Malaysian Institute Of Certified Public Accountants (MICPA)










24 June 2005

Y Bhg. Dato' Abdul Halim Mohyiddin
President MICPA

Y Bhg Dato' Nordin Baharuddin
Vice President  MICPA

Distinguished Guests
Ladies and Gentlemen.

Asalamualaikum and good evening.

I would like to congratulate the Council and members of the Malaysian Institute of Certified Public Accountants (MICPA) on the occasion of your 47th anniversary. MICPA has played a pivotal role in contributing to the development of the accounting profession in the country. I believe, as we move forward, MICPA's role will become increasingly important and  more relevant,  as the profession strives to rebuild and enhance public trust in today's  challenging corporate world.

2. Today's corporate world is undergoing unprecedented changes. The accelerating pace of technology is blurring borders, integrating markets, creating innovative means of communicating financial information to the market place, and thus, placing increasing demands on corporate reporting. In addition, there are new financial instruments that give rise to innovative but more complex business transactions, that make financial reporting even more challenging.

3. In addition, global markets are expanding exponentially. The emergence of North Asian and Indian capital markets, for instance, are having substantial impact on regional fund flows and portfolio allocations.  To benefit from the opportunities in the global markets, we must put in place strategies that will provide higher value propositions to the investment community.  At the same time, we must compete on the strength of quality and efficiency of our investible products and services that we offer in the market place.

4. Effective market mechanisms must, therefore, be in place to ensure efficient capital mobilization and formation, as well as ensure that capital is allocated efficiently in securing long-term economic growth. Needless to say, the development of efficient markets needs to be supported by strong and high quality market participants. Intermediaries, issuers, investors, regulators and professionals, such as yourselves, play important roles in generating  growth dynamism in our capital market. Within the context of both domestic and international challenges, the accounting profession clearly is essential in complementing the efforts of building a credible, reputable and internationally competitive capital market, whether as auditors, advisors, consultants, directors or as members of the corporate sector.

5. Undeniably, the accounting profession has seen many changes and experienced significant challenges during the 47 years since the formation of  MICPA. It is evident that, since then, the accountant's role has graduated from merely being bookkeepers. I am cognizant of the fact that your profession is experiencing tremendous pressure and strain. In the past decade, no other profession has come under as much public and legislative scrutiny as the accounting profession. The market indignation of global corporate scandals caused by lapses in accounting practices in the West, such as Enron, Parmalat, Worldcom and numerous others, have had significant ramifications for the profession, and recently created a crisis of confidence in corporate reporting.

Distinguished guests,

6. As the profession continues to undergo dramatic changes,  the demand for transparency and quality in financial reporting as well as   commitment to ethics, integrity and professionalism has never been more immense. However, transparency, accountability, responsibility and integrity are not new to the accounting profession. As guardians of financial truth, accountants must ensure that these premier values  remain as  the basic pillars of financial reporting. Accounting standards which represent the foundation of financial performance must form the bedrock of a strong framework of corporate governance and accountability. 

7. In auditing financial statements of companies, auditors have the most intimate knowledge of the strengths and weaknesses of  companies.  They are able to read the drivers and inhibitors of corporate performances and are in a position to provide an independent and objective view on the opportunities and risk profiles of these companies. It is the quality, integrity and objectivity of this information which directors, chief executive officers and investors depend on to make investment decisions and assign value to stocks being traded in the capital market.

8. This brings us to the issue of independence and integrity which continues to confront the profession. If the authority to attest on the corporate accounts and practices has been entrusted to auditors by the public, then it is their primary duty to serve and contribute to the ethical conduct of the profession where such independence and integrity should continuously be upheld.  Given these challenges, the accounting profession plays a crucial role in cultivating a culture of disclosure, transparency and corporate governance within  Malaysian corporates.

9. As the investing public is now broader and more discerning, what might have been, in past decades, a crisis behind closed doors, often becomes a matter of the broadest public concern now. Corporate reporting is an intricate discipline, but every market participant understands its importance to himself, the companies involved and also to the country. The effectiveness of the capital markets depends on public trust, and trust depends on the timely availability of complete, relevant and reliable information.

10. Transparency is imperative to imbue confidence amongst investors in our market and it also allows all publicly available information to be incorporated into stock prices in an expedient and efficient manner. After all, the stock market is essentially a 'confidence' game. Hence, the quality of information and the integrity of the market place act as strong modes for brand differentiation as well as brand premium to attract the necessary capital inflows. While the quality of information has immediate and far reaching implications to a particular company, eventually it permeates to the market and economy as a whole. It is, therefore, not surprising that the accounting profession is constantly being challenged to meet the demands for quality information and better disclosures. As key providers and verifiers of information, the message is simple but potent, that is, the higher the quality and integrity maintained by the accounting and auditing profession, the stronger and more resilient will be our markets.

11. There is, therefore, an urgent need for all participants in the capital market, including investors, analysts, CEOs, accountants and auditors, to rededicate themselves to transparent corporate reporting. Corporate reporting begins with company executives who prepare the financial statements that are reported to investors and other stakeholders. These financial statements are approved by independent boards of directors, attested to by  independent auditing firms, analysed by analysts and disseminated  by information distributors, including the news media.

12. However, ultimate responsibility for ensuring that shareholders and other stakeholders receive the information they require lies with corporate executives and their boards. One of the main challenges in combating fraud is the need for a change in the mindset of company directors and to impose increased accountability and greater transparency in their companies. It is important for CEOs to lead in ensuring that ethics and integrity pervade the working environment and are embedded in their corporate  culture.

