Future-prooFing aCCountanCy eduCation · mandate an audit paper, hence this is a point of deliberation in deciding ... for all accountants working in finance functions: chartered

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To achieve this, MIA is focusing on both capacity and competency. As a start, MIA is committed to drafting a holistic Competency Framework in 2017, which will lay out the desired outcomes and map out the measures needed to achieve them.

Although the Committee to Strengthen the Accountancy Profession (CSAP) recommendations had originally targeted 60,000 accountants in total in three years or by 2020, 2030 is a more realistic deadline as currently, MIA has approximately 33,000 members.

a neW ComPetenCy frameWork

MIA wants to ensure that its strategies and proposed outcomes are truly aligned with the nation’s current and future economic and

social development needs. This will entail gathering data, empirical evidence and wide stakeholder inputs to ascertain that reforms are on the right track and that the right accounting talent is being supplied to the market. No more square pegs in round holes.

The profession is recognised for its significant role in nation-building. According to the Department of Statistics (DoS), for 2015, exports of accounting services were

aCCountanCy eduCationmiA AIMS TO WORK TOGETHER WITH STAKEHOLDERS TO MAKE ACCOUNTANCY EDUCATION FIT FOR PURPOSE, IN TUNE WITH THE RECOMMENDATIONS FOR REFORM RELEASED BY THE COMMITTEE TO STRENGTHEN THE ACCOUNTANCY PROFESSION (CSAP).

Future-prooFing

althouGh the Committee to strenGthen the aCCountanCy Profession (CsaP) reCommendations had oriGinally tarGeted 60,000 aCCountants in total in three years or by 2020, 2030 is a more realistiC deadline as Currently, mia has aPProximately 33,000 members.

60,000. This is the total number of accountants needed to meet the national, economic and social development goals by the deadline of 2030.

10 accountants today | May / june 2017

FutuRe-pROOFING AccOuNtANcy eDucAtION

valued at around RM673 million, while imports of accounting services stood at RM392 million, resulting in net exports of RM281 million. Both business and the economy rely heavily on accountancy services to run smoothly. The DoS estimates the value of the accountancy profession to the country at around RM3 billion annually.

Moving ahead, the proposed Competency Framework for the accountancy profession will continue to support the nation-building agenda, which under Transformasi Nasional 2050 (TN50) is to usher Malaysia into the leading ranks of progressive nations internationally.

the riGht tyPe of talent

In formulating the Competency Framework, a basic question to ask is what type of accountants does Malaysia need? The prior emphasis has been on professionally qualified or chartered accountants i.e. those who have sat and passed globally recognised examinations such as ICAEW, ACCA, CPA Australia, CIMA and the homegrown MICPA. But does this mean that accountants who do not possess professional qualifications aren’t equally valued or don’t have roles to play?

Dissecting current employment patterns, accountants fall into certain categories. Chartered accountants can be found in public practice, heading finance functions in PLCs, GLCs and MNCs, and chairing Board Audit Committees. Outside

May / june 2017 | accountants today 11


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of public practice and corporates, many graduate accountants lend their talents across the depth and breadth of the financial services industry, be it in specialised functions such as investment banking, credit risk assessment, analysis, internal audit and investor relations, or operational roles in middle and higher management. Plus, there are also accountants who have chosen to become academicians and teach future young accountants.

But this breadth is not reflected in current legislation. Under the Accountants Act 1967, the accountancy profession has become very narrow – accountants are defined as chartered accountants or nothing, said Datuk Zaiton Mohd Hassan, MIA Vice-President and Chair of MIA’s Education Committee, at MIA’s recent Roundtable Discussion on the Outlook of the Accountancy Profession in Malaysia. “We’re all in the market and we know that it doesn’t have to be like that. Actually, the accountancy profession is very broad.”

Moving ahead, the Accountants Act is being changed to reflect the real make-up of the profession today and in response to market dynamics. Furthermore, MIA is determined to leverage this diversity and inclusivity to build a more robust and relevant profession, where everybody

can play to their own strengths and fulfil their ambitions according to their abilities and interests. “Not every job requires a chartered accountant. There are many other jobs available in the profession. The choice is yours but the jobs that you’re going to be doing (as a chartered accountant versus a non-chartered accountant) are very different and the prospects are very different,” explained Datuk Zaiton.

ensurinG ComPetenCy

Malaysia is a unique market with its own regulatory and business landscape. As the regulator and standard-setter of the profession, MIA is stepping up to the plate post-CSAP and defining the types of accountants and competencies which will be supplied to the market in future.

