjustment; arguably
some of the most complex aspects of
the GST system. For deeper understanding, it is essential to refer to the
Guide covering such topics. n
8. The recovery of expenses will be treated as disbursement and will not be subject to GST only if it satisfies the following conditions:
a) customer is responsible for paying the third party;
b) customer knows that the goods or services would be provided by a third party;
c) customer authorised you to make the payment on his behalf; i.e. you acted as an agent of the customer when paying the third party;
d) customer received and used the goods or services provided by the third party;
e) payment is separately itemised when you invoice the customer;
f) You recover only the exact amount you paid to the third party; and
g) The goods or services paid for are clearly additional to the supplies which you make to the customer.
9. Mixed supply refers to developers who make both taxable and exempt supplies.
32
accountants today | MAY / JUNE 2014
Moving towards a
better tomorrow...
Outcome Based Budgeting (OBB)
Powered by Censof
The Government of Malaysia (championed by Ministry of Finance), in
partnership with Censof, brings the ‘rakyat’ , the outcome based budgeting
system, a rst of its kind concept in the world. OBB ensures efficient
utilisation of resources to offer better healthcare, education, employment
opportunities and socio-economic conditions in Malaysia.
“MyResults”,
the system developed by Censof, works on the results based management
concept aimed at achieving better operational efficiency.
Outcome Based Budgeting:
“OBB,
also
known
as
Performance-Based
Censof has been chosen to champion this project. We take this opportunity
Budgeting, is a way to allocate
to thank all who have been part of this journey.
resources based on achieving
resour
agreed
Censof revolution - To greater heights and better values.
Need help with implementing GST? Our consultants can help you.
Call +6 03 7962 7888 or visit our website: www.censof.com
upon
objectives,
program goals and measured
results.”
driving business solutions
engagement
n MIA INTERNATIONAL ACCOUNTANTS CONFERENCE 2014
Powering the Economy,
Leading with Dynamism
Talent development is a core pillar for MIA, and the annual MIA International
Accountants Conference is an important platform through which MIA engages with
members and accountants to upskill talent.
This year, the MIA International
Accountants Conference will take
place from 4 to 5 November 2014, with
the theme of ‘Powering the Economy,
Leading with Dynamism.’ What this
means is that accountants are moving beyond traditional finance-centric
roles to become holistic and pivotal
business partners capable of driving
sustainable economic growth, using
their skills as managers of value. The
Conference’s cutting-edge content is
carefully designed not only to equip
accountants with the latest skills and
knowledge, but will empower them to
take charge of business in a volatile
global business environment where
scarce resources must be prudently
husbanded to deliver optimal stakeholder value.
Collaboration is the crux of success in the 21st century economy,
where even the most competitive
companies are forming alliances and
partnerships to manage risks and
maximise opportunities. MIA is proud
to collaborate with our Diamond
Sponsor, CGMA (Chartered Global
Management Accountant), and our
Platinum Sponsor, SALIHIN, to
ensure that the MIA International
Accountants Conference delivers the
relevant content to shape successful
accountants and business leaders and
partners of the 21st century.
34
accountants today | MAY / JUNE 2014
CGMA – DIAMOND
SPONSOR
CIMA and AICPA, under the auspices
of the Chartered Global Management Accountant (CGMA) designation, are proud to be the Diamond
sponsor of the MIA International Accountants Conference as its prestige
and reach is excellent and it is undoubtedly an important Conference
for accountants in the region.
By contributing to the Conference as a Diamond Sponsor, CIMA
through the CGMA designation is
able to bring value to the acccountancy profession and the wider
community. It wants to ensure that
the accountancy profession is at the
forefront of business sustainability
in order to elevate the accountancy profession beyond a focus
on finance-related matters, and
this agenda is directly linked to the
Conference theme of `Powering the
Economy, Leading with Dynamism’.
Through the CGMA designation,
CIMA believes that the Conference
is a strategic learning platform that
will be able to deliver the following
Irene Teng, CIMA Regional Director
SE Asia and Australasia
key outcomes to upskill accountants. One, delegates will gain
greater awareness of the current
trends that are impacting the accountancy profession. Two, accountants will be empowered to face the
changing demands of a dynamic
market through the knowledge
gained. Three, accountants will be
able to evolve the role of finance to
support better business.
CIMA’s and AICPA’s unique
management accounting principles
are in sync with the objectives of
the Conference to influence accountants to become leaders and
partners who can steer companies
with wisdom and accountability,
and ultimately ensure sustainable
Powering the Economy, Leading with Dynamism
If you have been thinking of attending this
foremost event for accountants and financial business leaders, now is the time to register. From now until 30 June, we are offering you a super savings of RM400! Kindly
visit www.miaconference.mia.org.my for more details.
business growth.
Management accounting is more
relevant than ever before in a volatile
global economic environment where
unpredictability is constant. Forwardlooking and externally-facing,
management accountants bring structured solutions to unstructured
problems, ensuring that organisations
have the quality of data, the analysis
and the judgement to ensure that decisions are made and communicated
effectively.
The Management Accounting
Principles - an authoritative set of
management accounting guidelines
to be launched by CIMA and the
AICPA - aim to help organisations
ensure that they have the very best
management accounting systems in
place. The Management Accounting
Principles will enable organisations to
make better decisions that will create
long-term stakeholder value, drive
sustainable success and ultimately
contribute to economic growth, all
of which are objectives at the heart
of the MIA International Accountants
Conference 2014.
The stand-out message from this
year’s Conference is that accountants
will have a bigger role in business
partnering, in line with the theme of
empowering accountants as business
leaders and partners. The demands
on finance professionals have evolved
a long way from their traditional focus
on cost reduction and efficiency
gains, and their target is now to also
create value for their business by
bringing finance, strategy and operations closer together and providing a
common language in which to frame
a company’s goals. This shift inevitably requires that finance professionals
acquire new skills.
As finance evolves, so must the
rest of the organisation, which must
adapt to accommodate business
partnering with the finance team.
Operational people don’t have to become finance people, but they need
to understand the long-term value a
finance function delivers.
MAY / JUNE 2014 | accountants today
35
engagement
Powering the Economy, Leading with Dynamism
SALIHIN: PLATINUM
SPONSOR
“SALIHIN, a dynamic accounting
firm, aspires to become the preferred national accounting firm of
Malaysia. Hence, our sponsorship of
the MIA International Accountants
Conference 2014 aims to reinforce
our brand awareness and the industry’s perception of SALIHIN. Apart from positioning our brand
positively, enabling it to thrive in
future, we are proud to be associated
with a world-class learning platform.
The Conference is expected to be
informative, insightful, educative and
entertaining while celebrating the
diversity of culture, people and knowledge, sharing precious knowledge
and experience with an emphasis on
quality speakers and fruitful discussions, and facilitating networking with
likeminded professionals.
The theme of the Conference is
timely and of significant importance
to us and the nation as a whole. From the onset, SALIHIN has defined
itself as a dynamic firm in the sense
of aligning thoughts and thinking differently to create, enhance
and sustain value to its clients and
stakeholders. Aligning thoughts of
its professional accountants to the
growth and sustainability needs of
the economy has always been at the
forefront of its strategic direction. As
such, SALIHIN, through its empowerment programme has focused on
creating thinking accountants. These
36
accountants today | MAY / JUNE 2014
Salihin Abang, Founder and Managing Partner of Salihin.
