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TITLE: Speech by YB Dato' IR Haji Amiruddin Hamzah, Deputy Finance Minister, Ministry of Finance at the MIA International Accountants Conference 2018

DATE: 09/10/2018

KEYNOTE ADDRESS

BY

DEPUTY FINANCE MINISTER

AT

THE MIA INTERNATIONAL ACCOUNTANTS CONFERENCE 2018

Riding the Digital Wave, Leading Transformation

9 OCTOBER 2018 (TUESDAY), KUALA LUMPUR

Yang Berbahagia Datuk Saat Esa,
Accountant General of Malaysia

Yang Berbahagia Dato' Shahrol Anuwar Sarman
Setiausaha Bahagian, Bahagian Pengurusan Strategik Badan Berkanun, Kementerian Kewangan Malaysia

Yang Berusaha Encik Salihin Abang,
President, Malaysian Institute of Accountants

Yang Berusaha Tuan Haji Sudirman Masduki,
Registrar, Malaysian Institute of Accountants

Yang Berusaha Dr Nurmazilah Dato’ Mahzan,
Chief Executive Officer, Malaysian Institute of Accountants

Members of the Media

Tan Sri-Tan Sri, Datuk-Datuk, Ladies and Gentlemen

Assalaammualaikum wrt wbt and salam sejahtera

  1. Thank you to Yang Berusaha Encik Salihin for that warm introduction and thank you to MIA for inviting me to deliver the keynote address at this conference. I understand that over the years, MIA has successfully built up this conference into a leading professional development event that has been certified as a national record holder by the Malaysia Book of Records as the “Largest gathering of Accountants in a single event’. Congratulations MIA!
  2. Today, I would like to focus my remarks on two areas that are pivotal to Malaysia’s future growth and international reputation – good governance and technology disruption, or digital disruption.
  3. As we all know, this new Government was elected on a groundswell of public ire that demanded accountability, honesty, integrity and an end to blatant and shameless corruption. People voted at the ballot box for clean government. Although it is an uphill task, the Government today is trying to implement Competency, Accountability and Transparency. CAT is the key to our reformation and our reinvention of the new Malaysia as a nation and people of integrity and good reputation.
  4. These are also the values that are synonymous with the accountancy profession. It is no accident that the word “account” is in the word “accountability”. As finance and assurance professionals, accountants are expected to be competent, professional and accountable for the monies under their scrutiny. There will always be greed, fraud and tax evasion, because this is human nature. But this is why accountants as guardians and representatives of the public interest must do their job properly in accordance with the highest professional standards to uphold integrity, responsibility and accountability. It is also your job to ensure that the accounts are correct so that Government can collect the right amount of tax to run the country!
  5. Accountant General’s Department of Malaysia, Ministry of Finance is in the transformation to implement accrual accounting from modified cash based to accrual based. The integrated Government Financial & Management Accounting System (iGFMAS) has been “Go Live” effective 1st January 2018 in all ministries and agencies.
  6. The system has the facility to produce dual ledger reporting both in modified cash and accrual based. Assets and Liabilities information in accrual based will subsequently allow ministries and agencies to be financially accountable for their respective revenues and expenditure. This will add depth to the accountability and transparency of the management of the public sector resources.
  7. Accrual Accounting foster better financial planning to ensure that the government is able to meet its liabilities as they fall due and the requirement to identify, measure and report government liabilities will result in transparency and foster better financial planning. On behalf of the Government, I would like to thank MIA for their support for the implementation of our public sector accrual accounting. Among these are their technical support, support for public financial management enhancement, support of our compliance with international standards specifically the Malaysian Public Sector Accounting Standards (MPSAS), and capacity-building for accountants in the public sector.
  8. Recording and reporting financial information more accurately and transparently through accrual accounting in turn will help to improve Public Sector Financial Management and identify leakages and wastages that impact our good governance and undermine public confidence. By understanding where public money is being expended, we can better strategise spending and allocations to improve public service delivery. Accrual accounting information is also helping us to formulate a more disciplined and prudent Budget for 2019 that will insha Allah improve the country’s future financial stability.
  9. As we go forward, we hope to heighten transparency and consistency in public sector information and reporting by eventually embarking on integrated thinking and integrated reporting. Congratulations to MIA for publishing its second integrated report and for advocating that Malaysian organisations adopt integrated thinking and integrated reporting. The <IR> framework can help to improve information transparency and keep us all accountable to our stakeholders and the public.

    Ladies and gentlemen

  10. I would like to give you a sneak preview of the Budget and how it will impact the financial performance and stability of the country in the next few years. I don’t want to steal the thunder from Budget Day, but I can say that the budget will impact positively on the financial sector through programmes and initiatives which will spur economic activities leading to healthy financial sector performance.
  11. As far as the domestic financial sector is concerned, the sector is expected to remain sound supported by financial institutions operating with strong capital and liquidity buffers. Similarly, the domestic capital market will remain resilient driven by diversified instruments as well as healthy market capitalisation level. The ringgit, along with other regional currencies, faced significant downward pressure against the US dollar following interest rate hikes in major economies particularly the US, global trade war and geopolitical tensions. As a result, the ringgit in line with other regional currencies depreciated within the range of 2.3% and 9% against the US dollar as at end-September 2018. However, the ringgit performed better against other regional currencies following our strong economic fundamentals. Looking ahead, the ringgit will reflect the underlying fundamentals of the economy when uncertainties recede.