Since the market obviously requires different categories of accountants within the entire ecosystem, MIA aims to define and map out baseline competencies in its upcoming MIA Competency Framework. This will empower MIA to monitor and regulate the quality of all accounting talent with or without professional qualifications in the market.

The Competency Framework will enable the profession to “pitch the correct

Outside of public practice and corporates, many graduate accountants lend their talents across the depth and breadth of the financial services industry, be it in specialised functions such as investment banking, credit risk assessment, analysis, internal audit and investor relations, or operational roles in middle and higher management.

Left to right: Dr. Nurmazilah Dato’ Mahzan, Dato’ Mohammad Faiz Azmi and Datuk Zaiton Mohd Hassan.



in the upcoming Competency Framework. For example, certain professional qualifications do not mandate an audit paper, hence this is a point of deliberation in deciding on the requirement for licensed audit practitioners in Malaysia. In order to serve Malaysian organisations, foreign qualified professionals would need to demonstrate knowledge of Malaysian law and tax.

MIA has also proposed to work with the Malaysian Qualifications Agency (MQA) which accredits university programmes nationwide, on a common standard for university accountancy education. This will ensure that Malaysian accountancy education in future is benchmarked to the upcoming Competency Framework and that graduates are fit for the workplace, eliminating the problem of unemployable and underutilised local talent.

Dato’ Faiz stressed that MIA will rely on coordination and collaboration with stakeholders to build capacity, competency and enhance the educational infrastructure. MIA will work to bring all parties together to identify the market demands out there and how universities, professional bodies and all education providers can respond for the greater good.

from latent Potential to full fruition

Ultimately, the goal of accountancy education reform is to fulfil national aspirations by catalysing individual potential. MIA aims to “broaden the profession and broaden the pathways and give people the opportunity to stretch themselves to the level that they want,” concluded Datuk Zaiton.

level of competency to serve the market,” said Dr. Nurmazilah Dato’ Mahzan, CEO, MIA. In terms of demand and supply, the profession is serving only 807 PLCs but 662,000 SMEs and 1.2 million enterprises in all. The demographics of the ecosystem require an equally diverse profession to match business needs. “It is important to manage expectations because not all accountants can become chartered accountants or partners of an audit firm. They will fall in place based on skills and probably their environment.”

The Competency Framework is the “DNA” which will define skill sets and knowledge sets at various levels of expectations and across job functions, enthused Dr. Nurmazilah. For instance, the Framework will map out competencies and expectations for all accountants working in finance functions: chartered accountants, graduate accountants and accounting technicians. Other areas to be considered would be valuation, forensics, insolvency, internal audit, shariah audit, etc. The Framework will also define competencies for accountants serving the SMEs and hopefully heighten SME financial literacy and performance. “The implications are tremendous in terms of how we define accountants in

Malaysia and how we actually look at the job scope of accountants at various levels.”

To date, MIA has engaged an experienced group of external consultants who have worked on similar competency baseline exercises in other jurisdictions. MIA will undertake rigorous engagement with stakeholders on the Competency Framework once the draft is out.

imPlementinG ProPrietary malaysian standards

The Competency Framework will also ensure that accountants working in the Malaysian market have the requisite local knowledge and skills as measured by MIA’s own standards. MIA President Dato’ Mohammad Faiz Azmi pointed out that MIA had previously never defined what an accountant is and that it had permitted other bodies to set their own definition in the Malaysian context. Where MIA previously accepted global qualifications (as per Schedule 1 Part 2 of the Accountants Act) without proper benchmarking, going forward MIA will assess whether these qualifications meet local requirements as defined



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New Skill Sets for a New GenerationWHAT ARE THE SKILL SETS AND ATTITUDES THAT YOUNG ACCOUNTANTS MUST POSSESS IN ORDER TO BECOME FUTURE-PROOF? AND HOW CAN STAKEHOLDERS SUCH AS EDUCATORS AND EMPLOYERS HELP TO MOULD THE FUTURE GENERATION OF ACCOUNTING TALENT SO THEY ARE FIT FOR WORK?