Apart from strengthening our reputation and
positioning our brand positively, enabling it to
thrive in future, we are proud to be associated with
a world-class learning platform.
kind of accountants become the
leaders and chieftains of the industry to drive the business/economy
to the next level. Thinking accountants have the right skills, attitude
and mindset, necessary to act as
strategic partners in business and
national growth and sustainability.
SALIHIN believes thinking accountants would think differently to find
different ways to creating value for
sustainable growth.
The key message of the
Conference is thus expected to
focus on change and emphasise knowledge acquisition in a
knowledge-based economy. In
a knowledge-based economy, a
knowledgeable accountant is a
necessity. As the economy transforms, so must the accountant
transform. Rather than being
purely mechanistic, accountants
must now be thinking accountants and strategic partners to
businesses. A change in role
necessitates a change of knowledge, and this is what will be
delivered by the MIA International
Accountants Conference 2014,
which SALIHIN is proud to support as the PLATINUM sponsor.”
Powering the Economy, Leading with Dynamism
No.1
Delegate
The lack of an e-mail address or a mobile phone has
not deterred early bird Ng How Viy from being the first
delegate to sign up for the MIA International Accountants
Conference every year for the past three years.
FinancE professionals are no strangers to the annual MIA International
Accountants Conference, which is
MIA’s flagship event. The Conference
has attracted more than 2,000 delegates from accountants in public
practice to business leaders to government and regulatory officers.
One of the most loyal delegates
is Ng How Viy, Group Accounts and
Finance Manager at Sincere Match
& Tobacco Sdn Bhd. Amazingly, Ng
has always been the first delegate
to register for the MIA International
Accountants Conference for the past
three years in a row, despite not
owning an e-mail address or mobile
phone. This practice could perhaps
be attributed to his lifelong habit of
being early for all appointments.
Ng has been steadfastly attending the yearly MIA flagship event
since 2003. “I look forward to attending the MIA Conference every year
as it is an opportunity to network
with finance professionals as well
as gain insights on accounting best
practices. And I have the opportunity
to listen to speakers who are experts
in various fields such as Islamic
Banking.”
On top of learning about the latest
developments, Ng’s personal favourites are sessions relating to personal
development. “I enjoyed the talk on
practical wellness during the “Lunch
Edutainment” session last year, which
reminds finance professionals not to
take their health for granted, and adopt
a work-life-balance. The other session
I enjoyed was ‘Insight to Creativity’ by
Datuk Ramli Ibrahim, where he talked about finding a balance between
Apollonian and Dionysian principles to
achieve creativity.”
By attending these Conferences
over the years, Ng said it has helped
him to think ‘out of the box.’ For
example in the field of accounting, it is
not merely about number crunching
but also about providing strategic value
to the business,” he said. His management style has also improved. “One of
the skills I picked up was adding a bit
of humour when dealing with people
especially to defuse tension at work.
It helps to break down barriers and
people are more open to your ideas.”
Through the Conference, he had
also gained exposure to creative
personalities who hold accounting
degrees but pursued different career
paths: Chef Wan and Chermaine
Poo. Chef Wan worked as an accountant before becoming a renowned
culinary expert while Poo, who is a
Chartered Accountant, is an actress,
emcee, TV host, show producer and
PR consultant.
Born the son of a policeman, Ng
was determined to be an accountant,
and eventually succeeded after many
challenges. Ng’s choice of career –
as well as that of his wife who was
formerly a tax consultant - must have
had an impact on his children; his
eldest daughter is studying to be an
accountant while his son has also
shown interest in the profession.
As befits a prudent accountant
who always has his eye on the bottom-line, Ng registers extra early for
the MIA International Accountants
Conference to take advantage of
the Early Bird discount and save a
few hundred Ringgit. Other benefits
for Ng include gaining Continuing
Professional Education (CPE) hours,
while his employer benefits from
eligibility for the Human Resource
Development Fund (HRDF) claims
under the Skim Bantuan Latihan
(SBL) Scheme. n
MAY / JUNE 2014 | accountants today
37
Accountability
n BY NAZATUL IZMA
40
accountants today | MAY / JUNE 2014
How to Be Good
How to Be
Good
ab
Ethics and integrity must be the foundation of the accountancy
profession. But behaving well is easier said than done. How should
accountants go about being good?
Accountants are always being exhorted to behave
ethically and with integrity, in efforts to improve stakeholder confidence, enhance governance and uphold
the profession’s reputation. But what exactly is good
behaviour in the context of the accountancy profession?
According to Mohd Izani Ghani, CFO, Khazanah
Nasional Berhad, “Ethics is not about ticking the right
boxes and being in compliance, but something that
comes from the heart.”
Perhaps the most important principle for accountants to remember is that they are always acting in
the public interest and for public benefit, and not in
the interests of select groups or individuals, said Nik
Mohd. Hasyudeen Yusoff, Executive Chairman, Audit
Oversight Board of the Securities Commission. “As
members of professional bodies, professionals have
a responsibility to stakeholders and the public. The
proportionality of due care is greater if the work of a
professional has a greater impact on a greater number
of stakeholders.” Ethics should come naturally. “When
ethics is something that you have to think about, you
are approaching the danger zone,” warned Nik. And
stay clear of doubtful matters. “There is usually no
black or white, but many shades of grey. It’s better to
avoid the grey because once you trespass into the grey
area, even black can become white. If in doubt, avoid it
to be safe,” advised Izani.
Moreover, accountants should be consistent in practicing ethical behaviour, whether or not they’re under
scrutiny. “Every day, our ethical standards are being
challenged. Ethics is about doing the right thing when
people are not looking. The real test of ethical standards
is to stay strong and consistent,” said Ravi Navaratnam,
Executive Vice-President, Minconsult Sdn Bhd.
Sometimes, what might be legally permissible
might be morally wrong. “Ethics and law may conflict,”
noted Nik. “The law cannot cover everything, therefore human beings must use their minds to determine
the right course of action. The other safeguard which
needs to kick in is your heart, which must be the first
line of defence.” He cited the example of cash-rich corporations using legal means to avoid paying corporate
tax, while regular people don’t have this option. “We
are surrounded by such challenges where conduct and
behaviour get past the legal net. Such challenges test
us on how truthful we are to the values we endorse.”
MAY / JUNE 2014 | accountants today
41
Accountability
How to Be Good
Speakers at the Forum (L-R): Ravi Navaratnam, Nik Mohd. Hasyudeen Yusoff, Eugene Wong Weng Soon, Mohd Izani Ghani and Tan Soo Yan.
Corporate tax planning is a classic
illustration of the tug of war between
business as usual and being ethically
responsible. “How do we reconcile
the business aspects with the values
of the firm?” asked Tan Soo Yan,
Professional Practice Director, Ernst
& Young Malaysia. While Ernst &
Young is committed to embedding
ethical culture throughout the firm,
in his view, good conduct is more personal. “It’s about making decisions and
taking actions that allow you to sleep
well at night with a clear conscience.
It’s important to define success as
being more than revenue generation
and wealth accumulation.”
Overcoming Power
Distance and State
Capture
The tendency to unquestioningly
submit to authority could also be
crippling good behaviour and independent mindsets in the local environment. Navaratnam singled out the
‘power distance’ and ‘state capture’ as
two factors influencing local behaviour and culture. Navaratnam noted
that Malaysia has one of the largest power distances globally, which
means that Malaysians generally bow
42
accountants today | MAY / JUNE 2014
down to authority, even when the said
authority is misbehaving and indulging in corrupt conduct. State capture
meanwhile refers to the incumbent
authorities’ use of government infrastructure and institutions to shape
mindsets, making it challenging for
Malaysians to go against the tide of
misconduct and speak out.
