Will professional accounting qualifications become mandatory?

BY ERROL OH

Johan says the MIA Education Blueprint is outdated and was 'illegally circulated by irresponsible parties in our midst'.

 

IF living in interesting times is considered undesirable – as in the phrase “May you live in interesting times”, which has been wrongly identified as an ancient Chinese curse – imagine what it’s like to lead in interesting times.

Perhaps somebody should ask Johan Idris, the president of the Malaysian Institute of Accountants (MIA).

The regulator-cum-professional body now has the job of handling a delicate yet important matter that may determine how well Malaysia’s accounting industry adapts to the shifting landscape.

The issue can be summed up in one long-standing question: Must a person have professional certification to be a chartered accountant in Malaysia, or is an accounting degree from a local university already good enough?

The Accountants Act 1967 provides for two main routes to becoming a chartered accountant.

One path to registration with the MIA is via an accounting degree from any of the 15 local universities listed in the First Schedule of the Act plus three years of working experience.

The second way is to first become a member of a recognised professional accounting body such as the Malaysian Institute of Certified Public Accountants, Institute of Chartered Accountants in England and Wales, Association of Chartered Certified Accountants, Chartered Institute of Management Accountants and CPA Australia.

Membership to such bodies – there are 11 named in the First Schedule – is typically dependent on passing their examinations and accumulating a certain amount of practical experience.

There’s currently a push to make professional qualifications mandatory, even for the accounting graduates. This idea was floated in the Economic Transformation Programme (ETP) roadmap launched in October 2010.

According to the report, the accounting sector is one of two business opportunities under the national key economic area of business services.

The report points out that as markets deregulate and global reporting standards converge, Malaysia can capitalise on these developments by exporting accountancy services. To do so, the quality of the country’s accountants need to be enhanced and they must develop specialised skill sets in areas such as international taxation, forensic accounting and carbon accounting.

It adds: “We will strengthen the quality of Malaysia’s chartered accountants by introducing a requirement to hold a recognised professional qualification (e.g. ACCA, CPA, ICCA) before being admitted as a chartered accountant in Malaysia.”

The report also says the MIA will introduce this additional requirement by mid-2012. That has proven to be an overly optimistic target.

The ETP annual report 2013 says the accounting sector business opportunity is under the purview of the Competition, Standards and Liberalisation Strategic Reform Initiative “for smoother execution”.

Prime Minister Datuk Seri Najib Tun Razak injected additional urgency into this objective in June this year when he said the Government wanted to increase the number of professional bumiputra accountants from 8% to 25% by 2020, noting that only 8% of Malaysia’s bumiputra accountants have professional qualifications.

He added that the Government was considering amending the Accountants Act to encourage more people, especially bumiputras, to acquire professional accounting qualifications.

But not everybody has warmed up to the idea of local accounting degrees losing their status as a direct entry point to MIA registration.

Copies of a document, dubbed the MIA Education Blueprint (MEB), have been widely distributed and it became the focus of a lobby against any attempt to make professional qualifications a must.

Johan, the MIA president, says the blueprint is outdated and was “illegally circulated by irresponsible parties in our midst”. But that didn’t halt a campaign to pre-empt changes in the current criteria for becoming a chartered accountant.

In July 3, Utusan Malaysia ran an article by Universiti Utara Malaysia’s Prof Dr Kamil Md Idris, who also chairs a council of heads of accounting schools in Malaysia. He presented a 10-point rejection of the MEB and warned the Government against a bid by “certain parties” to exploit Malaysia’s transformation plans.

The same newspaper then published three news reports last month quoting Kamil and officials of the Association of Malay Chartered Accountants Firms Malaysia (AMCAF) on why the MEB’s proposal to amend the Act is a bad idea.

In between, Utusan Malaysia also carried Johan’s response to the criticism. He defended the proposal, saying it was meant to elevate the accounting profession in Malaysia.

He addressed this issue again on Sept 27, when the MIA held its AGM in Kuala Lumpur. He said the institute was working on a roadmap for structural reforms so as “to remain relevant and to ensure that our profession is responsive to the changing business environment”.

He also explained the importance of professional certification.

It’s telling that he made several references to the Committee to Strengthen the Accountancy Profession (CSAP), a multi-agency panel formed early last year by the Finance Ministry. It’s chaired by the Securities Commission and its members represent the Ministry, Bank Negara, the Companies Commission of Malaysia, the Accountant General’s Department and the MIA.

The committee’s job is to “formulate and recommend strategies and measures to strengthen the accountancy profession and to improve the contribution of the profession in enhancing the competitiveness of the country in line with the government’s transformation agenda”.

Its report was originally slated for release by the end of last year, but apparently, the task is tougher than anticipated. Johan said the CSAP was expected to issue its draft report soon for comments.

He pointed out that the recommendations in the MIA roadmap must be aligned with what will be in the CSAP report.

This is why the report is set to be a decisive factor in whether the Accountants Act will be amended so as to emphasise professional qualifications.

Then again, there’s some way to go before a CSAP recommendation becomes legislative change. After all, we do live in interesting times.

Executive editor Errol Oh is eagerly awaiting the release of the draft CSAP report.