The landscape of the accountancy

profession is changing indelibly, thanks

to new regulations and standards and

technological and digital disruption. Given

the inchoate developments, how should

stakeholders help equip accountants,

especially the future generations?

MIA recently held a roundtable

discussion on “The Outlook of the

Accountancy Profession in Malaysia”,

which sought stakeholder views from

government, employers and academicians

on how future accountants should be

trained and the skill sets they need to be

employable and relevant. The following

are some key areas that need debugging,

according to the roundtable:

1 DiGital SkillS

Digital disruption is one of

the biggest risks in the profession,

along with regulatory reforms and

globalisation. Jobs are being rewired

or becoming obsolete because of

automation and technology, such as

routine audit work and transactional

accounting jobs in finance shared

services. Indeed, several professional

accountancy publications identified

knowledge of digital technologies as a

key competency area where professional

accountants have skill gaps.

Big data and automation are real

risks to the profession because these are

eliminating low-value and transactional

jobs, noted MIA Vice-President Datuk

Zaiton Mohd Hassan. “Malaysia is moving

up the scale in terms of skill levels. We

do want to move up – we don’t just

want to be a centre of outsourcing. We

want Malaysia to be better known in the

professional world. And we are actually

achieving this in overseas markets

where many high-performing finance

professionals are Malaysian,” she said,

adding that the challenge is to replicate

export-quality financial professionals in

the local market.

MIA President Dato’ Mohammad Faiz

Azmi stressed that it is no longer enough

for accountants to know numbers. “With

emerging technologies like blockchain

and fintech, do we need those with

knowledge of coding, algorithms, and

systems to serve the market?” From

the Big 4 perspective, firms such as EY

are scouting for IT skills and a minimal

level of competency and awareness of

artificial intelligence and technology.

If accountants shun technology, the

risk is great that other professions and

machine learning will thrust their way

into traditional accounting segments,

which is already happening with data

analytics and audit. “Audit is going away

from the tried and tested methodology

of the past 100 years to taking all data

from clients and putting it on a non-

live server and playing with it. We need

people with an IT background to play

with the data and actuaries to analyse

it and maybe quants to understand the

models that clients are using,” said Dato’

Faiz.



2 lifeloNG leaRNiNG SkillS,

BReaDth of kNowleDGe

Kids spend about four years in

university and maybe five years in a

professional programme before entering

the workplace. In that short span of

time, it is unfeasible for universities or

professional accounting bodies to impart

all the tools and knowledge necessary for

a lifetime.

More critical would be instilling

the ability to learn and upskill – either

autodidactically or through formal

organised training. “Accountants of the

future may need to be skilled in more

areas and be equipped with stronger

foundations so that they are in a position

where they can go and learn themselves,”

said Dato’ Faiz. For instance, he urged

universities to include components on

Islamic finance which is a Malaysian

domain where accountants could

potentially contribute even more.

As a professional body, MIA stresses

the need to continually upgrade members

through CPD on the latest developments.

“Given the importance of continuing

professional education for members,

CPD has been always an important

component in the MIA’s strategic plan,”

said G. Shanmugam, Executive Director,

Strategy & Development. “MIA produces

and offers about 800 high-quality CPD

programmes annually – ranging from the

latest standards to information technology-

related topics - to its members and the

accounting fraternity as a whole. This is

to ensure they are continuously updated

and upskilled to stay relevant in today’s

dynamic business environment.”

3 eNGliSh aND CoMMuNiCatioN

SkillS, Soft SkillS, eQ

MIA CEO Dr. Nurmazilah Dato’ Mahzan

quoted Malaysian Digital Economy

Corporation (MDEC) research, which shows

that local graduates are lacking in English

language competency, communications,

problem-solving, presentation and

leadership. One employer noted that

fresh graduates can’t really communicate

or engage well in person or in writing

with clients or stakeholders. “While they

text very well, their professional writing

skills aren’t there. They aren’t getting

the message right and the tone is

inappropriate.”

