16 March 2020 will forever be etched in the mind of MIA President Huang Shze Jiun.
That was the day the Movement Control Order (MCO) was announced to manage the Covid-19 pandemic and everything changed. The profession had only one day to prepare for the MCO which commenced on 18 March 2020. Just two weeks into the sixth month of his MIA presidency, he was thrust into a time of unprecedented challenges for the profession – facing challenges not only from the pandemic but also the resulting economic fallout. “While living in such times is not our decision, we can decide what to do with the time given to us. It is in such times more than any other that the profession requires the help and support of the Institute and even more so the government,” said Huang. Some support came on 27 March 2020 with the announcement of the government’s RM20 billion Economic Stimulus Package 2020 (ESP) to cushion the impacts of Covid-19 on the people and the economy.
Due to the Covid-19 pandemic, his term as MIA President has definitely been highly atypical. But every cloud has a silver lining. Huang encouraged MIA members to utilise their skills and expertise in supporting the ESP’s numerous tax and non-tax measures (Read more on the Economic Stimulus Package – click here). “As partners to business and our stakeholders, we are positioned to help the government in its efforts to minimise the economic impact of the Covid-19 outbreak, while working to ensure the safety, health and wellbeing of the people for whom we are responsible, such as our employees and subordinates.”
The timing is also good for members to embrace sustainability and digitalisation to future-proof themselves and the profession. “MIA is taking steps to try and insulate our members against the impacts of Covid-19, by encouraging the greater use of technology and the diversification of services, especially in the emerging growth areas of sustainability and climate change. Although Covid-19 is grabbing all the headlines now, the climate crisis is equally disrupting to economies and societies,” he stressed. “Along with the International Federation of Accountants (IFAC), MIA is advocating that accountants should be taking the lead for climate action, leveraging on our expertise in business and reporting to drive climate sustainability.” (see article on Climate Change – click here).
While there is a lag in pursing MIA’s priorities as Covid-19 and the change in government have taken the front seat, the long-term development and regulation agenda for MIA remains intact. Huang is committed to driving and supporting the ongoing transformation and future-proofing of the profession and accountants in Malaysia. The following are the Institute’s immediate priorities and key initiatives for 2020 and beyond, as well as important milestones charted in 2019. Some highlights:
Managing the Covid-19 Crisis and Impacts on the Profession
“It is no exaggeration to say that the Covid-19 crisis has had a tremendous impact on the profession and the outlook going forward. We understand that the effects are felt by all the categories of membership. The Professional Accountants in Business (PAIBs) are concerned over their job security, the academicians are concerned over the employment prospects of their students, and the members who are business owners, whether SMEs/SMPs or larger are facing an existential crisis. The Institute is continuously working on how to support members during this difficult time,” Huang stated.
Transparency is vital to preventing panic and irrational actions during a crisis. Despite operating under the constraints of the MCO, MIA continues to work hard to keep members and stakeholders informed and updated on the implications of the MCO as well as the impacts of the RM250 billion Economic Stimulus Package (ESP). “As the voice of the accountancy profession representing the interests of many employers and professionals, we also submitted proposals for economic stimulus to the government prior to the announcement of the ESP,” said Huang.
Post-announcement of the ESP, one of the main challenges still faced by SMEs and SMPs is the cash flow burden to make payment of wages and other expenses. “While the wage subsidy programme does help in part for those who qualify, the cash flow burden remains challenging in particular for professional firms where the cash flow burden is substantial. This is because the main cost is wages which cannot be deferred whereas collections are slow due to the MCO and also the economic crisis resulting from the Covid-19 pandemic. We will continue to submit proposals to the government on the support and assistance required by the profession. We are also actively working to identify funding avenues for firms to alleviate the liquidity challenges they will face.”
“It is also very important to clarify the roles and responsibilities of members during the period of the MCO, as many were confused with regards to permission to operate as well as regulations and compliance deadlines.” To seek clarification, MIA continues to communicate extensively with the government, relevant Ministries and agencies as well as fellow regulators.
One issue that confused many practitioners: whether MIA Member Firms fall within the definition of “Finance” under essential services, and hence could keep operating throughout the MCO. MIA wrote to the National Security Council and received confirmation that MIA member firms are not defined as “Finance” essential services. Therefore, MIA advised all members and member firms to comply strictly with the MCO by closing their premises from 18 to 31 March 2020 and subsequently to 14 April 2020. “Members and the profession must set a good example by behaving with compliance to the government’s orders during these trying times. Now, more than ever, members must be seen to be behaving with integrity and accountability, to ensure trust and uphold the public interest at all times,” stressed Huang. “However, we have also appealed to the National Security Council for professional accountancy services to be included under the definition of essential services on the basis that, amongst others, we play a critical role in supporting businesses to avail themselves of the numerous financial incentives being announced.”