    Ladies and gentlemen

  12. Good governance and the implementation of CAP requires checks and balances, and robust regulation. The accountancy profession plays a pivotal role in providing assurance and confidence in public and private sector finances. MIA in turn is enshrined as the regulator of the accountancy profession under the Accountants Act 1967 to regulate and develop the profession, and to ensure that the profession provides its services with integrity and accountability to uphold public confidence and the public interest.
  13. On behalf of the Government, I would like to commend MIA for strengthening its enforcement in order to enhance regulation, despite existing restrictions such as inadequate sanctions and investigative powers. We welcome the proactive enforcement actions against bogus accountants, prompt disposal of backlogged cases and judicious investigation of 1MDB by MIA, among other enforcement initiatives that create confidence in the profession and the market. Furthermore, the Government believes that more can be done to strengthen MIA’s powers and we are looking into enhancing and refining the Accountants Act 1967 to further empower regulation and enforcement of the profession. As MIA is a statutory body under the Ministry of Finance (MoF), MoF looks forward to facilitating this legislative transition in order to improve the relevance, governance and global reputation of MIA and our Malaysian accountancy profession.

    Ladies and gentlemen,

  14. The Government and statutory bodies such as MIA employ regulation and compliance as tools that help shape our vision of the new Malaysia. Another key tool that must be utilised to drive nation building is technology adoption, if the country is not to be sidelined, as the digital economy and Industrial Revolution 4.0 (IR4.0) technologies gain dominance in the global landscape. We must embrace opportunities arising from digital disruption, while putting in the appropriate regulations and checks and balances to protect stakeholders and the public interest.
  15. Conferences and platforms such as today’s MIA International Accountants Conference are thus very important to build awareness of digital evolution. With the theme of “Riding the Digital Wave, Leading Transformation”, the Conference puts the spotlight squarely on the need for all of us to leverage on technology adoption in order to transform ourselves and evolve – to become more relevant and resilient in the 21st century digital economy.
  16. Accountants in particular must evolve away from the previous practices and analytical frameworks that were fine for the 20th century, but unfit for the 21st century. MIA’s tagline is ‘managers of value’ – in order to manage value, you have to be able to measure it first. How do you measure value accurately in the digital economy where business models have changed tremendously and intangibles are overtaking tangible assets, so much so that balance sheets are no longer an accurate reflection of true value? How do you measure income accurately so that governments and tax authorities get their rightful share in order to support social development, rather than losing it to tactics such as transfer pricing and BEPS (base erosion profit shifting)? Malaysia as a nation puts more emphasis on competency and good governance, how do we measure and place a value on intangibles like talent and good reputation? To borrow phraseology from , how do we measure social capital and intellectual capital and our impacts on environment?
  17. What I am trying to say here is that, as Malaysia makes a paradigm shift, we need accountants who are able to make a similar leap in their thinking – to think holistically and with integration across disciplines. Technologies such as robotics processes automation and artificial intelligence and drones can now do the work of bookkeeping and invoice matching and inventory. New developments such as the shift from yearly audits to continuous real-time auditing, and the use of big data and data analytics are great for risk management and detection and prevention of leakages and mismanagement. If machines are taking over your routine roles, where does that leave the profession? If you want to be relevant in this new Malaysia, you have to be able to shed the baggage of doing things by the book, and become critical thinkers and problem solvers who act with integrity. This is how you manage, create and add value – through innovation. From being old school, you have to unschool. Free your thinking through events such as today’s Conference so that you can be a new Malaysian who can really contribute to the new Malaysia.
  18. On that note, the Government will leverage digital technology to improve efficiency and productivity of Government services, thus contributing to the country’s development Malaysia is ahead of 29, of the 35 OECD countries and ranked 10th in the world in the World Bank Government Digital Adoption Index due to our strong performance in core administrative systems and digital identification. In this regard, Ministry of Finance has introduced various digital initiatives for the public and the government agencies to improve service delivery such as MyBudget, MyCukai, ePerolehan, e-Filing and many more. These technologies will continue to add value to government service delivery and assist in data collection which enables more transparency, effective policy formulation as well as reduction in leakages and wastages.
  19. With these digital initiatives, the Government is hopeful that we can improve the quality of public sector management, especially public financial management, and heighten productivity and performance. I hope that accountants – especially those in the public sector - can refer to the guidelines and principles in MIA’s Digital Technology Blueprint to guide their journey of technology adoption and to build capacity and competency in digital technology.
  20. Congratulations to MIA for producing this document which is specially geared to build awareness and move the needle on technology adoption for accountants in all sectors in Malaysia. The MoF as the finance function of the Government will certainly recommend the Blueprint as a reference for our own technology-driven finance function transformation.
  21. Finally, I would also like to congratulate MIA on its other extensive thought leadership initiatives that are strategically aimed at developing competency and promoting compliance with professional standards and best practices. For example, the Small & Medium Enterprises (SMEs) that are the backbone of the economy will benefit greatly from the MPERS Illustrative Financial Statements published by MIA, that enables their compliance with the Malaysian Private Entities Reporting Standard (MPERS) and the Companies Act 2016 legislative changes and impacts on financial statements. The Competency Framework for CFOs in PIEs and the upcoming Competency Framework for Finance Functions will also be very useful as references to build the competency and capacity of the Government finance function, supporting the Government and MIA’s mutual purpose of nation building for the people.

    Ladies and gentlemen,

  22. I hope that my remarks have given you a flavour of what the Government and the MoF has in store and the potential impacts and opportunities on business and society. I also had a look at the sessions lined up for this Conference, and they map out the ongoing transformation and future direction of the global profession and the nation, especially in terms of governance, technology and talent development. If you want to track the frontlines of change, this Conference is the place to be for the next two days. On that note, I wish every success to MIA for this Conference, and I hope that the content will be of great benefit to all the delegates.

Thank you.