C

M

Y

CM

MY

CY

CMY

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MIAFinance_HalfPage_Bleed.pdf 1 30/03/2017 9:50 AM

and unemployable graduates who make

up a large chunk of the jobless, and

in turn help arrest disconnect and

discontent and build unity.

This is part of MIA’s

corporate social responsibility,

which is being discharged

partially through initiatives such

as MyPAC, which aims to groom

talented yet underprivileged

Bumiputera kids into professional

accountants. “We got to where we are

today because somebody gave us a break. So

let’s give them – especially these kids from the not so well-to-do

families - a break,” exhorted Datuk Zaiton. n

One solution could be for

universities and training providers to

offer more business English and soft

skill development programmes, and set

tougher business English exams to get

students and graduates up to market

expectations. From MIA’s perspective,

MyPAC which is led by Datuk Zaiton as

the CEO, had successfully intervened with

underprivileged Bumiputera accounting

students to raise English levels to

professional working proficiency. Perhaps

these methods could be deployed on a

larger scale.

4 aNalytiCal aND thiNkiNG

SkillS

Employers laid out three other

key competencies that they want in

fresh graduates, apart from digital and

communications skills. One, talent should

demonstrate an analytical mind and critical

thinking abilities. Two, they should be

able to link financial numbers to business

and operations. Three, they should be

able to look beyond silos to link different

segments within organisations to make

important decisions and offer advisory

services, or in essence be able to practice

information synthesis and integrated

thinking.

There has to be a continuous focus

on developing these skill sets throughout

the years as the business, regulatory

and technological landscape become

ever more complex. The good news

is that while technology can eliminate

substantive transactional and processing

work, machines can never replace the

mind. Accountants’ value lie in their ability

to bring to the table critical thinking,

judgement and professional scepticism

to enable quality decision-making and

protect the public trust.

Tenacity and mental strength are

prerequisites too. One employer referred

to fresh graduates today as “strawberries”,

because “once pressed they’re gone.” So

how can employers and educators help

fresh graduates to be able to withstand

pressure and stay hungry for knowledge

and improvement? Dato’ Faiz suggested

assigning mentors or “care bears”, who

take an active interest in grooming and

supporting young talent.


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iN the NatioNal iNteReSt

With regards to education, MIA’s mission is to broaden

and deepen the pathways to the profession and create

flexible routes for upskilling and building competency and

quality. “Whatever you do and whatever routes you take,

there must be pathways back so you can enhance your

skills,” said Datuk Zaiton, who espouses self-improvement

and catalysing growth through education.

At the end of the day, said MIA President Dato’

Mohammad Faiz Azmi, “our challenge is to create

meaningful jobs for the young coming into the

workplace.” TN50 targets include development for

all regardless of gender or race. By future-proofing

accountancy education, MIA aims to nurture young talent.

This can mitigate the growing numbers of unemployed


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Untitled-4 1 12/04/2017 4:46 PM

iCon of inteGrity

“good leAdership revolves Around unquestionAble integrity, competency And humility” - Tan Sri

abdul Wahid Omar, GrOup Chairman, permOdalan naSiOnal berhad, expOundinG On The Theme inTeGriTy

in aCTiOn aT The firST Of mia’S 50Th anniverSary COmmemOraTive leCTureS.

n by majella Gomes

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on integrity than Tan Sri Abdul Wahid Omar,” Dato’ Faiz said. “His corporate track record shows he is shrewd, hardworking and intelligent, with the tenacity and guts to deliver on his promises. This he has done without self-enrichment or reward beyond his due. He truly upholds many of the values that we subscribe to, as accountants.”

Tan Sri Wahid’s CV includes a term as a Senator and Minister in the Prime Minister’s Depar tment in charge of Economic

MIA chose Tan Sri Abdul Wahid Omar, Group Chairman, Permodalan Nasional Berhad to speak at the first of its three 50th Anniversary Commemorative Lectures precisely because he embodies integrity, a core value of the Institute along with accountability and trust.

