Setting up Public Practice

Public practice is governed by the Act, the Rules and the By-Laws (On Professional Ethics, Conduct and Practice) of the Institute.

Under the Act, the person must be a member of the Institute, and is prohibited from public practice through a body corporate save where this is allowed by other statutes for limited areas of public practice, namely tax.

A member, in most instances, is allowed to be engaged in public practice as a sole practitioner or in partnership only with another member(s) as the Act and By-Laws prohibits the sharing of profits with non-members. All firms in public practice are described as firms of chartered accountants (or licensed accountants, where applicable).

Only members registered as chartered accountants with valid practising certificate can describe and hold themselves out as chartered accountants in public practice and are able to set up firms providing public practice services. Members in public practice may carry out public practice services such as accounting, audit, liquidation, tax and other related services. However, the practice of audit, liquidation and tax are licensed under other legislation.

Members also have to have their principal or only place of residence in Malaysia to be in public practice in Malaysia.

Members who wish to set up a practice must first obtain the approval of the Institute on the use of the firm's name. It should not be a trade or association name. Upon the setting-up of his firm, the practice must be registered with the Institute.

No additional licensing requirements are needed but members who do not posses an audit licence (issued by the Accountant General's Office) can only register their firms as non-audit firms.

To be an auditor a member must be in possession of an audit licence granted by the Accountant General’s Office pursuant to the Companies Act 1965.

The requirements for applying for an audit licence are as follows:-

  1. Is a member of the Malaysian Institute of Accountants (MIA) under the Chartered Accountant category. In addition, the applicant has to be a member of the MIA for at least one (1) year.
  2. Possess a valid Practising Certificate issued by the MIA.
  3. Possess sufficient working experience in audit practice in a public accounting firm:
    1. The candidate must have at least 5 years of working experience prior to application. The 5 years accumulative working experience can be obtained prior to and/or after becoming a Chartered Accountant of the MIA.
      1. At least 3 years must be in audit work.
      2. At least 1 year out of the above 3 years shall be in an audit supervisory role. The audit supervisory role is defined as being responsible for audit management including consultation with audit partners and has experience in giving opinions for financial statements and be directly involved in audit planning.
    2. Candidates who have left audit practice, but still within a 3 year period prior to the application to be approved company auditors, are still eligible to apply.
    3. For candidates who have left audit practice for more than 3 years, they must work for at least 1 year in audit in the Malaysian environment.
    4. Experience in other countries can also be considered however, they must work for at least 1 year in audit in the Malaysian environment.
  4. Candidates are required to attend the “Public Practice Programme” organised by the MIA.

A new framework for liquidator licence applications is under review

The issuance of a licence to be a tax agent is governed by the Income Tax Act 1967.

A licence is only granted after the applicant has passed an interview conducted by the Inland Revenue Board.

The practice of taxation may be carried out under a body corporate. However, it has to be established as a separate entity from that of a public practice and may not be referred to as a tax consultant or tax adviser. Only members who hold themselves out as chartered accountants with valid practising certificates may use these descriptions under a sole proprietorship or a partnership. A body corporate cannot be described as chartered accountants and it cannot be registered as a member firm of the Institute.

Other related services include management consultancy and corporate services such as secretarial services. Where these services are provided under the same accounting firm or tax firm or audit firm, no new licencing requirements is required.

However if a member carries out management consultancy and certain corporate services other than secretarial services, he/she will be required either to incorporate a limited liability company pursuant to the Companies Act 1965 or practise as a sole proprietorship or partnership pursuant to the Registration of Businesses Act 1956.

A chartered accountant without a valid practising certificate may set up a corporate entity to provide management and corporate consultancy services but he or she cannot be registered as a member firm of the Institute and should not hold himself or herself out as a chartered accountant when describing his or her corporate activities. The company is also not allowed to describe itself as an entity of chartered accountants.