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TITLE: Remarks by Ybhg Datuk Bazlan Osman, MIA Council Member and Chairman, PAIB Committee, Malaysian Institute of Accountants at the 4th CFO CIRCLE – Strategies to Weather the COVID-19 Storm

DATE: 05/06/2020

REMARKS BY

YBHG DATUK BAZLAN OSMAN

MIA COUNCIL MEMBER and CHAIRMAN, PAIB COMMITTEE

MALAYSIAN INSTITUTE OF ACCOUNTANTS

AT THE

4th CFO CIRCLE – Strategies to Weather the COVID-19 Storm

5 June 2020 (Friday)

  • Dr Nurmazilah Dato’ Mahzan, Chief Executive Officer, Malaysian Institute of Accountants
  • PAIB Committee Members
  • Distinguished Speakers
  • Ladies & Gentlemen, fellow members of MIA
  1. On behalf of the MIA PAIB Committee, which advocates the interests and advancement of professional accountants in business, I welcome and thank you to all for participating in this CFO circle session. MIA has almost 37,000 members of which 75% are from the public/government and commercial sector and they come under the purview of PAIB. Let’s work together to get more new members on board.
  2. As Dr Nurmazilah had rightly said, this is a time of unprecedented crisis and turbulence. The International Monetary Fund (IMF) predicted that global GDP would shrink by 3% during 2020 in its 2020 World Economic Outlook, which marks the steepest downturn since the Great Depression of the 1930s. As an open economy, Malaysia will not be exempt. On 3 April, in a press release, Bank Negara Malaysia (BNM) projected Malaysia's GDP growth, at between -2% to 0.5% in 2020 due to the weak global outlook, demand and supply chain disruptions and local and foreign COVID-19 containment measures.
  3. Against such a landscape, corporates are facing unfamiliar terrain where business scenario planning and business continuity & sustainability are currently top-of-mind. This is why the PAIB Committee selected this timely topic and invited four experienced leaders to share how they are adapting to a new normal during and post COVID-19. Our many thanks to Chen Li-Kai, Mustamir Mohamad, Khalijah Ismail and Chari TVT for being here today.
  4. Of course, this is not the first time that the PAIB Committee and MIA are formulating COVID-19 strategies and business sustainability. On 9 April 2020, we held a virtual forum with leading PAIBs to find out how CFOs should be bringing value to their organisations in response to the COVID-19 pandemic. The article based on this forum was posted on 27 April 2020 in the e-Accountants Today knowledge portal and has since obtained nearly 500 views and 250 shares.
  5. There are several best practices contained in the article that are highly relevant for CFOs as leaders, integrators and navigators of their organisations as we proceed on our journey throughout the COVID-19 new normal.
  6. One: Finance must take the Lead. Finance must pivot itself from pure accounting and financial reporting to the big picture of playing a significant leadership role to manoeuvre their companies through this unchartered waters. CFOs should lead the business in contingency planning, risk management and recalibrating business models in this COVID-19 environment that drives digital and touch less economy.
  7. Two: Scenario planning and forecast setting is the key to survival. The objective now is to take stock of the state of the business and do scenario testing based on various thresholds and trigger points. Scenario planning driven by finance also sends the message that all business units need to integrate better and not operate in silos. There is an immediate need for short term recovery measures before the next phase of medium to long term sustainability plan. In the haste of corporates striving to regain its operating revenue, it must be conducted with full honesty and integrity. CFOs must take cognizant of the MACC Section 17A which had become effective recently on 1st June 2020, and ensure that adequate measures are already in place and adhered at all times.
  8. Three: Prioritise Business Continuity where Cash is paramount. These two factors - liquidity and business continuity – must be the immediate focus for business survival. Steps that are critical now are to review Acs receivable, payables, banking facilities and credit lines and perform stress testing to determine the maximum limit to which these can be rigorously exerted.
  9. Four: Communicate – continually and constantly. Keep engaging and communicating with all stakeholders including shareholders, employees and customers, to address their expectations and explain the business challenges to maintain trust and goodwill towards the organisation.
  10. Five: Rework Work Culture. We understand that CFOs already have a lot on your plate. However, taking care of people and work culture is critical to sustain morale and productivity. So do look to embrace more digital technologies and flexible staffing strategies, and look into psychological health and mental wellbeing as well. Also demonstrate digital leadership to enable remote working culture and teamwork despite social distancing. This will help to maintain productivity - and reduce burnout and COVID-19 fatigue - which is essential to business continuity. We must provide the proper digital tools and training to the employees for them to work effectively from home and everywhere. Business and customers’ data must be well protected under this surge of online transactions. Always bear in mind PDPA.
  11. Six: Manage the Impacts on Financial Reporting. Other than delaying reporting deadlines, COVID-19 will definitely affect financial reporting, for example, in the application of MFRS 9 and assets impairment on financial statements. Notes to the financial statements may have to be provided in more detail to explain the provisions that have to be made. There will be increased guidance on disclosures to CFOs and corporates as well as helping organisations to engage with key stakeholders to explain that businesses are now operating under extraordinary circumstances that affect finances.
  12. Last but not least, be realistic but yet cautious in planning beyond the Movement Control Order (MCO). The IMF predicts a partial rebound in 2021 to global GDP growth of 5.5%, although this will be from 2020’s remarkably low baseline, and there will be “extreme uncertainty.” Although things look bleak now, the MCO will end eventually, with no Wave 2, and businesses need to be prepared for life after the MCO. Let’s prepare for the ‘coming back to the office’ under the New Norm, and continue to drive the digital economy in a safe environment. Today’s panel session will also be looking at strategies for post-Covid-19.
  13. On behalf of MIA and the PAIB Committee, I hope that you will find today’s CFO Circle sharing useful. In this secure and private webinar, do feel free to openly ask questions to our guest speakers. In line with MIA’s drive to collate and analyse data for future initiatives, the webinar will be recorded, and the findings documented to help us to better understand the challenges and issues faced by CFOs and to propose solutions. I also thank the secretariat and the organising committee for making this event possible under this extraordinary circumstances.
  14. Do enjoy the webinar and always stay safe. Thank you.