The way to overcome these handicaps is to ask questions relentlessly,
advised Navaratnam.
Boosting
Whistleblowing
Linked to good governance and ethical conduct is the act of blowing the
whistle on misconduct. However, does
Malaysia’s whistleblowing act afford
sufficient protection to whistleblowers?
“There is some disjunct between
what we want to achieve from whistleblowing and the protection accorded
to whistleblowers,” said Navaratnam.
“Existing provisions do not adequately protect whistleblowers.”
To change mindsets, said Eugene
Wong Weng Soon, Chairman of the
MIA Ethics Standards Board (ESB)
and Executive Director of Corporate
Finance & Investments, Securities
Commission Malaysia, there is a need
to perceive whistleblowers not as a
liability but as an asset. Perhaps there
is a place for whistleblowers to act
as advisors and consultants to companies and boards which can benefit
from their experiences to heighten
governance, which is happening in
developed markets.
Conclusion
The bottom line is that accountants
live in a real society where they are
exposed to daily challenges in real life
and real time. While codes of ethics
are a helpful guide, ultimately accountants will have to use their hearts and
minds to determine good conduct.
These comments were captured at
the recent forum on Ethical Challenges
in Today’s World, organised by MIA
together with four supporting bodies:
Securities Commission Malaysia (SC),
the Malaysian Institute of Integrity
(MII), Association of Chartered
Certified Accountants (ACCA) and CPA
Australia. The Ethics Standards Board
of MIA aims to create awareness of and
promote ethical behaviour among MIA
members and Malaysian accountants,
in order to inspire stakeholder and public confidence and uphold the global
reputation of the profession. n
F-TEN Asia Leadership
programme
®
Are you ready to lead as a CFO in the boardroom?
ICAEW, in partnership with the Singapore Management University (SMU) and Progress-U, will be
launching this year’s F-TEN® Asia programme in Singapore in September 2014. F-TEN® is an elite
leadership development, mentoring and networking programme. It was developed to support
senior finance leaders and newly promoted CFOs in developing the boardroom leadership skills
needed by today’s high performing CFO. Launched in the UK in 2009 and in Asia in 2013, F-TEN®
is now one of the most sought after development programmes for senior finance leaders.
For more information about F-TEN® Asia, contact
April Chiew, Regional Business Development Manager
T: +6012 334 5646
E: [email protected]
facebook.com/icaewsea
ICAEW South East Asia
MAY / JUNE 2014 | accountants today
BUSINESS WITH CONFIDENCE
43
icaew.com/ften
Accountability
n BY Majella Gomes
Changing
the Auditor’s
Report
Impending changes to the auditor’s
report could help Audit Committees
improve their oversight, and hence,
heighten the standards of corporate
governance and restore public trust.
44
accountants today | MAY / JUNE 2014
Changing the Auditor’s Report
Panel discussion
One of the
“fixes” may be
a change in
the auditor’s
report which
would require
auditors to
communicate
matters of
the most
significance
in their
reports.
The Board Audit Committee is perhaps one
of the most critical elements in ensuring good
governance, especially through sound risk
management and good corporate reporting.
“The Audit Committee should play an
important role in identifying, addressing
and managing risks, especially in this economic climate. It should continue to ensure
the integrity of financial statements through
oversight of the company’s financial reporting process, internal controls and the audit
function,” said Johan Idris, MIA President,
at the 2014 Audit Committee Conference in
Kuala Lumpur recently. The Conference was
jointly organised by MIA and the Institute
of Internal Auditors (IIA) with the theme of
‘Stepping Up for Better Governance’.
He noted that MIA and the Audit Oversight
Board (AOB) have implemented various measures such as the monitoring programme
to ensure that professional quality and high
standards were upheld. Furthermore, regulatory oversight work had been improved
through the cooperation of the two bodies
with other institutions. But he stressed that
proper corporate governance processes alone
would not guarantee that unethical people
would do the right thing. “Management and
directors need to rise above a rules-based
mindset to ensure that the decisions made
are legally sound and ethically correct,” he
said. “We face significant challenges that do
not lend themselves to easy answers or quick
fixes.”
The Future of the
Auditor’s Report
One of the “fixes” may be a change in the auditor’s report which would require auditors to
communicate matters of the most significance
in their reports. This includes making specific
statements about going concern and explicit
statements about the auditor’s independence
from the audited entity.
The impact of such reporting was the
focus of the discussion of the Conference’s
first panel session on ‘The Future of the
Auditor’s Report’. Moderated by Johan, the
panellists were Lee Tuck Heng of MIA’s
Audit & Assurance Standards Board, Martin
Giles Manen, who is Chairman of the Audit
Committee of two public-listed companies,
and Wan Ahmad Ikram Wan Ahmad Lotfi,
CFO and GM (Finance & Administration) of
Perbadanan Insurans Deposit Malaysia.
MAY / JUNE 2014 | accountants today
45
Accountability
Changing the Auditor’s Report
Improvements to the auditor’s report
are in the pipeline at the global level. On
25 July 2013, the International Auditing
and Assurance Standards Board (IAASB)
released an exposure draft (ED) with proposals to expand the content of the auditor’s
report. The IAASB tentatively plans to issue
the ED as a final standard in the fourth
quarter of 2014, with 15 December 2015 as
a possible effective date. “This means that
by 31 December 2016, the form and content
of the auditor’s report will have changed dramatically,” Johan said. “But who will benefit?
We want to hear from auditors. When the
global financial crisis happened, the question
was asked: if audit was done, why were there
no red flags? The auditors’ role was called
into question, as was the robustness of the
system. Right now, the auditor’s report is
symbolic and has little communicative value.
The call is for more relevance, and better
audit quality.”
Will the new requirements bring more
transparency? “Yes, there will be greater
transparency, which we are all in favour of,”
Manen said. “The new requirements will provide more information for users of financial
statements. The significant audit matters are
currently reported to the Audit Committee
and Board members in the audit summary
memorandum presented at the end of the
audit but this is not available to other users
of the financial statements. But I am wary
of adding more pages to the annual reports,
they are already voluminous enough. So
there is a need to decide what the key audit
matters are. Currently, the auditor’s report
is similar for most companies and has not
changed significantly since the time I started
as an auditor. The proposed changes are
overdue and I am all for it.”
Johan Idris
Martin Giles Manen
Needed: More
Resources?
Wan Ahmad Ikram
Wan Ahmad Lotfi
Holistic Impact of New
Standards
Meanwhile, Lee noted that: “This new auditing standard will impact the entire financial
46
accountants today | MAY / JUNE 2014
reporting chain particularly the preparers
and those charged with governance and not
just the auditors,” he said. This is because of
the principle that audit reports cannot be the
source of primary information and as such,
there is an expectation that the key audit matters will be described and discussed in the
annual report.
Auditors currently do make reports of key
audit matters to the Audit Committee, but not
all are expected to be included in the audit
report as some matters may not be as relevant to users, he added. He opined that most
audit reports are expected to include one to
three matters up to a maximum of perhaps six
matters for discussion. There was also a need
for discussion with preparers as to how best
to present these matters, as it was not easy to
describe these matters clearly and succinctly.