Describing him as a “Man of Integrity”, President Dato’ Mohammad Faiz Azmi said that Tan Sri Wahid was a fitting person to present the inaugural lecture because he has aptly demonstrated what integrity means, based on his track record of key positions with many GLCs and corporate sector firms.

“We could find none better to speak

tan sri Wahid Was a fittinG Person to Present the inauGural leCture beCause he has aPtly demonstrated What inteGrity means, based on his traCk reCord of key Positions With many GlCs and CorPorate seCtor firms.

Dato’ Mohammad Faiz Azmi, President, MIA


IcON OF INteGRIty

Planning. Prior to his Cabinet appointment, he was President and CEO of Maybank; before that, the Group CEO of Telekom Malaysia Berhad. Other appointments include the managing directorship of the UEM Group and Executive Vice-Chairmanship of PLUS Expressways.

On a personal level, Dato’ Faiz added, Tan Sri Wahid has set himself some very high standards which most will not be able to reach, but manages to maintain humility, good humour and dedication. “This is all the more surprising considering he has held pretty much all key posts in the GLC world, and has also been a minister,” Dato’ Faiz concluded. “Not many corporate individuals have adapted or thrived in the public sector.”

humility is the core oF integrity

Confessing to having a great deal of anxiety at having to address a gathering of accountants on the matter of integrity, Tan Sri Wahid dispensed with the textbook definitions of integrity (“doing right even when no one is watching”) and singled out one element – humility – as the basis of integrity. Commenting that the title of his presentation, “Integrity In Action” would emphasise the “In Action” part, he gave a brief overview of his background (humble beginnings, ninth of 11 children, hard-working parents who instilled the right values), but noted that he aspired to become a CFO from a very early age.

Interspersing his insights with

Confessing to having a great deal of anxiety at having to address a gathering of accountants on the matter of integrity, Tan Sri Wahid dispensed with the textbook definitions of integrity (“doing right even when no one is watching”) and singled out one element – humility – as the basis of integrity.


IcON OF INteGRIty

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gentle humour, he covered three aspects of integrity – as core values of good leadership, in society and in financial systems. Considering himself fortunate to have had experience in the private sector, GLCs and the government proper, he opined that beyond working hard and smart, good leadership revolved around unquestionable integrity, competency and humility. Touching at length on humility he said. “Humility is about treating people with respect, staying grounded and true to our roots and recognising that we all serve a greater purpose.”

A competent, hardworking leader of unwavering integrity will enjoy a reputation that will precede him, Tan Sri Wahid continued. “Even competitors will acknowledge it! But a leader without integrity will find his position unsustainable and if he has indeed acted dishonestly, his transgressions will eventually be found out.” Mentioning trust, he conceded that everyone knew the meaning of the word but tended to take it for granted. Referring to Charles E Green’s Trust Equation, he remarked that trustworthiness could now be measured in terms of credibility,

reliability, intimacy and self-orientation but the term “Trust Deficit” seems to be used more frequently.

Adding that Green’s Trust Equation had helped better his understanding of how competent leaders sometimes suffered from a trust deficit and were therefore bereft of stakeholder support, he said, “It involves personal commitment. He needs to demonstrate humility and take an interest in the wellbeing of his people, without having vested interests in the outcome of what he is promoting.”

For integrity, stAmp out corruption

Lauding the recent efforts by the Malaysian Anti-Corruption Commission (MACC) to bring the corrupt to book, he said society had to rid itself of corrupt practices if it aspired to be seen as having integrity. “The MACC must be supported in its anti-corruption drive without fear or favour,” he stated, emphasising however that zero tolerance of corruption had to begin with everyone, accountants and non-accountants alike. “Both givers and recipients of bribes should be charged and punished,” he asserted. “The time has come for corporate Malaysia to say no to corruption. When the giving stops, the taking of bribes will stop too.”

On integrity in the financial system and the way forward, he singled out Bank Negara’s efforts to stem money laundering and counter financing of terrorism as some of the means to ensure integrity in the financial system. The Central Bank, he said, collaborated with other agencies like the Royal Malaysian Police and foreign financial intelligence units to maintain the country’s defences against these two practices. “Vigilance over the use of the financial system to finance terrorism activities has heightened globally since the emergence of militant terrorist groups

Left to right: Sudirman Masduki, Dato’ Mohammad Faiz Azmi, Tan Sri Abdul Wahid Omar, Datuk Zaiton Mohd Hassan and Dr. Nurmazilah Dato’ Mahzan.

