accountants today june2018 · dr. nurmazilah served as session moderator, with panellists rashidah...

THE complaint avenue has been a

provision in the MIA Disciplinary Rules

2002. Hence, MIA with the objective that

the complaint mechanism is exercised

rightfully by the public at large as well

as to assist members who have been

served with the Notice of Complaint

(NoC), established the REGISTRAR

OFFICE to oversee the due processes

involved. This enables MIA to

significantly participate in performing

its role in regulating the practice of the

profession of accountancy in Malaysia.

In view of the duties and obligations

played by the accountancy profession

in our society, the Malaysian Institute

of Accountants through Section 10

of the Accountants Act empowers

the Council to make By-Laws. These

By-Laws are designed inter-alia for the

inculcation of sound practice of the

accountancy profession, prevention of

illegal and dishonourable practices and

the promotion of the interest of the

profession.

With the objective that our members

shall exhibit the highest standard of

ethics, professionalism and professional

conduct that are expected of the

profession, MIA shall not preclude any

person from lodging a complaint against

members arising from any offences or

breaches committed in contravention of

the MIA By-Laws.

Over the years, the Institute has

been dealing with a wide range of

complainants from all walks of life,

be it members of the public, our own

members, internal departments of MIA

or regulators.

The very many complaints that have

landed on the desk of the Registrar

include amongst others auditors

rendering unqualified reports despite

discrepancies in financial statements,

non-reply to correspondences, breach of

confidentiality, breach of practice review

and quality assurance, a various range

of company secretarial matters, specific

cases on liquidation, failure to seek

professional clearance, non-compliance

of the accounting and auditing

standards and various matters confined

to breaches of the MIA By-Laws.

The Registrar Office also does

receive a significant number of

enquiries on lodgement of complaints

UNDERSTANDING THE SCOPE OF COMPLAINTS THAT CAN BE

LODGED WITH MIA’S REGISTRAR’S OFFICE, TO ENABLE THE

PUBLIC AND COMPLAINANTS TO EXERCISE THEIR RIGHTS AND

TO SUPPORT MEMBERS SERVED WITH COMPLAINT NOTICES.

PUBLIC INTERESTProtecting

BY MIA COMPLAINTS UNIT

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50 ACCOUNTANTS TODAY | MAY / JUNE 2018

against tax agents. The span of issues

raised includes timeliness, compilation

and tax engagements. Most of the

complainants’ grievances relate to

unexpected tax penalties. Many of

these complaints remain an enquiry

since the complainants do not have the

necessary documentation in support of

their allegations.

There are also a significant number

of complaints that the Institute has

deliberately declined to accept. The

common levelled matters which are not

in the purview of the Institute include

family matters, partnership dispute,

fees, criminal offences, ongoing

litigation proceedings, fraud and forgery,

commercial crime, employer-employee

dispute, monetary compensation, issues

on court-appointed liquidators where

the issues have yet to be established at

the court, and other irrelevant matters.

Having said that, observing Section

150.1 on Professional Behaviour of

the MIA By-Laws which reads that

the “professional behaviour imposes

an obligation on all professional

accountants to comply with relevant

laws and regulation to avoid any conduct

that the professional accountant

knows or should know may discredit

the profession”, cases that has been

referred by regulators and relevant

To any member, the whole

investigation processes may be a

stressful event until the completion of

the case.

Considering the impact, members

are therefore advised to exercise due

diligence in discharging their duties

in every situation. As a member of the

Institute, mastering the MIA By-Laws

on Professional Ethics, Conduct and

Practice will be useful tool for an

avoidance of unnecessary complaint

that renders in “please explain to the

Investigation Committee”.

Understanding the significant

role owed to the society at large, the

most convenient guidance that can be

obtained by a member is through the

various programmes conducted by the

Institute to upgrade members’ skill

and knowledge. An idea to attend the

Public Practitioners Programme (PPP)

by the Institute from time to time will

be the most simplified version of a

practitioner’s life.

authorities has also been subjected to

the complaint mechanism and the due

processes of the Institute.

The number of complaints stood at

13 cases received from January to April

2018.

All the cases which satisfy the

requirement of Rule 4 of the MIA

Disciplinary Rule (No.2) 2002 results in

an issuance of the Notice of Complaint

to our members. Members are given

the opportunity to render an explanation

via writing or verbal submission to the

Investigation Committee.

Chronologically, from the Registrar,

the case will flow to the Investigation Unit

for proceedings before the Investigation

Committee (IC). Should there be

sufficient evidence, the case will be

referred to the Disciplinary Committee

(DC) for disciplinary proceeding. In

any event, an appeal avenue via the

Disciplinary Appeal Board (DAB) is

made available for members who appeal

on the decision imposed by the DC.