He felt that one of the key challenges was
the skillsets required, and the timeframe to
complete the work given that most of the
PLCs have a 31 December year-end and the
drafting and agreement of key audit matters
will be a very involved process. “In principle,
the changes should be supported, but there
are challenges especially for large companies
with multilocation operations requiring significant coordination efforts.”
Lee Tuck Heng
Preparing the financial statements and annual
report is an onerous task, remarked Wan
Ahmad Ikram, as reports have to conform to
various rules, regulations and listing requirements. With the enhanced requirements on
audit reports, the preparers will have to
also ensure that the financial statements and
other relevant parts of the annual report
contain sufficient information to ensure that
audit matters which may be reported, are
adequately addressed whilst ensuring that
those information remain relevant to users
in general.
Additionally, management of entities needs
014
MIA
to ensure that adequate information is
provided to the auditors throughout
the audit process to facilitate a thorough understanding of matters that
may be of concern by auditors. There
should be balanced reporting to highlight management actions to address
operational matters highlighted by
the auditors. Continuous communication between auditors, management
and those charged with governance is
key to ensuring that the audit process
is effective and the audit reporting
achieves its objectives.
There were also concerns that the
new reporting will result in increases
in cost. “This has to be viewed within
the context of what additional work has
to be undertaken by the auditor especially in deciding what additional information has to be included in the auditor’s report,” Manen said. “As I have
said earlier, the auditor already summarises the significant audit matters
for the Audit Committee and Board.”
The need for relevant information
was foremost, the panellists agreed,
but this will necessitate several moves,
including spending more time and
resources on obtaining the said information, more time on discussing and
determining its relevancy, and greater
involvement of senior audit partners.
Another area requiring attention is
the issue of going concern. “The 2008
financial crisis brought going concern
into sharp focus,” Lee said. “There is
now a specific section for auditors to
comment on going concern; preparers and the Board must have explanations as to how the opinion on going
concern was arrived at. The standards
around going concern are changing.
We have to be careful to provide clarity, and minimise confusion because
going concern should never be underestimated.” n
SUR
2
VEY
Reply now and be in the running to win an
iPad Mini Retina Display (128GB)!
The Institute would like to invite
you to take part in its MIA Survey
2014, which examines members’
expectation to activities conducted
or services provided by MIA. Your
response will enable us to continue
to improve the quality of activities
and services we provide to you.
This survey will only take approximately nine minutes of your time.
However, please feel free to expand
upon your answers. The more information we have, the better we will
be able to evaluate your response.
To compensate your time, each
completed response is entitled
to RM100 worth of CPE vouchers and every 500th respondent
will receive a mystery gift worth
more than RM500. Each completed
response will be entered into a
lucky draw for an iPad Mini Retina
Display (128GB) worth RM2,249
(Recommended Retail Price).
To be eligible for the CPE Vouchers, Mystery Gifts and Lucky Draw
Gift you must –
• Be a member of the Institute when completing the survey;
• Complete all sections which are applicable to you;
• Include your name and membership number for purposes of delivering
the CPE Vouchers and Mystery Gift;
•Respond only once as one member is entitled to only one set of CPE
Vouchers and one Mystery Gift;
• Ensure that your communication details with the Institute is updated
as CPE Vouchers will be sent to your correspondence address as per the
Institute’s records;
• Complete and send your response by 12 noon, Friday 31 July 2014.
Please note that the decision of the Institute in awarding the Mystery Gift
and the Lucky Draw Gift is final. Many thanks for your views and time.
Here is a link to the survey: https://www.surveymonkey.com/s/
Malaysian_Institute_of_Accountants
Contest extended till 31 July 2014
MAY / JUNE 2014 | accountants today
47
Accountability
Changing the Auditor’s Report
Chief Audit Executives:
The Heart of Good Governance
Chief audit executives
can be central to good
governance.
Companies that want to excel in
governance should think about
optimising the roles of their chief
audit executives.
Speaking at the recent 2014 Audit
Committee Conference, Paul J
Sobel, Chairman of the IIA Global
Board, talked at length about the
role of the chief audit executive
(CAE) in enabling good governance. Sobel said that CAEs need
to develop an understanding of key
stakeholder needs and expectations; provide assurance to Audit
Committees and the Board through
timely and effective reporting; and
assist management in strategising
and evaluating overall effectiveness
of the organisation’s governance
process.
“Governance is about helping
organisations be successful in a
sustainable way,” he said. “It goes
beyond the Board because it has
many constituents. The Board has
the responsibility of carrying out
the oversight role, but the CAE can
assist in strategic planning and
evaluation of the effectiveness of
the process. In fact, the CAE can
be positioned as the heart of good
governance.”
However, both Boards and CAEs
must understand who their stake-
48
accountants today | MAY / JUNE 2014
holders are; these are not limited
to just shareholders, said Sobel.
Categorising stakeholders into
three main groups, he said that
employees, customers and vendors
could be classified as direct stakeholders. Shareholders, investors, and
regulatory agencies, on the other
hand, were often seen as indirect
stakeholders, while financial institutions, rating agencies, industry
associations and competitors were
often referred to as influencing
stakeholders.
Auditors can play a valuable supporting role, but should preserve
their independence by not getting
involved in strategic decisionmaking. “Information from auditors
helps management execute its
oversight role, and helps the organisation protect its existing value,” he
explained. “CAEs can provide such
information in a timely, reliable
manner – thereby helping to manage risk. They are also well-placed
to determine if risk management
processes are designed adequately,
and operating as intended.”
He stressed that auditors should
not be making strategic decisions.
Rather, they should drill down to
details such as making sure that
risk owners’ assertions to senior
management are accurate, and
information pertaining to these is
complete. Risk appetite and tolerance are also areas that need con-
stant monitoring. “Do you have it all
covered? Are there any governance
or risk areas which have not been
covered by the risk management
process? The Board and senior
management should be constantly
encouraged to ask if they should be
doing more or giving more to provide better assurance,” he added.
He explained that the evaluation
process includes assessment, interviews with Board members and
management, benchmarking, and
assessing current vs desired maturity. Internal audit functions can play
a valuable role in ensuring effective
governance but the audit charter
should be written with enough
clarity to define auditors’ roles
clearly and succinctly. “You need to
look at risks that will prevent the
auditors and audit plan from being
successful, and strategise from
there,” Sobel advised. “Sometimes
it’s about resources; you need to
strike a balance – resources are
never enough! New things emerge
and inevitably affect your plans,
so execute plans by quarter. It’s a
dynamic world.”
MIA Annual Subscription &
Practising Certificate Fee 2014/2015
The Malaysian Institute of Accountants’ (MIA) Annual Membership Subscription and Practising Certificate Fee for the
financial year 2014/2015 is due on 1 JULY 2014. A notification has been sent out to members in May 2014.
If you have not received the notification, kindly update your correspondence record(s) plus any other information:
l at www.mia.org.my via the MIA’s member login page; or
l e-mail the updates to [email protected].
To assist in the payment of the Annual Subscription and/or Practising Certificate fee, kindly complete the section
below and fax to +603-2273 7533 or e-mail to [email protected]. If you have already made payment, we would
like to thank you for your promptness and please disregard this notice.