All sources of revenue could thus be easily identified, and the audit trail will be a major disincentive for crimes like corruption and tax evasion. While this cannot be done overnight, it will also have many detractors, he acknowledged.


IcON OF INteGRIty

e-payment transactions per capita has been growing, from 49 on average in 2011, to 97 in 2016. Technology has advanced to the point where this can be achieved not just at POS (point of sale) terminals but through mobile devices. Lower denomination notes could still be available for those without bank accounts to transact in cash.

Drawing parallels with the change to scripless trading in the 1990s, he conceded that there was initial resistance to change. “But fears were addressed and overcome,” he stated. “With all share certificates being immobilised in a central depository system under wholly-owned KLSE subsidiary Malaysian Central Depository Sdn Bhd, we now trade seamlessly on Bursa Malaysia.”

Tan Sri Wahid concluded with the hope that everyone would embrace integrity as a core value, personally and professionally, but cautioned that: “This means choosing the right leaders, ensuring the integrity of our records and financial statements, and ensuring we do not perpetuate corruption by paying bribes. We should whistleblow when we see acts of dishonesty. Let us reflect on what we have achieved and where we have not done well. We are not perfect; there are many things that need to be rectified and improved.” n

in the Gulf countries in 2014,” he confirmed.

Street crimes like purse-snatching, smash-and-grab or armed robberies, muggings and ATM plundering – all these could be discouraged if the probability of being caught was high. “People commit crime because they think they can get away with it,” he pointed out. “But what if we could live in a crimeless, corruption-less, inclusive society where no one gets away with tax evasion so that we can all pay lower tax rates? As accountants, we all know the value of the audit trail. If we immobilise all large currency notes – RM100, RM50 and RM20 – and mandate that all

transactions above a certain threshold (of maybe RM300 or so) should be done electronically for audit trail purposes, stolen goods cannot be sold for cash, and corruption payments will be traceable.”

go cAshless to disincentivise crime

All sources of revenue could thus be easily identified, and the audit trail will be a major disincentive for crimes like corruption and tax evasion. While this cannot be done overnight, it will also have many detractors, he acknowledged. “But it can be done,” he continued, adding that the world was already moving towards a cashless society. Also, the total number of

The Malaysian Institute of Accountants

(MIA) marks the 50th Anniversary of its

establishment on 30 September this year.

In conjunction with its Golden Anniversary,

the MIA is hosting three 50th Anniversary

Commemorative Lectures presented by iconic

MIA members whose lectures will respectively

be centred on the MIA 50th Anniversary

theme of Integrity, Accountability and Trust.

The inaugural 50th Anniversary

Commemorative Lecture featured Group

Chairman of Permodalan Nasional Berhad, Y

Bhg Tan Sri Abdul Wahid Omar, who spoke on

the topic Integrity in Action.

At the event, Tan Sri Wahid was presented

with an appreciation memento in the form

of a glass sculpture designed and created by

renowned artist and sculptor, Raja Azhar Idris.

The MIA had specifically selected the designer

and memento as part of the Institute’s efforts

in supporting Malaysian artisans.


n RepoRtING by the accouNtaNts today edItoRIal team

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The supersized Association of International Certified Professional Accountants aims to drive significant change to help the global profession develop and grow sustainably.

A New Model for theGlobal Profession

WhIle the profession has always grappled with change, what’s extraordinary today is the relentless pace and speed of disruption in the digital economy, summed up Barry Melancon, CEO of the Association of International Certified Professional Accountants and Andrew Harding, the Association’s CEO for Management Accounting in an exclusive interview with MIA Executive Director of Strategy & Development, G.Shanmugam recently.

To manage change in a globally diverse landscape, two of the profession’s leading bodies, the American Institute of Certified Public Accountants (AICPA) and the UK Chartered Institute of Management Accountants (CIMA) joined forces to form the global Association. Change was the catalyst. “The profession and what we do as professional

accountants is changing dramatically. Technology and other megaforces are changing what we do, how we do it and how we add value to stakeholders. The vision of the Association is to be ahead of the change so that the accountancy profession continues to thrive globally,” said Barry.