Year 2015 2016 2017

Number of complaints

received by the Registrar Office112 67 54

COMPLAINTS LODGED FROM 2015 TO 2017

*Number of complaints shown above is based on calendar year

COMPLAINT PROCESSES

Complainant

lodge

complaint with

the Registrar

1

If complaint fulfils

requirement of Rule

4 of the MIA

Disciplinary Rules

2002, Registrar

issues Notice of

Complaint (NoC) to

Member

2

Upon receipt of the

explanation from

member/in the

absence of the

reply, complaint will

be transferred to the

Investigation Unit

3

Investigation

Committee (IC)

process

4

Disciplinary

Committee (DC)

process

5

Disciplinary

Appeal Board

(DAB) process

6

PROTECTING PUBLIC INTEREST

MAY / JUNE 2018 | ACCOUNTANTS TODAY 51

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HOW TO BE GOOD

The following are some key

takeaways from the discussion:

ACCOUNTANTS ARE IMPORTANT

GATEKEEPERS OF INTEGRITY

Fostering the strength of the

accounting and finance function

in an organisation can be critical to

protecting governance and integrity,

because accountants are recognised

for their roles as gatekeepers. The

International Federation of Accountants

(IFAC) advocates for the accountancy

profession’s pivotal role in countering

corruption, and this is supported by IFAC’s

most recent issuances developed from

documents at the G-20 Leaders’ Summit

2016. “The world is seeking stronger

governance through higher levels of trust

and integrity in the business and public

sectors, and stronger, more consistent

collaboration in the global regulatory

environment, and accountants are party

to this by virtue of their roles in the global

compliance and economic ecosystems,”

emphasised Dr. Nurmazilah.

Assurance from the accountancy

profession could also be a tool to counter

the negative perceptions of Malaysia in

the Corporate Governance Watch Index.

Low scores in the categories of politics

and regulation are indications of declining

public trust that need to be swiftly

addressed. “Fortunately, auditing and

accounting appear to be our strengths,”

said Dr. Nurmazilah, and these assets help

How can we foster stronger governance in organisations, and in

turn improve perceived and actual integrity and trust? How can

organisations help their employees to always do the right thing and make

the right decision to support integrity and good reputation?

INTEGRITY is doing the right thing

even when no one is watching. BUT

how many can resist the temptation of

sneaking through a red light at 3:00am,

when there’s obviously no oncoming

traffic?” asked Dr. Nurmazilah Dato’

Mahzan, CEO, MIA, in her preamble

to the panel discussion on Stronger

Governance for Integrity and Trust

in Organisations at the recent MIA

Trust & Integrity Conference 2018.

Dr. Nurmazilah served as session

moderator, with panellists Rashidah

Hussen, Director, Integrity Division,

IRBM, and Eulis Rachmatiah Iskandar,

Head of Ethics, Celcom Axiata Berhad

providing public and private sector

perspectives.


HOW TO BE GOOD

to succour a positive climate of assurance

and trust.

GOVERNANCE AND ENFORCEMENT

ARE PIVOTAL

Institutional governance, regulation

and enforcement can impose the

necessary rules and standards that

support integrity and trust, thereby

having a direct impact on society, noted

Rashidah. Compliance with regulations

such as Sarbanes-Oxley and the Frank-

Dodd Act have not just helped the

private sector to avoid punitive fines and

penalties, said Eulis, but is a differentiating

factor that can help companies secure

the best talent from around the world.

EVERYBODY HAS A ROLE TO PLAY

Personal responsibility, conscience

and morals differentiate those with

integrity. “We have to behave and have

higher standards than the market around

us. It is up to everyone to do the right

thing,” advised Eulis. “All levels need to

understand their respective roles and

modify (their behaviour) to suit their

objectives,” concurred Rashidah. “Everyone

is a leader in their own environment.”

At the same time, tone from the top

is imperative. It is the Board of Directors’

responsibility to ensure that the right

approach is cascaded down to other

levels of the organisation, said Rashidah.

What happens when the tone at the

top is not what it should be? There will

be consequences: you will lose people.

“People won’t want to work with you,”

Eulis said, adding that employees today

were doing due diligence on their

employers before taking up job offers.

ENSURE ALL SYSTEMS GO,

BACKED BY THE RIGHT CULTURE

A conducive environment for

trust and integrity can be nurtured

by putting in the appropriate policies,

communications, training, risk

assessment, internal controls, and the

proper protocols for managing situations

that test integrity.

