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PRESIDENT'S ADDRESS BY DATUK MOHD NASIR AHMAD PRESIDENT MALAYSIAN INSTITUTE OF ACCOUNTANTS 25TH ANNUAL GENERAL MEETING SATURDAY, 24 SEPT 2011 MAHKOTA BALLROOM II, HOTEL ISTANA Salutations: Ladies and Gentlemen Assalamu'alaikum w.b.t., Salam Sejahtera and good afternoon. Welcome to the Institute's 25th Annual General Meeting. It is indeed an honor for me to chair this meeting. Before I move on, I would like to express my gratitude and thanks to our Accountant General, YBhg Datuk Wan Selamah Wan Sulaiman, Council Members, members of the Institute and MIA staff. For the strong support and commitment that have helped the Institute to progress further. As you know, this is the first time that I am chairing our AGM after taking over the presidency of the Institute from my predecessor, Encik Abdul Rahim Abdul Hamid. Encik Abdul Rahim, who is now Vice President, has been a steady hand in steering the Institute during the last two challenging and significant years. We have much to thank him for. I am sure you will join me in a show of appreciation to Encik Abdul Rahim for his excellent stewardship of the Institute and particularly, for the development and progress of the accountancy profession locally as well as internationally. Mention must also be made of Ms Christina Constance Foo, the former Vice President for her many contributions towards the profession and for being there when it mattered. I would also like to take this opportunity to introduce to you, our members who were recently appointed by the government to the Council. It is my great pleasure to introduce to you: - Assoc Prof Dr. Mohamat Sabri Hassan; - Mr. Devanesan Evanson; - Ms. Josephine Phan Su Han; - En. Baharuddin Ahmad; - Mr. Donald Joshua Jeganathan; - Mr. Eugene Wong Weng Soon; - En. Johan Idris; AND - Puan Zahrah Abd. Wahab Fenner - And of course yours truly. We welcome these individuals and look forward to a productive and fresh new phase for the Institute and the profession. Later today, we will have the opportunity to welcome three more new Council Members when the election results are known. Meanwhile, let me also record my sincere appreciation and heartfelt gratitude to our former Accountant General, YBhg Dato' Mohd Salleh Mahmud who has retired on 28 November last year, as well as our Council members who have completed their term, namely:- - Ms. Christina Constance Foo; - Assoc. Prof Dr. Norman Mohd Salleh; - YBhg Dato' Gan Ah Tee; - YBhg Datuk Nur Jazlan Tan Sri Mohamed; - En. Mohamed Raslan Abdul Rahman; - Mr. Seow Yoo Lin; - Mr. Uthaya Kumar Vivekananda; - Dr. YC Lee; - Mr. Liew Kim Yuen; - Mr. Chen Voon Hann; - Mr. Lam Kee Soon; AND - Mr. Yeo Tek Ling Also, I would like to thank our outgoing Council members, - Dr. YC Lee; - Mr. Liew Kim Yuen; - Mr. Chen Voon Hann; - Mr. Lam Kee Soon; AND - Mr. Yeo Tek Ling - Mr. Billy Kang Wei Geh; - Mr. Alex Ooi Thiam Poh; AND - Mr. Stephen Oong Kee Leong   To all these members of the Institute - we would like to thank you for your invaluable contributions towards the strengthening of the Institute and profession. We hope that all of you will continue to contribute to the Institute and the profession in the years to come. MIA PARTNERING THE NATION TOWARDS PROGRESS Ladies and Gentlemen When I assumed the Presidency of the Institute on 8th August, I was fully conscious of the need to maintain the delicate balance between the Institute's responsibility to regulate the profession and its responsibility to promote the interests of the profession. On behalf of the Council, I wish to state very clearly that the Council is in place for the Institute and the profession. We will discharge our duties responsibly, objectively and professionally. We will perform our regulatory role without fear. And we will provide services to members without favour. To this end, I wish to remind myself and my colleagues in the Council that we are all, whether appointed or elected, to serve the Institute as a whole and not just representing the any particular segment of the membership. As we all know, the Malaysian Institute of Accountants is a Statutory Body established by an Act of Parliament, - the Accountants Act 1967 - to develop and regulate the Profession. Its Vision includes partnering the Government in Nation Building and its Mission is steeped with the upholding of Integrity and Ethics. According to the Act, MIA has the following statutory functions: - To determine qualifying and admission criteria for members - To provide continuing professional education - To regulate the profession by ensuring benchmark standards are maintained, and enforcing the professions code of professional conduct and ethics - To approve, regulate and supervise the conduct of the Qualifying Examination - To promote the interests of the profession MIA achieves this by providing our members continuous professional education and quality assurance through: - The development of a competitive and comprehensive assessment framework when admitting new members; - By implementing professional standards and practices recommended and required by internationally accepted guidelines as standards; - Conducting practice reviews; - A provision of By-Laws for members to abide and comply with, in ensuring the integrity of the profession with necessary values and skills, required by accountants in order for them to be competent and globally recognised in performing their duties, ethically and professionally, and; - Having in place a robust disciplinary system for those who fail to comply with these standards and By-Laws. STRONG GOVERNANCE AND STRUCTURAL FRAMEWORK. Ladies and gentlemen, I have just been elected as the President of MIA last month. For the benefit of those who are new to the profession, and