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Ms. Farah – ext.152 )
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hereby authorise MIA to charge ______________________ (RM200 (AM) / RM350 (CA) /RM600 (CA&PC) to
my credit card for the Annual Subscription 2014/2015 and/or Practising Certificate 2014/2015 with/without
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* Donation (optional) towards Malaysian Accountancy Research and Education Foundation (MAREF) is EXEMPTED from
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MAY / JUNE 2014 | accountants today
49
Accountability
n BY Accountants Today Editorial Team
CPA Australia Special
Admission for MIA Senior Members
A strategic MoU between MIA and CPA Australia enables longstanding MIA members to
obtain the coveted CPA Australia designation, subject to approval from CPA Australia. In
the long run, this MoU will encourage more MIA members to upskill themselves, supporting
MIA’s objective to increase the number of professionally qualified accountants in Malaysia.
Under the terms of a recent MoU
between MIA and CPA Australia, MIA
members who have served the profession for more than 10 years in
a senior capacity can now enhance
their credentials by obtaining the CPA
Australia qualification.
This prestigious and globally
recognised professional accountancy qualification is issued by CPA
Australia, one of the world’s largest
professional accountancy organisations with members in 121 countries.
CPA Australia President Penny
Egan FCPA said: “Under the MoU, eligible MIA members would be able to
attain the CPA Australia membership
by demonstrating their skill, experience and professional acumen through
a specially tailored examination.”
How does the scheme work? By
taking up this programme, an MIA
member will receive recognition as an
Associate Member of CPA Australia
and the opportunity to obtain full
membership status by completing
three papers namely:
a) Ethics & Governance;
b) Financial Reporting; and
c) Global Strategy and Leadership;
50
accountants today | MAY / JUNE 2014
Special Admission Guidelines
CPA Australia will be issuing special
admission guidelines that members of
MIA must meet in order to become
Associate Members of CPA Australia.
The guidelines will contain but not be
limited to the following requirements
that an MIA member candidate must
provide to CPA Australia for assessment. CPA Australia will assess applications
from the MIA member for the special admission. The decision whether to admit
an MIA member candidate to CPA Australia Associate membership rests solely
with CPA Australia.
The MIA member must:
a) b) c) d) e) f) have at least ten (10) years of continuous membership of MIA;
at the time of application, be currently working in a senior-level position
within the organisation in which they are employed;
hold a university degree recognised by the Australian Education
International – National Office of Overseas Skills Recognition (AEI-NOOSR)
as being at least equivalent to an Australian bachelor degree level. This will
be determined during the assessment of your application
provide a referral letter from their employer organisation stating their job
designation and length of engagement
provide a detailed curriculum vitae and
Have been recommended and certified as a member of good standing by
the MIA
CPA Australia Special Admission for MIA Senior Members
“The key area of cooperation identified
under the MoU is the commitment given
by MIA to encourage our members to take
up the CPA Australia Programme, thereby
increasing the number of professionally
qualified accountants in Malaysia.”
Datuk Zaiton Mohd Hassan
MIA Vice-President
Enhancing the
Profession
“The key area of cooperation identified under the MoU is the commitment given by MIA to encourage our
members to take up the CPA Australia
Programme, thereby increasing the
number of professionally qualified
accountants in Malaysia,” said MIA
Vice-President Datuk Zaiton Mohd
Hassan at the MoU signing ceremony. Signing the MoU on behalf of
MIA was Datuk Zaiton Mohd Hassan
and CPA Australia was represented
by Penny Egan. The signing ceremony was witnessed by MIA CEO,
Ho Foong Moi and Alex Malley, Chief
Executive, CPA Australia. Also present at the MoU signing ceremony was
Dato’ Omar Awang, Chief Executive
of Human Resource Development
Fund.
“This is very much in line with
MIA’s objectives in Education.
Working together with CPA Australia,
MIA aims to support the Continuing
Professional Development or CPD of
our members by encouraging them
to acquire professional accountancy
qualifications,” she said.
Government funding is available
(L- R): Ho Foong Moi, Datuk Zaiton Mohd Hassan, Penny Egan and Alex Malley.
for this scheme, in line with targets
to strengthen the profession as a
key business driver and catalyst for
economic transformation. Under
the MoU’s terms, employers who
contribute to the Human Resource
Development Fund (HRDF) will be
able to access government funding
to help staff attain the CPA Australia
designation via the SBL Scheme for
Online Distance Learning (ODL).
This underscores the government’s
seriousness in supporting the con-
tinuous upskilling of experienced
accountants who may not have had
the opportunity previously to obtain a
professional qualification. n
To find out more about the information sessions organised by CPA
Australia please visit www.cpaaustralia.com.au/malaysianinstitute
or contact Serena, Zen or Hazarina
at: [email protected].
au / 03 – 2267 3388.
MAY / JUNE 2014 | accountants today
51
Accountability
n BY Accountants Today Editorial Team
NACRA 2014 – Towards
Accountability & Excellence
Entries are now open for the National Annual Corporate Reporting
Awards 2014 with a closing date of 30 June 2014
(L-R) Selvarany Rasiah, Chief Regulatory Officer, Bursa Malaysia Berhad, Loh Lay Choon
and Stephen Oong
Companies are invited to submit their annual reports for judging
in the latest edition of the National
Annual Corporate Reporting Awards
(NACRA) scheme, jointly organised by Bursa Malaysia Berhad, the
Malaysian Institute of Accountants
(MIA) and the Malaysian Institute
of Certified Public Accountants
(MICPA).
With the theme of “Towards
Accountability
&
Excellence”,
NACRA 2014 underscores the vital
role of annual reports in propagating transparency and enhancing the
integrity of the capital market.
Established in 1990, NACRA
52
accountants today | MAY / JUNE 2014
aims to promote greater corporate
accountability and more effective
communication of financial and other
information by companies to their
stakeholders.
“It aims to improve on the quality
of annual reports recognising that
information is the lifeblood of today’s
capital markets and societies rely upon
them to make informed decisions and
the significant efforts and commitments put in by the various participating organisations to enhance the
quality of their annual reports. Every
year, the guidelines are reviewed and
enhanced to ensure that the standards and quality of the production
of annual reports are in line with current requirement and trends,” said
Loh Lay Choon, Chairman for the
NACRA 2014 Organising Committee.
She noted that there has been a
significant increase in the number of
quality submissions, no doubt providing stiffer competition among participating organisations.
Entries are assessed in five categories: Corporate Information,
Accounting Information, Corporate
Social Responsibility Reporting, Best
Designed Annual Report, and Best
Annual Report in Bahasa Malaysia.
NACRA gives out awards in five
categories of awards: the Overall
Excellence
Awards,
Industr y
Excellence Awards for Listed
Companies, Presentation Awards,
Corporate Social Responsibility
Reporting Awards and the Special
Award for Non-Listed Organisations.
Certificates of Merit will also be presented to all finalists in recognition of
their commendable high standard of
annual reporting.
Participation is open to all publiclisted and non-public-listed organisations as well as other organisations
established in Malaysia. The closing
date for registration and submission
of entries is 30 June 2014. For more
information interested participants
can visit www.micpa.com.my n
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managing the threat of financial fraud.
The book provides solid strategies for
prevention of financial fraud as well
as a process to follow when fraud has
been discovered. It is written for almost
everyone involved: outside directors,
Audit Committee members, senior executives, CFOs, CPAs, in-house lawyers,
and outside law firms.
MAY / JUNE 2014 | accountants today
53
Sustainability
n by Preetha Nadarajah
Prepping for Retirement?
Given that 51% of MIA’s members are under 40 years of age, with the majority in their
30s, it’s high time that they start prepping for retirement, if they haven’t done so yet.