Cima (uk) + aiCPa (us) = assoCiation (Global)

One challenge was to preserve the history and traditions of these two legacy organisations which go back more than a century. Under the Association’s new structure, there is a new board and governance model which operate as one, but preserves the legacy of the founding organisations. “We operate today as a combined organisation. We are 650,000

members and students globally and 35 offices in 23 countries. We think that we’ve done something totally unique in the profession with the goal of being a major force in ensuring that all aspects of the profession globally are successful,” said Barry.

“This is very much about the accountancy profession, which we see across the world as being genuinely valued and genuinely respected at a time when many people are questioning experts and institutions. We aim to drive that profession, and


A NeW MODel FOR tHe GlObAl pROFeSSION

we aim to give the opportunity and prosperity that people expect from their careers – and maintain trust in the work that accountants do,” elaborated Andrew.

Given CIMA’s traditional strengths and branding in management accounting and AICPA’s focus on financial accounting and public practice, might there be some conflict? How, might the Association reconcile specific interests of management accounting and financial accounting moving forward, asked G.Shanmugam.

“Historically from an AICPA perspective, 40% of its members are in management accounting. What we really think drives the future of the profession is how management accounting and financial accounting complement each other. Many people in management accounting are in financial reporting so that’s the starting point before getting to an audit. They go hand in hand. High quality on the preparers’ side helps to make higher quality on the auditor’s perspective. Quality starts there,” said Barry.

To inform their respective members about the benefits of the new Association, CIMA and AICPA used the notion of “and”, said Barry. “This isn’t about ‘either or’. This is an ‘and’ strategy – we can and need to do both.” Barry referred to the key idea of the book Built to Last: Successful Habits of Visionary Companies by Jim Collins, where companies that survive the long- term are those that have an ‘and’ strategy. These companies can do something well, and when they see a new opportunity they can do something else. Those companies that can only do one thing ‘or’ the other are more susceptible to failure. “This is truly an ‘and’ strategy. We think the synergies

historiCally from an aiCPa PersPeCtive, 40% of its members are in manaGement aCCountinG. What We really think drives the future of the Profession is hoW manaGement aCCountinG and finanCial aCCountinG ComPlement eaCh other.

Barry MelanconCEO of the Association of International Certified Professional Accountants



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are tremendous. We are absolutely committed to management accounting, and we are absolutely committed to financial accounting, auditing and public practice.” Barry added that the Association had also built protections into their processes to ensure that resources are channelled equitably to management and public accounting.

Collaboration with other stakeholders will also be pivotal to the new Association. Andrew pointed out that both the Association and MIA have been building a shared model of cooperation, development and learning over the past four years, and will work to enrich this going forward both in management accounting and financial accounting. Areas of cooperation could include integrated reporting, which is being spearheaded by MIA in Malaysia, and cybersecurity and risk management. For example, the Association is keen to evangelise the development of new auditing and assurance services, thought leadership and standards in cyber. The Association’s new cyber attestation initiative will give organisations the ability to reliably report on their cybersecurity programme with

the credibility associated with an independent auditor’s report.

Development won’t be one-directional but multidirectional and the Association hopes to leverage on leadership emerging all over the world. “We learn in the other direction too. Leadership doesn’t just happen in one place but in today’s world with technology it can happen in all sorts of unpredictable places. The footprint we have is actually a way to leverage that. The greatest ideas for the future might come from a small firm practitioner here in KL and we can be part of the voice in bringing that forward,” enthused Barry.

teChnoloGiCal ChanGe

“The top three impacts on the profession in future are technology, technology and technology,” quipped Barry humourously.

A significant change driver will be blockchain technology and the profession will definitely need to change and adapt. “The basic premise of blockchain technology is business transactions being created in a digital world that are unalterable and they are totally transparent,” explained Barry. In the traditional audit process, auditors see only one side of the transaction in that company. But there is another side of the transaction involving the other company or counterparty. Audit techniques such as confirmations, subsequent events and analytical procedures emerged to help manage this risk of the unknown and to determine appropriateness.

