accountants group calls for better governance structure (1)

Accountants group calls for better governance structure

Written by Anuja RavendranThursday, 13 September 2012 10:13 -

A group of accountants are calling for an enhanced governance structure for the MalaysianInstitute of Accountants (MIA), including a call to recognise that it is not a regulatory body and torevamp its council which, at present, is overwhelmed by government appointees.

These members feel that MIA, a statutory body established under the Accountants Act 1967 toregulate and develop the accountancy profession in Malaysia, is veering away from itsself-regulation mandate when there already are regulatory entities like Securities Commissionand Audit Oversight Board (AOB) responsible for ensuring that public interest is protected.

Some of the resolutions that the group intends to propose at MIAs upcoming annual generalmeeting (AGM) on Sept 29 are to include a declaration that it was a professional accountantsbody and not a regulator, an accountant representing the group proposing the resolutions toldThe Malaysian Reserve.

Another proposal concerns the amendment to the Accountants Act 1967 to enable the MIAcouncil to comprise a majority of elected members as opposed to the current majority of 20government appointed members and 10 elected members.

The call came on the heels of a hard hitting World Banks report on the observance of standardsand codes (ROSC) for accounting and auditing in Malaysia released in February that said MIAneeded to undertake an independent review of its governance structure in order for it to be ableto fully deliver on its mandate.

This review should address the structure and membership of the council, the practice reviewprocess, the application of investigation and disciplinary processes, membership admissionprocesses, the assessment of quality standards for university accounting degree programmesas well as the monitoring and enforcement of those standards and the level of resourcesrequired to enable MIA to effectively deliver its full mandate, the report said.

A spokesperson for the group of accountants, ready to push for changes in the MIA, said that itscurrent stance to be regulator of it own members whose membership fees are a source offunding for the institution is a contradiction of its functions.

The supervisory and disciplinary function of MIA merely reinforces their services for membersand represent self-regulating functions universally practised by all other accounting bodiesaround the world, he added.

If it takes on the stance of a regulator, essentially there is no element of self-regulation which iswhat was intended for the profession, he said.

The matter is further complicated by the council's composition.

Presently, it comprises 20 government appointed members and only 10 members elected byfellow members, he said.

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If self-regulation is the goal, there is an imbalance in the composition of the council as under aself-regulatory regime, there should be more elected representatives than governmentappointees, he added.

While there is certainly a place for government appointed council members as well as heads ofprofessional accountancy bodies in the council, the present structure is incongruent for a bodythat is run on membership subscriptions, he said.

There needs to be a more democratic spirit in the way council members are elected so thatthere is a stronger sense of ownership of charting the direction for the profession, he said.

He said that under the current structure, there are policies that have or are being implementedthat may not bode well for the development of the profession, for example the challengingprocesses involved in securing audit licences and deciding on the qualification for admission ofmembers which will affect the quality of accountants in the country.

The council is also seeking the responsibility of increasing membership fees without having togo to the AGM to get members approval which is not right, he added.

Furthermore, as a member of the International Federation of Accountants (IFAC) which is theglobal body representing the interest of accountants, it is clear that MIA must be a professionalmembers body, he said.

Other resolutions being proposed by the group in a bid to enhance the MIA council governanceare:

- i) a call for any amendments to the Accountants Act 1967 to be made after approval bymembers at a general meeting; - ii) a call for all elected and appointed members of council to retire at the AGM, which ispresently not the case, in a bid - to ensure continuity and accountability; - iii) a restriction for each member to carry only one proxy at any general meeting; and - iv) that the Accountant General be responsible for any legislative changes required toeffect the various resolutions made.

In enhancing its function as a professional body for members, the group is also proposing thatMIA take the lead in deciding the audit licence approvals and renewals processes whichcurrently also involves other government departments including the Ministry of Finance, theCompanies Commission of Malaysia and the Securities Commission, among others, he said.

The group has also called for the establishment of a technical resource centre that is able tomeet with the needs of members, he said.

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In Malaysia, the use of the word accountant is regulated under the Accountants Act 1967, andanyone who wishes to carry the title would have to register as a member of MIA.

They would have to meet its admission requirements which include academic and workingexperience as well as pay a fee of RM500 for admission (payable once at the point ofadmission) and a yearly subscription fee of RM250.

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accountants group calls for better governance structure (1)

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