But these are soulless and ineffective

in shaping the right behaviour even

when nobody is looking, if organisations

don’t also take steps to perpetuate and

inculcate the right culture. Ultimately,

how individual behaviour and values are

applied when operating in the corporate

environment basically underpins the

creation of an ethical organisational

culture – which will in turn encourage

the right behaviour among staff,

inculcate integrity and develop good

governance. “At the heart of integrity

is making the right decision,” said Dr.

Nurmazilah. Each organisation is an

individual entity; it has to work out the

best way to enable its systems, people

and processes to make the right choices.

INSTITUTIONAL INITIATIVES

FOR INTEGRITY

Institutions too must play their

respective roles to ensure security and

integrity, especially the integrity and

protection of data in an increasingly

digital and connected world where

one decision can have multifarious

consequences. While business drives

economic prosperity by providing jobs

and training, the information it has

access to needs to be appropriately

safeguarded from misuse and abuse.

Non-Governmental Organisations can

play a watchdog role by supporting the

poor, identifying instances of the abuse

of power and exploitation or oppression

of marginalised groups and generally

fostering a sense of community.

The media safeguards the quality

of information that is disseminated,

and correctly educates, informs and

entertains the public in a wholesome,

positive way. In parallel, the government

should prioritise economic prosperity

for its citizens and ensure integrity of its

social mission by guaranteeing equitable

distribution of resources and wealth for

all.

(From left) Dr. Nurmazilah Dato’ Mahzan, Rashidah Hussen and Eulis Rachmatiah

Iskandar

ALL LEVELS NEED TO UNDERSTAND THEIR RESPECTIVE ROLES AND MODIFY (THEIR BEHAVIOUR) TO SUIT THEIR OBJECTIVES.

Rashidah Hussen

Director, Integrity Division, IRBM


REPORTING BY MIA INTEGRATED REPORTING STEERING COMMITTEE

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INTEGRATED REPORTINGTELLING THE VALUE CREATION STORYTaking a page from the best – Winners of the NACRA Integrated

Reporting Awards 2017. This two-part article highlights certain key

areas for improvement and exemplary best practices collated from

the adjudication of the Intergrated Reporting Awards 2017.

PART 1: DIVING INTO THE GUIDING PRINCIPLES

At the heart of integrated reporting

(IR) is the desire to communicate

an organisation’s value creation

story in a manner that engages

its stakeholders. The Integrated

Reporting Framework (Framework)

speaks extensively about how value

creation should be communicated,

taking into consideration the

capitals available to an organisation.

Specifically, the Framework provides

Guiding Principles that underpin

the preparation and presentation

of an integrated report, informing

the content of the report and how

information should be presented.

This article, the first in a two-

part series, focuses on the common

findings arising from the Integrated

Reporting Awards (IR Awards)

adjudication of the National Annual

Corporate Report Awards (NACRA)

2017, analysed by the Guiding

Principles in the Framework.

Before diving in, the Committee

congratulates the IR Award 2017

winners on their well-deserved win.


INTEGRATED REPORTING – TELLING THE VALUE CREATION STORY

Sime Darby Berhad clinched the

coveted Platinum Award, setting

the benchmark for excellence in

integrated reporting. The Gold Award

went to Telekom Malaysia Berhad

while Petronas Gas Berhad and

Tenaga Nasional Berhad tied for a

joint Silver Award. We also commend

all participants for their efforts in

producing integrated reports.

AREAS FOR IMPROVEMENT

Accordingly, we wish to highlight

certain key areas for improvement

from the adjudication of the IR Awards

2017. In discussing the observations,

examples of good practices are

featured, making reference to the

annual reports of the IR Awards 2017

winners above.

STRATEGIC FOCUS AND FUTURE

ORIENTATION

Observations

In articulating an organisation’s

value creation strategies, there

could have been clearer linkages

to their resources or capitals (as

referred to in the Framework). The

informational value of the disclosures

could be enhanced if the strategies

were demarcated into short-term,

medium-term or long-term strategies.

In particular, the adjudicators found a

lack of disclosures addressing long-

term strategies.

Exemplary practice

Petronas Gas Berhad Annual

Report 2016 pages 74-78.

Their 3ZERO100 strategy was

communicated well, with clear

progression of strategies up to year

2020. Petronas Gas Berhad’s focus

on strategy is also shown via frequent

referencing throughout the report.

CONNECTIVITY OF INFORMATION

Observations

The value creation processes

should clearly articulate the connection

between inputs, outputs and outcomes.

The interdependencies and trade-offs

between capitals could also be better

articulated.

Exemplary practice:

Tenaga Nasional Berhad Integrated

Annual Report 2016 pages

87-108.