Another issue: lower productivity due to the MCO would delay members and their clients in complying with the regulatory requirements on financial reporting, annual general meeting and taxation. “MIA wrote to Bursa Malaysia, Companies Commission of Malaysia and the Inland Revenue Board of Malaysia to highlight the practical challenges faced by the profession and to consider possible measures. Our feedback is being taken into account as the government and regulators work to shield businesses from economic damage,” explained Huang.
MIA has also taken the initiative to keep members informed of all relevant matters through regular statements and analyses, such as the immediate statement issued on the RM250 billion Economic Stimulus Package, and published circulars and articles in MIA’s online knowledge portal e-AT on the tax and non-tax impacts. (For more information click here).
“We hope that the ESP measures will boost the confidence of our members, and that members will gain from the concessions that are aimed at saving business and jobs. MIA will continue to work with our stakeholders to propose stronger and more effective economic and social solutions that can help to defend the wellbeing of our members as well as to protect families, communities and businesses,” promised Huang.
Reforming the Accountants Act 1967
While legislative reform is on the backburner as all resources are being pumped into mitigating the health and economic impacts of Covid-19, amending this Act that is even older than Huang himself is critical to provide the Institute the necessary flexibility especially in these times of crisis. “Matters as basic as the manual election of Council Members and the physical Annual General Meeting are hard coded into the Act despite the fact that now more than ever, we need the flexibility of being able to conduct electronic voting and virtual meetings.”
“As this is a longstanding issue, the Institute will continue to engage with the Ministry of Finance to get the proposed new Act passed, once the worst of Covid-19 is over,” said Huang.
Embarking on Sustainability
Given the profession’s unique expertise in measurement, assurance and disclosure, Huang advised members and accountants to start advocating for sustainability by embracing and advocating integrated reporting <IR>. “This is the first step in getting started on sustainability and the UN SDGs. The Covid-19 crisis can segue us to sustainability, as this window of inaction forces us to assess the impacts of our usual behaviours and reconfigure our business models for a post-Covid-19 planet,” mused Huang.
“Sustainability is linked to IR because IR looks at how we report holistically on the organisation’s impacts and value creation to our stakeholders as a whole. By embracing <IR>, it gives a clearer picture of organisations,” said Huang, who encouraged members to refer to MIA’s <IR> 2019 as a guide for <IR> in practice.
Sustainability within the context of the United Nations Sustainable Development Goals (UN SDGs) was a core theme of the MIA International Accountants Conference (MIAC) 2019 and also for the upcoming MIAC 2020. MIA’s climate and sustainability agenda focuses on the acquisition of sustainability skillsets and how accountants can add value through advocating climate change disclosure to influence business decision-making.
Strengthening Public Practitioners
“As a public practitioner and SMP myself, I understand the urgent need for SMPs to transform and to improve the quality of public practice services and practice management.” He stressed the importance of SMP transformation to be relevant in a business environment that is changing drastically in accordance to Covid-19 controls. For example, SMPs that have embraced digital transformation are better positioned to continue with their professional services to clients especially on audit, tax and advisory work during the shutdown ordered by the government’s Movement Control Order. “These SMPs are able to continue working online using the cloud which facilitates work-from-home for employees, so they are not as pressured by upcoming regulatory and compliance deadlines.”
Even after Covid-19 is managed and infection rates reduced, transformation is still necessary for SMPs to survive and thrive in changing the constantly evolving market landscape. For example, audit is still predominantly the core service for most SMPs, but audit exemption has begun to disrupt their business model. While the low audit thresholds for audit exemption provided room for a soft landing, “We cannot count on low thresholds forever, so we must diversify our services and consolidate and combine our resources. We also have to take advantage of technology to become more efficient and effective,” urged Huang.
To help SMPs, MIA has put in place a gamut of initiatives such as the SMP Roadmap 2015 – 2020, the New Practice Review Framework which focuses on remediation, numerous workshops on MPERs, and several initiatives to improve audit quality, such as the Audit Guide for Practitioners, Illustrative Audit Working Papers workshops, the joint Quality Assessment Programme with MICPA and the upcoming multi-stakeholder Electronic Bank Confirmation platform.
With regards to the SMP Roadmap, MIA has completed all initiatives under the Strategic Thrust (ST) 1 on Quality Enhancement. The progress of ST3 Professional Reforms is ongoing, to ensure that the regulatory and practising environment evolves to remain relevant and appropriate for Malaysia. The focus moving forward will be on the ST2 Capacity Building and Capability Development, whereby MIA will work closely with government agencies in developing a catalyst programme for small and medium practices.