Indeed, time is the best ally when saving for retirement.
The good news is that the official
retirement age for Malaysians has
been raised from 55 to 60, meaning
that we can pad our nest eggs for an
additional five years. However, there’s
still a need to ensure adequate retirement funds for at least about 20 years
past retirement, given the average
life expectancy for Malaysians is 78.6
and 82.6 years for males and females
respectively.
Just like other Malaysians,
accountants aren’t exempted from
worr ying about retirement. The
volatility of investment assets globally isn’t helping matters either. Is
there a right way to plan for retirement, especially post-2008? Is there
54
accountants today | MAY / JUNE 2014
a magic number in investments that
will sustain us safely through retirement?
What are the right asset classes
and asset allocations for retirement?
There’s a school of thought that holds
that equities will always beat bonds
over the long-term. But a 65-year old
Japanese who took that view in 1990
would have been hugely disappointed
when Japanese bond yields peaked in
September 1990, about one year after
the Japanese stock market index, the
Nikkei peaked in December 1989.
If you had retired in 2007 with a
significant component of retirement
funding in equities either directly or
via a mutual fund, you would have had
a very nasty shock in 2008 during the
global financial crisis, the worst financial crisis since the Great Depression
of the 1930s, when the Kuala Lumpur
Composite Index (KLCI) tanked to
801.27 points on 28 October 2008
from a previous high of 1,524 points
on 15 January 2008.
Perhaps investments in properties
could be the saviour? As a fixed asset
which is illiquid, the possible funding
from real estate would be either in
the form of rental income or capital
gains from the sale of the property.
Based on the evictions, foreclosures
and underwater properties as a result
of the subprime mortgage crisis in
the US in 2007-2008, this asset class
Prepping for Retirement?
table 1
With all this doom and gloom, when should Gen-Y and millennial folks start planning for retirement? Given the
power of compounding over time, it is prudent to start as soon as possible, i.e. with one’s first salary. The following
table illustrates the beauty of compounding:
Start investment at age
Monthly investment amount
Years before retirement
Annual Investment Return
Total returns at 60 years of age
is also a no sure thing. Alternatively,
as is the case with the Koreans or
Americans today, if reverse mortgages or borrowing money against
the equity of the owned property
becomes available during our retirement, this could potentially be a last
resort to support the need for stable
income during retirement!
The unfortunate reality is that
there is NO one right way of investing for retirement nor is there a right
amount that one should accumulate
for retirement. The retirement question is entirely unique to an individual. An appropriate selection of
asset allocation is crucial in achieving retirement funding, taking into
consideration the individual’s risk
profile, current income and debt levels, investment time horizon, rate of
investment/inflation and any other
factor unique to his or her own situation and aspirations.
Having a mere 10-year head start
on investing for retirement could
make a significant difference as outlined in Table 1 above. Ceteris paribus
or all things being equal, the returns at
60 years are more than doubled with a
mere 10-year head start.
Another reason to start investing
for retirement early is that it allows
more time to recover from any investment or costly life mistakes! For
A
22
RM150
38
8%
RM443,147
BC
32
42
RM150
RM150
28
18
8%
8%
RM187,284
RM72,013
D
52
RM150
8
8%
RM20,080
the sooner we learn and recover –
and optimistically, build a nest egg
which can sustain us throughout
retirement.
Key Steps to a
Golden Retirement
Since 51% of MIA’s members are
under 40 years of age and the majority are in their 30s, time is of the
essence. Planning is everything!
The 10 key steps to a
retirement plan:
Having a mere 10-year
head start on investing for
retirement could make a
significant difference.
example, most new business investments go bankrupt in the first 3-5
years, and there is a good possibility
of losing a chunk of one’s investment
capital on a hot stock tip from the
neighbour’s cousin’s good friend’s
remisier. Factors that are not always
within our control could also derail
retirement funding: such as losing
one’s job, or losing loved ones due to
illness or a divorce. The sooner we
make these mistakes or the sooner
we start planning for the unexpected,
1 Understand needs (must-haves)
versus wants (nice-to-haves).
Practice delayed gratification for
your wants.
2 Make a budget and live by it.
This may involve increasing cash
flow with an additional income
stream and decreasing expenses.
Someone famous once said: “It
is what you do after 5p.m. that
determines your riches.” Also,
the lost compounding investment
opportunity with spending on
regular Starbucks coffees and teh
tarik add up over time! Investing
RM150 monthly (or approximately 10-15 fancy coffees per month?)
with 8% p.a. interest over a 10-year
period equals RM27,440!
MAY / JUNE 2014 | accountants today
55
Sustainability
Prepping for Retirement?
3 Invest (not save) at least 15% of
income (above and beyond EPF
contributions). Start at 10% of
income if need be, but start and
work from there! Diversify. Be
aware of scams. If it sounds too
good to be true, it probably is!
4 Set aside three months of gross
income or six months of monthly
expenses in emergency savings
for unexpected rainy days. This
should be liquid and not too
accessible to avoid temptations!
5 Ensure adequate, but
not excessive protection
– review your medical
and life insurance
coverage.
6 Write a will and a living trust.
What’s the difference? A will
bequeaths your assets to named
beneficiaries and is enforced
upon your passing. However, if
during your lifetime, you become
unable or unwilling to manage
your own assets (e.g. when in
a coma or if suffering from a
degenerative disease such as
Alzheimer’s), a living trust allows
your assets to be managed by a
trustee or successor trustee. 7 Pay off credit card debts, if any.
8 Pay off debts on your primary
home, i.e. the roof over your
head, for the priceless peace of
mind in case of emergencies.
9 Choose a life partner who is
onboard with your life and financial plans.
J Learn to be grateful for and happy
with what you have! Live does not
start at retirement, it is happening right now! n
56
accountants today | MAY / JUNE 2014
table 2
Malaysians
and Retirement
Schemes
Just as Malaysians are diverse in
their racial and religious makeup, they’re equally different
when it comes to saving for
their golden years.
As indicated in Table 2, 11%
of the total Malaysian labour
force of 13.1 million are civil
servants who are on a defined
benefit plan, i.e. the Malaysian
government pension scheme.
Upon retirement, the Malaysian
government provides a monthly service pension, a one-time
lump sum payment called service
gratuity at the point of retirement
and disability pension, if applicable.
Though not luxurious, an adequate
pension payout of RM2,000RM2,500 per month for life is not
uncommon. Benefits are adjusted
periodically and furthermore, there
are benefits for survivors.
Although life may seem like it
begins at retirement for the civil
servants, it is unfortunately quite
the opposite for the remaining
90% of the workforce. This segment
includes at least 67% of MIA’s members who are professional accountants in business!
Fifty per cent of the Malaysian
labour force is made up of private sector and non-pensionable
public sector employees, who are
active contributors to a defined
contribution plan by Employees
50%
6.5 million
active EPF
contributors
36%
4.8 million; neither
EPF c
­ ontributors
nor civil servants
11%
1.4 million
civil s
­ ervants
3%
0.4 million
unemployed
workforce
Provident Fund (EPF). A 2003
survey by EPF revealed that 14%
of its retirees used up all of their
EPF savings three years into retirement, 50% within five years and
70% within ten years. Clearly,
EPF in itself is inadequate to
fund retirement. This led to the
creation of the voluntary longterm investment scheme, called
Private Retirement Scheme (PRS)
launched in October 2012 to
encourage Malaysians to invest
more towards retirement. As of
March 2014, with about RM300
million worth of assets under
management and approximately
70,000 registered members, the
PRS take-up is still at its infancy.