Tenaga Nasional Berhad’s

sustainable value creation story is

linked to the different capitals of the

organisation through the use of icons.

The different capitals are also referenced

throughout the report where applicable.

STAKEHOLDER RELATIONSHIPS

Observations

The key concerns of stakeholders

should be communicated clearly in

the report. Organisations should also

make an effort to show how the

organisations’ strategy addresses the

needs of their stakeholders.

Exemplary practice

Petronas Gas Berhad Annual

Report 2016 pages 224 - 225.

The business model of Petronas

Gas Berhad creates value for their

stakeholders through the depiction of its

integrated value chain. The disclosure

clearly links the inputs, outputs and

outcomes of the business process for

the key stakeholders.

MATERIALITY

Observations

The materiality determination

processes were not clearly articulated.

There was also a lack of disclosure

of how material matters affect the

organisation’s value creation.

Exemplary practice

Telekom Malaysia Berhad

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Integrated Annual Report pages

54-55.

There was robust discussion

on the identification of Telekom

Malaysia Berhad’s material issues. The

disclosures covered the identification

process, the linkages between the

organisation’s material assessment and

its sustainability strategy. The material

issues were also set out on a materiality

radar for ease of understanding.

CONCISENESS

Observations

Organisations should reduce or

eliminate as much as possible the use

of generic or boilerplate disclosures.

These disclosures add bulk to the

annual report but provide little value

to the user. In achieving conciseness,

organisations should also make greater

use of infographics in place of lengthy

paragraphs.

Exemplary practice

Sime Darby Berhad Annual

Report 2016 pages 16-23.

As a conglomerate with operations

in the plantation, industrial, motors,

property and logistics sector,

Sime Darby Berhad succeeded in

communicating succinctly. The flow

of information is logical and easy to

follow. The organisation also makes

good use of infographics throughout

the report, making it easy for readers to

understand.

RELIABILITY AND

COMPLETENESS

Observations

Disclosures should be more

balanced, with disclosures providing

both positive and negative outcomes.

There was also a lack of disclosure on

the mechanisms that the organisations

employed to ensure the reliability of the

information in the annual report.

Exemplary practice

Tenaga Nasional Berhad

Integrated Annual Report 2016

pages 40-41.

Disclosures were balanced with

Tenaga Nasional Berhad openly

disclosing their “lost time injury

frequencies” and accident rates. In

addressing these challenges, Tenaga

Nasional Berhad also highlighted its

safety and health initiatives.

Telekom Malaysia Berhad

Integrated Annual Report page

(111).

The preamble to Telekom Malaysia

Berhad’s annual report indicated to what

extent assurance had been obtained

over the reliability and completeness of

the information provided in the annual

report.

CONSISTENCY AND

COMPARABILITY

Observations

There was an overall lack of

benchmarking against industry

statistics and other comparable

organisations. Hard key performance

indicators should also be disclosed

to enable users to make informed

assessments. Disclosure of results

from prior periods will also assist

the stakeholders in gauging the

performance of an organisation over

time.

Exemplary practice

Sime Darby Berhad Annual



Report 2016 pages

32-111

Sime Darby Berhad reported

information in a systematic and

consistent manner, enabling

easy comparison against past

performance. Common industry

benchmarks and terminologies

were also used, further aiding

comparability.

The examples of good

practices given above are

to facilitate discussion of the

specific Guiding Principles and are not meant to be treated as the

“perfect” or the “only way” to articulate these principles. Instead, the

key takeaway is to observe how the winners have communicated their

unique value creation story and leave you inspired to craft your own.

The IR Awards adjudicators hope that these key observations will

provide additional guidance to the participants of NACRA and other

organisations looking to embark on their own IR journey.

Established by the Institute in 2014 upon the

recommendation of the Securities Commission

Malaysia, the Integrated Reporting Steering

Committee (IRSC or the Committee) focuses on

creating awareness and promoting IR in Malaysia.

The Integrated Reporting Awards category

was introduced in the National Annual Corporate

Reporting Awards (NACRA) in 2017. The key

observations identified during the review of the

NACRA 2017 submissions have been segmented

using the Guiding Principles from the IR

Framework as a basis for discussion.

To access materials on the Guiding Principles,

the Framework or to learn more about IR, please

visit https://integratedreporting.org/. The second

article in this two-part series, focussing on the

common findings analysed by Content Elements,

will be released in the next issue of Accountants

Today.

*for renewal of Practising Certificate, the PII policy/policies for member firm/s must be valid until 30 June 2019 and min. 20 CPE credit hours for 2017 has been updated in MIA record.

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accountants today june2018 · dr. nurmazilah served as session moderator, with panellists rashidah...

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