13. CEOS and financial executives have also an important duty to ensure that  company's financial statements not only satisfy the requirements of regulatory authorities, but be of sufficient quality to meet the needs of investors. Indeed, to attract capital, they should consider  providing useful information beyond the minimum requirements to serve investors better. Today, disclosure requirements have expanded beyond the traditional financial data. The explosion of information needs is not only for  regulatory intent but a reflection and product of a growing public demand and sophistication of markets across the world.

14. Responsibility also lies with the professional bodies, such as MICPA and MIA, which periodically update accounting and reporting guidelines  and bears responsibility for applying those guidelines with objectivity and impartiality. As accountants, auditors and advisors, you provide the assurance that the financial statements can be trusted; and in performing your duties, it is implicit that there should not be any tolerance for corporate misconduct.  Failure of this can undermine investors and public confidence.

15. Investors and others who use the information should also bear responsibility for using financial information conscientiously in assessing corporate performance and making investment decisions. While investors and other users are demanding greater accountability from those on whom they depend for information, they too must  hold themselves ultimately accountable for their decisions; and avoid investments where full information is unavailable or  available information has gaps. I believe that investors will be far more readily and willingly accept this responsibility when they know that the information on which their decisions are based on, is prepared, approved, and audited in a spirit of transparency  and by people of integrity.

Distinguished guests,

16. The demand for greater transparency and more effective financial reporting has placed new pressures on those preparing and attesting the  financial reports to comply with internationally accepted accounting standards, and ensure these standards are properly applied. They also have a greater responsibility in assisting the rest of corporate Malaysia to adjust to higher standards of financial reporting and work jointly towards the common goal of providing internationally comparable financial statements.

17.  In this regard, it is heartening to note that the accounting and auditing standards in Malaysia have always been benchmarked against international standards. I am also happy to note that the Malaysian Accounting Standards Board (MASB) is moving forward to complete the alignment of Malaysian accounting standards with international standards; and I understand that there will be 21 new and revised standards that will be introduced at the beginning of  next year. I am also pleased that MICPA had been the forerunner in the introduction and application of IASs in Malaysia, reflecting the foresight of the profession in recognizing the importance of international comparability.

18. An important criteria of integrity is in delivering professional advice based on competencies, technical skills and experiences. In this regard, the qualifications of the Certified Public Accountant or the CPA is undoubtedly, the premier certification in the profession.  If our objective is  to converge our financial reporting practices with global standards, then investing and supporting the growth of as many professionals with this qualification is a priority.  Indeed, the CPA Malaysia certification is the professional brand with global credentials which comply with the stringent parameters of international  accounting rules and standards.  I understand the CPA is given  to accountants who meet certain educational and public accounting requirements where certification covers international standards, entrepreneurial skills, business finance and strategies in addition to the technical expertise of the accounting profession.

19. The internationally-recognized CPA qualification offered by MICPA will enable the acceptance of home-grown accounting services by international companies in the promotion of the Malaysian services sector. Since the CPA Malaysia qualification is also recognised by the Institute of Chartered Accountants of England and Wales (ICAEW), it provides an opportunity for Malaysians to pursue world-class education in accounting and  attain international professional qualification. It will not only enhance the career mobility of qualified Malaysian CPAs, but also, the qualification offered by MICPA will be positioned as the benchmark or the highest qualification to be achieved in the profession. 

20. Professions such as yours must also take the lead in self-policing. The appropriate mix between self-regulation and regulatory discipline by the regulators will create high levels of professionalism and integrity and more transparent and greater accountability in corporate behaviour. Indeed, we  have high expectation from the accounting profession, not only as guardians of integrity but also in ensuring that the market is progressive and innovative.

21. I would also like to applaud  MICPA's  efforts to become a regional player in the development of future CPAs, who will understand the financial needs, opportunities and issues impacting the operation and governance, in particular of emerging market economies.  I understand MICPA is working jointly with the Malaysian Institute of Accountants in providing technical assistance to other accounting bodies, such as those in Kampuchea and North Korea.

22. Notwithstanding the increasing demand and challenges on the accounting profession, it continues to be a blue chip profession. Not many other professions have the requirement of statutory audits where the services of  public accountants are sought during good or  bad times. Today's accountants, of course have also assumed a much wider role.  They not only have a good command of numbers, they are also well equipped with business knowledge and the ability to assess risks and analyse corporate performance. As such, professional accountants are  increasingly being appointed to helm key positions in corporate Malaysia, including the GLCs.

23. I am confident that our future accountants will not only think about accountancy as a rewarding profession, but will be persuaded to see the strategic importance of the profession to nation building, the excitement of working in different types of business environments, and of course the economic value of an integral and continuous learning profession, which  is still regarded  as a globally-indispensable one. 

Distinguished guests,

24. In conclusion, let me reiterate that Malaysia is accelerating its efforts in transforming the economy towards achieving higher value added  growth. Among others, more efficient market mechanisms are required to support this transformation. Towards this end,   greater dynamism from all market participants, including the accounting profession, is required to make Malaysia as a premier capital market in the region. The Government  will continue to be supportive and be an  enabler of business as well as ensure a conducive  environment that promote growth.

25. On that note, I would like to once again congratulate MICPA on its 47th anniversary and for all its efforts in providing the professional leadership, international representation and contributions towards the development and progress  in the nation's financial services sectors.  I would also like to commend members of MICPA for your aspiration to further strengthen the professionalism, independence and integrity of the Malaysian CPA. 

Thank you.

Wasalamualaikum Warahmatullahi Wabarahkatu.

Ministry of Finance
24 June 2005