The remaining 39% of the labour
force is made up of self-employed
or the unemployed, who are left to
their own devices to cater for retirement funding.
Balance
By Anis Ramli
Step into my
fCoffice f
There’s new food for thought for small business and professional
firms: could it be more productive to crunch numbers in a wifiready café with coffees and cakes galore?
If
Starbucks were to have
an eulogy, it’ll be this:
“Best remembered for
re-inventing coffee and
inviting the office into the cafe
culture.” Hands down, Starbucks
ingeniously set the tone for not
only a new movement in coffee –
where a frappe is favoured like the
latest Hermes handbag, but also
the trend of the office-in-the-cafe.
Or commonly referred to now as
‘coffice’.
At first, those seen toting their
laptops or hanging on to their
tablets were just the wifi-hungry
generation, eager to mix coffee
and chit-chat while milestoning
everything on Facebook. On free
connections. Score!
These days however, many
have discovered that with free
flowing coffee and connectivity
(and/or iCloud), work can also
benefit from indulging in that java
fix. And it’s not just for freelance
writers and part-time bloggers,
either. Professionals – from lawyers to accountants and tax con-
58
accountants today | MAY / JUNE 2014
sultants – could also benefit from
doing business from the coffice.
Former Australia Telstra
Businesswoman of the Year,
Angela Vithoulkas, runs her
Eagle Waves Radio from Vivo
Cafe in Sydney’s CBD. Her choice
is validated by research that has
showed that working in cafes can
actually boost creativity. She’s not
alone. Indicating how the coffice
is trending, Vithoulkas says that
15 per cent of small business
owners in Australia now prefer to
conduct business in cafes rather
than offices.
The idea of doing business
in coffee houses is not that alien.
When coffee houses first appeared
in Europe during the 17th and 18th
century, the place quickly became
a favourite for traders to negotiate
and kick ideas around. Today, this
idea is being rebooted - today’s
cafes have once more become a
place to work, trade and flourish.
Cafes are also warm and inviting. Would you rather work here
or in your monotonous brick-and-
Step Into My Coffice
*
Starbucks ingeniously set
the tone for not only a new
movement in coffee – where
a frappe is favoured like the
latest Hermes handbag, but
also the trend of the office-inthe-cafe.
mortar office? Plus, with a
myriad of tools now available to
accommodate a ‘virtual office’
– such as smartphones, tablets,
and cloud-based infrastructure,
like eVoice and eFax, anyone
can keep on top of business efficiently and keep their momentum going. And think about
all the networking opportunities. When others are curious
about what you’re doing, it’s an
opportunity to market yourself
and to strike up new clients and
relationships!
Of course, there is the challenge of table-hoggers, where
customers sit at a table for
hours, pushing away potential
customers. What is the proper
coffice etiquette in this scenario? One cafe in London thinks
it has the answer. Ziferblat has
launched a pay-per-minute cafe
perfect for cofficers. Coffee and
Cafes
With a myriad of
tools now available to accommodate a ‘virtual
office’ – such as
smartphones,
tablets, and
cloud-based
infrastructure,
like eVoice
and eFax, anyone
can keep on top
of business efficiently and keep
their momentum
going.
ab
everything else is free, but
guests pay 3p a minute for
connectivity. No Ziferblat near
you? Don’t worry. Generally,
the rule of thumb for any cafe
with free wifi is to order a coffee every hour if you’re going
to take up table space.
Another concern could be
security. Critics have pointed
out that privacy of conversations and documents could be
compromised when conducting business in a cafe.
And what of distractions from people-watching?
Wouldn’t an enclosed traditional workplace with cubicles and partitions be less
disruptive? Well, think again.
Basex, a knowledge economy research and advisory
firm says that nearly three
hours per day is lost to officerelated interruptions and distractions, costing American
businesses over US$750 billion per year. While similar research isn’t available in
Malaysia, it’s quite safe to
extrapolate that local professionals too find that office distractions – phone calls, meetings, etc. – impede productivity and focus. It might be
worthwhile for bosses to consider letting staff recharge
their batteries and sharpen
their focus by working from
the coffice.
So the next time you walk
into a cafe, don’t ask why there
are so many people hunched
over laptops. They’re not
wasting time. Instead, they’re
working at the coffice. It’s the
new normal. n
MAY / JUNE 2014 | accountants today
59
MIA notice
DECISION OF THE DISCIPLINARY COMMITTEE
MALAYSIAN INSTITUTE OF ACCOUNTANTS
The Council of the Malaysian Institute of Accountants
hereby gives notice that on 6 January 2014, after due
inquiry by the Disciplinary Committee of the Institute, Goh
Keng Juay (Mem. No.: 1007) was found to have committed an act amounting to ‘unprofessional conduct’ within
the meaning as provided under Rule 2 of the Malaysian
Institute of Accountants (Disciplinary) Rules 2002 [P. U. (A)
229/2002] [“the MIA (Disciplinary) Rules”].
The decision of the Disciplinary Committee was based on
the member’s own admission that as auditor of Polymate
Holdings Berhad (‘PHB’) for the financial year ended 30
September 2003, he had failed to discharge his professional duties in carrying out the audit of PHB in that he
had:
(1) not documented matters that are important in providing
evidence that audit work had been properly performed ;
(2) not obtained sufficient audit evidence to form the judgement on non-provisioning of the purported trade debtors
of PHB;
(3) not exercised sufficient professional skepticism throughout the audit process for sale and trade debtors of PHB;
(4) relied significantly on management’s representation in
forming the judgement for non-provisioning of the purported trade debtors of PHB ; and
(5) allowed his familiar relationship with the Managing
Director of PHB to influence his objectivity and independence in the course of the audit for PHB. The Disciplinary Committee in exercise of its powers under
Rule 18(3) of the MIA (Disciplinary) Rules has ordered the
member:
• to be reprimanded;
• to pay a fine of RM4,000-00;
• to pay the Institute the sum of RM5,000-00 in respect of
costs and expenses of and incidental to the disciplinary
hearing before the Disciplinary Committee and the investigation conducted by the Investigation Committee ;
• to attend a course of instruction relevant to the application of clarified International Standards on Auditing (ISA)
within six months from 13 January 2014.
The decision of the Disciplinary Committee is effective from 4
February 2014.
SUDIRMAN BIN MASDUKI
Registrar
On behalf of the Council of the Malaysian Institute of Accountants
DECISION OF THE DISCIPLINARY COMMITTEE
MALAYSIAN INSTITUTE OF ACCOUNTANTS
The Council of the Malaysian Institute of Accountants
hereby gives notice that on 6 January 2014, after due
inquiry by the Disciplinary Committee of the Institute,
Timothy Oliver Sylvester (Mem. No.: 7222) was found to
have committed an act amounting to ‘unprofessional
conduct’ within the meaning as provided under Rule 2 of
the Malaysian Institute of Accountants (Disciplinary) Rules
2002 [P. U. (A) 229/2002] [“the MIA (Disciplinary) Rules”].
The decision of the Disciplinary Committee was based
on the evidence adduced by the Investigation Committee
before the Disciplinary Committee that he had failed to
adhere to the Institute’s By-Laws (On Professional Ethics,
Conduct and Practice) by failing to purchase a policy of
Professional Indemnity Insurance (PII).