Supporting Young Professionals, Academia and the Public Sector
As a founding member of the Young Professionals Committee (YPC) of the MIA, Huang is attuned to the challenges and opportunities faced by his peers. The challenges are now starker than ever due to the challenging employment prospects resulting from the economic fallout of the Covid-19 crisis
“It is important to communicate the value proposition of the profession and to sell it as an exciting profession, and not something that is done only by the older generation.”
Embracing digitalisation and technologies will be vital to transforming the perception of the profession and to appeal to millennials who are digital natives.
Closely interlinked to talent development are the ongoing reforms of accountancy education, which will also be essential to providing the right mix of core, technical and soft skills that accountants need to be relevant in the digital economy. “We have to ensure that accountancy education in Malaysia meets global standards so that our members are marketable and relevant all over the world, not just in our market,” said Huang. Key to this is the ongoing development of the MIA Competency Framework which defines the skill sets required to become accountancy professionals, based on three (3) proficiency levels of the IFAC International Education Standards (IES) which include the Foundation, Intermediate and Advanced proficiency requirements.
Equally important is to support the development and upskilling of the public sector, as this is critical to ensuring excellence in public sector financial management as well as good governance. For 2019, MIA focused on encouraging the digital transformation of the public sector to enhance service delivery, via the MIA Data Intelligence & Analytics Conference 2019 for the Public Sector which shared best practices for big data analytics, data integrity and security to build an effective data governance framework, and to strengthen trust and the public interest. For 2020 and beyond, MIA will continue to emphasise on strengthening public sector financial management and technology adoption among accountants in the public sector.
Strengthening PAIBs
“MIA has focused intensely on encouraging the upskilling of PAIBs which make up a large segment of our membership,” said Huang. Talented PAIBs are more crucial than ever to assist companies in navigating the financial headwinds in these challenging times. Key initiatives to strengthen PAIBs and the finance function include MIA’s Competency Frameworks for CFOs and Finance Functions in PIEs, which are gaining acceptance from the market and regulators. This is complemented by the various CPE programmes and special conferences and platforms to enhance and upskill PAIBs, including the exclusive CFO Circles and annual CFO Conference.
“In addition, it is important to mention that MIA is placing strong emphasis on Board and director liability and accountability as the new corporate liability provision in the Malaysian Anti-Corruption Commission Act 2009 under Section 17A comes into force,” said Huang. Boards and management need to know how to implement the adequate procedures to manage the wider scope of governance risk and increased liabilities as a consequence of the new Section 17A.
Supporting the Regions
Johor-born and bred, Huang who has served as partner with Johor Bahru-based Baker Tilly HYT since 2005 has a keen understanding of the challenges facing the border towns and regional offices.
These include talent recruitment and retention woes due to competition from neighbouring markets as well as competition from bogus accountants. “Being far from the Central headquarters, it is easier for them to operate. That’s why we need the new Act to strengthen the Institute and improve and streamline quality levels between Central and the regions.”
To help improve quality and regulatory compliance, the Institute is emphasising continuing professional development through online and digital platforms and offering rebates and discounts to members from the regions to travel to KL for training. Learning events such as the AccTech Penang Conference 2020 were also organised to drive digital transformation among regional members, but unfortunately this had to be postponed due to Covid-19. In addition, said Huang, “the regional offices and committees are doing good work in strengthening engagement with members.”
Post-Covid-19 – What Lies Ahead
Asked about the way forward, Huang said: “The Covid-19 outbreak crisis is unprecedented; it has caused severe damage to businesses and the economic ecosystem, and affected MIA members in all sectors including the small medium practitioners (SMPs). However, as trusted business partners, MIA members must rise to the occasion in this challenging time and demonstrate their relevance – in assisting businesses to recover from financial distress and supporting the government initiatives towards nation-building.”
“As for post-Covid-19, it’s all about further strengthening the profession and its continuing relevance to the society. In order to be worthy of the enhanced powers that we are asking for under the new Accountants Act, we need to first ensure that our governance is strong enough to pass the most rigorous scrutiny. I believe that the Institute is in a good place with a sound integrated strategy, a solid business model and above all, a great team. We have in place a robust governance structure whereby the Council has oversight and guidance over the Institute’s strategy, operational plan and specific initiatives, which are executed by a very capable management team and invaluable staff.”
Huang also paid tribute to MIA’s members, whom he deemed instrumental to the profession’s continuing growth and future sustainability. “We greatly appreciate your support as the Institute seeks to achieve even more challenging milestones in the next phase of our journey.”
Huang’s term as President concludes at the MIA AGM in September 2020 as mandated by the Accountants Act 1967. While this marks one of the shortest tenures ever for an MIA President, it is definitely one of the most turbulent. He was elected as the MIA President effective 27 August 2019. As he was previously elected as an MIA Council Member on 24 September 2016 and subsequently elected as MIA Vice-President on 25 October 2018, he has already served three years of the maximum four years on the Council as allowed by the Accountants Act 1967.
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