to those who wonder, allow me to explain the process of electing the president. In accordance with the Act, the president is elected from amongst the members of the Council of MIA. Based on our experience, the Council has always elected the President through consensus. Ideally, MIA needs to have an independent and neutral President who does not have any potential issues of conflict of interest. As for the composition of the MIA Council, its members who come from various industries and sectors provide the strategic direction. Core personnel implement the strategies and manage daily operations under the supervision of the CEO which report to Council. Currently, the MIA Council is made up of thirty members who represent members in public practice, commerce and industry, public sector and the academia. Up to eighteen Council members are appointed of which five are nominated from institutions of higher education, one member is picked from the MICPA Council (other than the MICPA President), three from other approved professional bodies and nine others are appointed by the government as fit and proper person to be in the Council. The remaining ten members are elected at the Institute's annual general meeting. The Act prescribes that a Council member is not allowed to hold office for more than four (4) consecutive years. To ensure strong governance and structural framework, we have dedicated committees to execute their responsibilities. Each Committee has clearly defined terms and reference and divided as follows:- - Governance Committees Executive Committee, Nominating Committee AND Audit & Risk Management Committee - Statutory Committees Investigation Committee, Disciplinary Committee, Disciplinary Appeal Board AND Examination Committee. - Technical Committees Auditing and Assurance Standards Board, Ethics Standards Board, Education Committee, Financial Reporting Standards and Implementation Committee, Taxation Committee AND Islamic Finance Committee. - Surveillance Committees Financial Statements Review Committee AND Practice Review Committee. - Representative of Membership Public Practice Committee, Audit Practice Sub Committee, Tax Practice Sub Committee, Insolvency Practice Sub Committee AND Professional Accountants in Business. The three core divisions in the Institute are Membership Services, Education & Development and Surveillance & Enforcement that carry out day-to-day operations and implement Council-approved strategies. To serve members better, apart from the headquarters in Kuala Lumpur, the Institute also operates four (4) regional offices in Penang, Johor, Sabah and Sarawak. MEMBERS' ROLE Members are important to the existence of the MIA. And it is from members that that we expect views and suggestions for the betterment of the profession and in becoming smart partners in nation-building. However we are also a fraternity of professionals who should conduct ourselves within certain frameworks and boundaries. We should be conscious of the implications of what we say and do, and whether or not they will go beyond the boundaries. Let us remind ourselves that as members of MIA, we are bound by the tenets of our governing document which is the Accountants Act and its subsidiary Rules. Additionally, we are not an island of our own. We are professionals who form part of the society, whose interest we serve and by whom we are being scrutinized. Where the greater society is concerned, there are other public laws which have bearing on our conduct such that we must be cautious whether what we say or do is inconsistent with those other laws. That is the way we are operating now. We cannot ignore that what we do affects the society and the country. Whilst we want to take care of our own interests, it cannot be to the extent that we ignore the larger interest of the society that depends on us as professionals. Yes I agree that as an organisation, we must be dynamic and prepared to evolve. But these efforts to improve ourselves must be done tactfully and without sacrificing the professionalism that we are so proud of. COMMITMENT TO PROGRESS AND QUALITY Ladies and Gentlemen The Institute was established to control and regulate the accountancy profession as a whole. However, our role has evolved far beyond simple policing and enforcement over its 44 years of existence. The Institute is always finding ways to enhance the accountancy profession. We have been active in organising programmes and activities that bring benefits to all. Along the way, there was one `GREAT' event that pushed us to a greater height. This is of course the 18th World Congress of Accountants. Based on the deliberations at the WCOA with the theme of `Accountants: Sustaining Value Creation', it is important that we as accountants to continue to improve perceptions of business in relation to the value we bring, fully taking into account the needs of business and the views of the beneficiaries of our services. In summary, we must bring value to all our work and ensure that business and the wider public understand the value we bring. REINVENTING VALUE THROUGH WCOA 2010 Ladies and Gentlemen The success in hosting the WCOA 2010 has encouraged us to provide capacity building and professional development beyond the Malaysian shores. So, with effect from this year, tour annual National Accountants Conference which is popularly known as the NAC will be renamed as the MIA International Accountants Conference (MIA Conference). The rebranding of NAC is a natural progression of our new standing in the international community. We are confident that through this re-branding effort, MIA Conference will be able to provide a unique development opportunity for accounting and financial leaders in this region. For 2011, the MIA Conference will be