60
accountants today | MAY / JUNE 2014
The Disciplinary Committee in exercise of its powers under
Rule 18(3) of the MIA (Disciplinary) Rules has ordered the
member:
• to pay a fine of RM1,500-00; and
• to pay the Institute the sum of RM2,500-00 in respect of
costs and expenses of and incidental to the disciplinary
hearing before the Disciplinary Committee and the investigation conducted by the Investigation Committee.
The decision of the Disciplinary Committee is effective
from 11 February 2014.
SUDIRMAN BIN MASDUKI
Registrar
On behalf of the Council of the Malaysian Institute of Accountants
Professional
Professional
Professional
Accountancy
Accountancy
Accountancy
Programmes
Programmes
Programmes
Centre
Centre
Centrefor
for
for
Accountancy
Accountancy
Accountancy
Excellence
Excellence
Excellence
TRANSFORMING
TRANSFORMING
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MALAYSIA
MALAYSIA
MALAYSIA
INTO
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AAA
LEADING
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REGIONAL
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ACCOUNTANCY
ACCOUNTANCY
ACCOUNTANCY
EDUCATION
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HUB
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The
The
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TESTES
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(Centre
(Centre
(Centre
forfor
Accountancy
for
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Accountancy
Excellence)
Excellence)
Excellence)
project
project
project
in in
the
in
the
ETP
the
ETP
Education
ETP
Education
Education
NKEA
NKEA
NKEA
is set
is is
set
to
set
to
transform
to
transform
transform
Malaysia
Malaysia
Malaysia
into
into
into
a leading
aa
leading
leading
regional
regional
regional
accountancy
accountancy
accountancy
hub
hub
hub
in in
the
in
the
Asia
the
Asia
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Pacific
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region.
region.
region.
The
The
first
The
first
step
first
step
step
is the
is the
is establishment
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establishment
of of of
Sunway
Sunway
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TESTES
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that
that
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internationally
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programmes.
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Sunway
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is the
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Centre
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Centre
of of
Accountancy
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Training
Training
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and
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at at at
http://bit.ly/stescae
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Courses
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Offered
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Certified
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Technician
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JPT/BPP(K)(R/344/3/0076/A7555)06/16
JPT/BPP(K)(R/344/3/0076/A7555)06/16
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Association
Association
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of Chartered
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Certified
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Accountants
Accountants
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(ACCA)
(ACCA)
(ACCA)
Certificate
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in Finance,
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Accounting
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andand
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(CFAB)
pathway
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pathway
to to to
Institute
Institute
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Accountants
Accountants
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in England
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andand
Wales
and
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JPT/BPP(K)(R/344/4/0066/A7649)12/16
Since Since
2003Since
20032003
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SUNWAY
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COLLEGE
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(W4PW072)
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A member
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Group
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T. +6T.03+67491
T.03
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8622
03 7491
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+65531
8391
03 5531
83918391
W. sunway.edu.my/sunwaytes
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THE WAY
FORWARD
IFAC President Warren Allen
talks about the way forward for the
accountancy profession at the recent MIA
International Accountants Conference 2013.
What are the challenges and prospects for
accountants in this brave new world?
CAN MALAYSIA GRADUATE
INTO THE LEAGUE OF
HIGH-INCOME COUNTRIES?
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2,200
2,100
2,000
1,700
Half Page
1,668
1,584
1,500
1,425
1,283
(B&W)
1/3 Banner Strip
1,500 1,200
1,000
1,400 1,100
950
1,300 1,000
900
1,200
950
855
1,000
800
730
SPECIAL
SIZE/CREATIVE
SPECIAL
SIZE/ CREATIVE
ADS
Advertorial/Gatefolds
Front Flap
Loose Insert
Stick on/Sampling/Postcards
ADS
Negotiable
Negotiable
Negotiable
Negotiable
PREMIUM
POSITIONS/LOADING
PREMIUM
POSITIONS
/ LOADING
Positions
Front Cover Gatefold
Back Cover Gatefold
Centre Spread
Inside Front Cover & Page 1 (DPS)
Double Page Spread
Outside Back Cover
Inside Front Cover
Inside Back Cover
ROP Specified Page/Position
Facing Inside Front Cover (page 1)
Facing Inside Back Cover
Negotiable
Negotiable
60%
50%
40%
40%
40%
30%
20%
20%
20%
Film
Black & white ad
Four colour ad
Screen
Screened positive film
Screened process
colour-separated positives
with progressive proofs
150 lines
CD-ROM
Formats
PDF, JPEG, Adobe Photoshop,
Adobe Illustrator, Adobe
Pagemaker, Quark Xpress
Images
300 dpi
Scanned images
300dpi
Colour contribution
CYMK
METHOD OF PRINTING/BINDING
Offset printing on 85gsm Matt Art paper with
staple binding/perfect binding.
ADVERTISING CONDITIONS
The Publisher reserves the right to revise
advertising rates upon 30 days prior written
notice. Payment must be in Ringgit Malaysia
(RM) as per rates shown.
Dimension of advertisements must adhere to
the Publisher’s specifications. The Publisher
will only carry advertisements either in
English or Bahasa Malaysia.
CANCELLATION POLICY
Advertisers who have contracted schedules
must notify in writing to the Publisher of their
intention to cancel advertisement orders before
the booking deadline. Failure to fulfill the
insertion order after the close of the booking
deadline will entitle the Publisher to impose a
penalty on the advertiser equivalent to 50% of
the contracted advertisement rate.
Please write to:
[email protected]
03-2279 9200 ext. 366/354
Malaysian Institute of Accountants
Dewan Akauntan, 2 Jalan Tun Sambanthan 3,
Brickfields, 50470 Kuala Lumpur, Malaysia.
Tel : (603) 2279 9200 Fax : (603) 2279 9386
IFRS MASTERCLASS 2014
IFRS 15 Revenue from Contracts
with Customers
Date : 4 July 2014 (Friday)
Time : 8.30am to 12.30pm
Venue : Shangri-La Hotel, Kuala Lumpur
The International Accounting Standards Board (‘IASB’) is expected to publish the much-awaited IFRS 15
simultaneously with the Financial Accounting Standards Board (‘FASB’) with an effective date of 1 January 2017.
This signifies the culmination of the IASB’s and FASB’s joint effort to improve the revenue recognition requirements, which includes
redefining the current revenue recognition principles arising from IFRIC 15
BDO is pleased to host a distinct Masterclass dedicated to practical deliberations on the interpretation and implementation of
IFRS 15 for the Property Development and Construction (‘PDC’) industry as part of our efforts to partner with you for a successful
transition into IFRS 15.
Our panel of speakers include:
• Andrew Buchanan, Global Head of IFRS and member of the IFRS Interpretations Committee*
• Wayne Basford, Chairman of the BDO International IFRS Working Party and Head of Technical Services Group of BDO Australia
Call us today to find out more about IFRS Masterclass 2014.
MASTERCLASS FEE
RM250 per person
CONTACT
Jodie Loh
Tel : +603-2616 2891
Email: [email protected]
*from 1 July 2016
www.bdo.my
BDO Malaysia
BDO Asean
BDO (AF 0206) Chartered Accountants, a Malaysian Partnership, is a member of BDO International Limited,
a UK company limited by guarantee, and forms part of the international BDO network of independent member firms.
BDO is the brand name for the BDO network and for each of the BDO Member Firms.