While there are private chains, the majority are public blockchains, where there are account numbers associated with that technology chain or transactional chain. “You

the basiC Premise of bloCkChain teChnoloGy is business transaCtions beinG Created in a diGital World that are unalterable and they are totally transParent.

Left to right: Barry Melancon, G. Shanmugam and Andrew Harding.


Untitled-1 1 06/04/2017 4:57 PM


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can actually see both sides of those transactions simultaneously, so for the purposes of fraud detection we are much more likely to know about the appropriateness of that transaction,” said Barry. Furthermore, blockchain is able to give a transaction a digital identification that clearly indicates if somebody had attempted to alter it or tamper with it, facilitating fraud detection.

Other game changers for the profession are big data and data analytics, which transforms the audit scope and verification processes. Previously, firms might have had to send in teams of people to large companies to look at samples of leases, for example. Today, 100% of leasing transactions can be looked at using machine learning and augmented intelligence in a day. All these transactions can be traced back to the general ledger, and human intervention is needed only to examine the exceptions.

“This has huge ramifications to the investment needs of firms in their technology; the interoperability of technology between companies and auditors; the level and amount of staffing

in those particular environments; and where there is staffing involved, the higher level of skills necessary for that staff to be dealing with those exceptions,” continued Barry.

Furthermore, these technological innovations can be replicated endlessly and in many different areas. Barry noted that firms are using drone technology to do inventory observation today. “Rather than flying a staff person out to the inventory location, a drone is flown out with camera technology in certain circumstances. It’s much more cost-effective and you get a wider coverage.”

The changes are dramatic and nerve-wrecking. “We’ve always had evolution in the audit, like how microcomputers changed and evolved the audit, but the pace of that change and the depth and breadth of that change today is totally different.”

A key worry is the impact of digital disruption on smaller firms and stakeholder expectations. “What I worry about is how do we get that technology down to small and medium sized practices? In terms of blockchain technology, what does it change in terms of public expectations? How does this then change what we actually report on, for instance in IR and cybersecurity? I really believe we are on the cusp of what we audit being changed as much as how we audit,” said Barry.

Surprisingly, said Andrew, management accountants are welcoming the spread of artificial intelligence (AI) to cope with the big data influx. “Management accountants aren’t afraid of AI because AI will help them manage the big data and then they can focus on giving the insights, the influencing and decision-making and they can also focus on giving trusted stewardship for the business.”

you Can aCtually see both sides of those transaCtions simultaneously, so for the PurPoses of fraud deteCtion We are muCh more likely to knoW about the aPProPriateness of that transaCtion.


strateGies for survival

In concluding the interview, G.Shanmugam touched on the future relevance of the profession and asked how accountants should respond to the pervasiveness and speed of change. Barry responded by saying that defensive strategies will not work because disruption and evolutionary changes – e.g. fintech – cannot be prevented. “If you play defence you increase the possibility that somebody else does that right in the marketplace, so you have to play offence. Change management is hard and here we’re talking about

compressed time change management and we have to find a way to impress that change,” said Barry.

Meanwhile, Andrew said that the key to keeping up is to never stop learning. “Ask yourself what did you learn that is still useful from the day you got your first designation. Personally, this is some of the people skills I learnt, and as Barry said - debits to the left and credits to the right - but everything else has changed. Once you’ve come to terms to that it’s easier to say I’ve got to keep learning.” n


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Since 30 September 1967, the Malaysian Institute of Accountants (MIA) has been dedicated to regulating, developing and supporting the accountancy profession in Malaysia while upholding the public interest. From inception, we have worked strategically to expand the profession’s sphere of influence and activity. Today, MIA is recognised as a role model and benchmark for professional accountancy organisations in emerging markets globally and our expertise in Islamic financial accounting and reporting is sought after. Our membership has grown exponentially from just 1,619 accountants in 1980 to more than 33,000 today, making MIA one of the ASEAN region’s largest, most diverse and most influential Professional Accountancy Organisations (PAOs).

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Documents

Future-prooFing aCCountanCy eduCation · mandate an audit paper, hence this is a point of deliberation in deciding ... for all accountants working in finance functions: chartered