organised in conjunction with the 17th edition of the ASEAN Federation of Accountants Conference which will be held from 2 - 3 November 2011 at the Kuala Lumpur Convention Centre. CHANGING LANDSCAPE OF THE ACCOUNTANCY PROFESSION IN MALAYSIA Ladies and Gentlemen The Institute continues to play an active role in globalisation issues. We continue to make good progress in preparing our members for the progressive liberalisation of markets and increasing competition. As remarked by the our Prime Minister in his keynote address at the 18th World Congress of Accountants last November, Malaysia is committed to achieve full convergence with the International Financial Reporting Standards (IFRS) by 1 January 2012. Adoption of the new IFRS-compliant framework by the publicly accountable entities in Malaysia shall from 2012 onwards simultaneously ensure full compliance of their general purpose financial statements with IFRS. At the same time we need to note that the Government recently announced its plan to adopt full accrual-based accounting in the financial reporting by the public sector by 1 January 2015; using bases of accounting that are largely aligned to the International Public Sector Accounting Standards (IPSAS). MIA has to get involved in this exercise by the Government by providing technical advisory services and education. The target to migrate from the modified cash basis of accounting to accrual basis of accounting in less than four years is indeed challenging. But this plan is a policy measure in the New Economic Model which is the bedrock to the Economic Transformation Programme. Considering its potential impact to the economy and the national agenda, this plan has to be prioritised. MIA's attentiveness on this matter should be at the level similar to the efforts in support of IFRS convergence, if not greater. SUSTAINING AND PROGRESSING THE ACCOUNTANCY PROFESSION Ladies and Gentlemen Our financial reporting frameworks for the capital market, as well as the public sector, are set to be internationally recognised, but there are concerns that not all of our existing and future accountants are prepared to embrace the new changes with a globalised mindset. In this regard, education is a key priority of MIA - not just for the existing accountants, but also the future accountants. MIA must continue to play an active role to help all members of the profession to learn, unlearn and relearn to a level that would enable all accountants to appreciate the application of globalised accounting standards, with a globalised mindset, in a globalised environment. Among the programmes undertaken by MIA to enhance the standard of the profession is the MIA Chartered Accountant's Relevant Experience programme or CARE programme. CARE was introduced with an objective to monitor accounting graduates who aspire to become MIA members as Chartered Accountants obtaining the three (3) years relevant experience. The program monitors the experiences of the registered graduates with guidance by mentors in order to provide relevance to their experience and ease of certification when applying for membership into MIA. We would like to encourage members to be part of this programme by becoming the CARE volunteer mentor. MATTERS FOR COGNIZANCE Ladies and Gentlemen Allow me to proceed by highlighting some of the key issues, both at the national level as well as the Institute's level, which we have had to address during the course of the year. I would like to touch on the resolutions passed at the last AGM and their status: First, the meeting had resolved to revoke the Quality Assurance & Practice and propose a fresh set of rules on Peer Review (PR). Such resolution had been considered by the Council, which in turn assigned the Public Practice Committee to study it. A Taskforce was then formed by the PPC to determine the feasibility of the resolution. The Taskforce concluded that Peer Review cannot be revoked as this is an obligation under the IFAC Member Body Compliance Programme. As such, this matter will be reworded to `Reviewed' instead of `Revoked'. The Taskforce was also of the view that the Peer Review framework should be formulated bearing in mind the approach taken by the Audit Oversight Board (AOB) in the audit of Public Interest Entities' (PIE) auditors. The Peer Review framework will be educational in nature, although the disciplinary element will also be introduced for the purpose of raising the bar. Second, the meeting had resolved to set up a separate register in respect of Members in Practice so as to accord them with respective rights and obligations required to be in practice. The Taskforce recommended that no separate register is required as we are focused on one objective which is to promote the Chartered Accountant classification for better oversight and governance of the profession. At the same time, MIA has already put in place a register of member with practising certificates. Third, the meeting had resolved that all matters that affect only the Rights of members in Practice be voted upon only by members in practice. The Taskforce recommended that this resolution requires the Accountants Act to be amended, and therefore the Council is currently looking at enhancing the on-going proposal to amend the Act to include the effects of this resolution as well. Fourth, the meeting had resolved that the Form M1(A) be revoked and the previously used format be reinstated. The Taskforce recommended 2 options in approaching this issue. Option 1 is to revoke the requirement for a Statutory Declaration to accompany the Form M1(A), and that the Form be submitted to MIA only, instead of the Accountant General's office. Based on the Form received, MIA will in turn issue a letter to the Accountant General in support of the licence renewal. The Taskforce further recommended that if the Accountant General does not agree to Option 1, Option 2 is to reinstate the previously used format. Fifth, the meeting resolved that MIA takes control of the interview process and not leave it to the various parties on the interview panel for licensing. The Taskforce agreed with the proposition because among others it was in line with international practices and that of the other professions in Malaysia, and because of the fact that MIA itself has a due process to assess the quality of practitioners through Practice Review. The Taskforce recommended that MIA will conduct the process to evaluate, and recommend to the Accountant General / Ministry the candidates to be granted with licence or its renewal, without amending the Companies Act. Last, the meeting resolved to abolish the need to renew audit licence every 2 years. The Taskforce agreed with this proposition and recommended that where MIA has taken control of the interview process, MIA could then decide on the procedures of renewal. Despite that the renewal of licence was a legal requirement under the Companies' Act, the Taskforce is of the view that the renewal shall be administrative by nature, upon payment of renewal fee. That's the status of the Resolutions. Now let's touch on the national issues. As we are all aware, some developments have taken place in the country which affects the profession directly or otherwise. One of them is the proposal pertaining to the qualifications of accountants in the Economic Transformation Programme (ETP) Roadmap unveiled last October. In essence, the ETP Roadmap proposed that by mid-2012, a person who wishes to become a chartered accountant ("CA Malaysia") must possess a professional qualification. Let us re-cap what is embedded in the Accountants Act 1967, particularly the legislated ways of admission as members. The Act provides that a person can become a member if he (i) passes the final examination of the listed public universities in Malaysia and has 3 years of relevant working experience, (ii) passes MIA's Qualifying Examination and has 3 years of relevant working experience, or (iii) has a professional qualification from the listed professional bodies. Thus the requirement for admission that one must possess a professional qualification is nothing new except that under current legal framework, such a requirement is only one of three alternative criteria to become a chartered accountant. It appears that the ETP is suggesting having a professional qualification is a primary requirement to become a chartered accountant, which is not consistent with the requirement under the law. It must be said here that such proposal was made without prior consultation with MIA. Perhaps the author of the Roadmap under the ETP is unaware of the existing legislation or did not fully understand the existing legal provision on admission as MIA member. For information, the accounting faculties of our recognised public universities have been conducting their programmes in accordance with the International Education Standards pronounced by IFAC, to prepare its graduates to handle challenges ahead of them, especially from a technical knowledge standpoint. Secondly is the proposed amendment to the Accountants Act 1967. The proposal to amend the Accountants Act 1967 has been an on-going effort on the part of MIA. We have been deliberating the proposal in the Council, and have been in continuous engagement with the government through the office of the Accountant General over the proposal. Primarily, the proposed amendment seeks to enhance the regulatory mechanism and regulatory process of the profession so as to ensure independence and greater accountability and transparency. The amendment also seeks to introduce the framework of competency assessment, which makes it an added legal requirement for a person's professional capability to be assessed before he can be admitted as a member of the profession. This is so as to meet public expectations that an accountant should be able to serve most professionally in keeping with the currently demanding economic and financial atmosphere. We are also looking at fitting a resolution by members made at the previous AGM into the package of amendments to the Act. That is the establishment of separate rights of voting for members in practice, in matters which concern only them and their practices. The Council hopes to conclude the amending process soon so that the bill can go into legislation in the next calendar year. CONCLUSION Ladies and Gentlemen We are living in very challenging times and therefore cannot be complacent. The profile of the profession is constantly changing and shifting, and closely watched by others. So I would like to remind members and myself, to constantly keep ourselves up-to-date and if necessary, reinvent ourselves and the way we do things to keep up with the changes and challenges. By nature, our profession is always linked to positions of TRUST. We can only remain relevant and strong if people continue to trust us. So we must be mindful of how we conduct ourselves so as not to lose that all important TRUST. Once again, thank you for your presence and patience. I know it has been a lengthy speech, but this is a once in a year opportunity. So I thought it is best that I address the relevant issues involving MIA and its members. I also want to acknowledge those members throughout the country, who have contributed in one way or another to the Institute and the profession but unable to be present today. Members' support together with that of the Institute's staff is crucial for the well-being and development of the Institute and the profession. See you all at the MIA-AFA Conference 2011 this November. Thank you.