Malaysian Institute of Certified Public Accountants

In Malaysia, the Audit Oversight Board (AOB) and the Malaysian Institute of Accountants (MIA) are responsible for establishing and operating quality assurance (QA) mechanisms in the jurisdiction. Both systems are reported to be in line with SMO 1 requirements.

MICPA membership is voluntary for any registered auditors, therefore MICPA is not required to conduct QA reviews of its members who are registered auditors. MICPA members who are auditors are also members of MIA and consequently are required to follow the rules established by MIA and the AOB. However, the institute has established a voluntary a review mechanism that allows MICPA members to be reviewed by MICPA’s Financial Statements Review Committee.

To support the implementation of the upcoming quality management standards and to ensure that members are kept up to date on applicable standards, MICPA is organizing ongoing training on ISQM 1, ISQM 2, and other pronouncements issued by the IAASB. MICPA is also currently producing guidance aimed at helping practitioners implement ISQM 1. The institute targets completing the guidance by mid-2022. In addition, since 2014, MICPA has issued, maintained, and updated an Audit Guide for Practitioners to assist members during their audit work.

Since 2016, to support small and medium-sized practices (SMP), MICPA has collaborated with MIA to operate a Quality Assessment Program, which is a continuing professional development program that aims to enhance the audit quality of SMPs. MICPA’s role under this collaboration is to carry out reviews of financial statements and the implementation of ISQC 1 and/or ISQM 1 while MIA is responsible for sourcing participants for the program.

Since 2020, MICPA has issued technical releases aimed at enhancing audit quality and quality of financial reporting. In 2021, MICPA collaborated with vendors to produce audit software which incorporates the MICPA Audit Guide for Practitioners and MICPA Illustrative Audit Working Papers aimed at enhancing the audit quality of SMPs in Malaysia.

MICPA has demonstrated an ongoing process to maintain its level of fulfillment with the SMO 1 obligations and is committed to continuous improvement.

Current Status: Sustain

In Malaysia, Initial Professional Development (IPD) and Continuing Professional Development (CPD) requirements for professional accountants are set independently by the two Professional Accountancy Organizations in the jurisdiction: the Malaysian Institute of Accountants (MIA) and the Malaysian Institute of Certified Public Accountants (MICPA).

MICPA is responsible for establishing initial professional development and continuing professional development (CPD) requirements for its candidates and members. A Memorandum of Understanding (MoU) was signed between MICPA and Chartered Accountants Australia and New Zealand. MICPA adopts the Chartered Accountants Australia and New Zealand (CA ANZ) qualification program (except for the module on taxation). The module on taxation is administered by MICPA to assess local knowledge. MICPA has also developed other requirements for its members, including practical training and CPD that it reports meets the latest IES. The institute reports that it also works with local universities and higher institutions to review their respective curricula. MICPA members are required to submit an annual declaration of CPD fulfillment and record completed CPD. MICPA audits compliance with CPD requirements through random sampling. MICPA’s training calendar is located on its website.

To keep members informed on updates to the standards, MICPA disseminates information and resources from IFAC, and other international education-based entities. MICPA has also organized a joint forum with CA ANZ on Bridging the Gap between Accounting Research and Professional Practice and organized other seminars and CPD related to financial reporting and the applicability of the international standards.

Due to the COVID-19 pandemic, MICPA switched to offering its examinations online. In addition, MICPA has also conducted virtual CPD programs; a Module Insights Series which covered all subjects in the MICPA program; and offered mentoring to students by Young MICPA Members and recent graduates who shared experiences and insights into the program and their careers. MICPA is also producing a student/candidate-focused newsletter covering technical and career related content.

Current Status: Sustain

Under the Securities Commission Act 1993, the Auditing Oversight Board (AOB) is given legislative authority to set auditing standards. The AOB, however, has delegated this responsibility to the Malaysia Institute of Accountants (MIA).

MICPA is involved in the local standard-setting process in collaboration with MIA. MICPA discusses and deliberates exposure drafts issued by the IAASB with a group of practitioners that come from various sizes of firms as well as non-practitioners. Feedback from these discussions feeds into comment letters issued to the IAASB.

To support implementation of the standards among members, MICPA organizes various training courses on the requirements of the IAASB standards. In 2020 and 2021, training has focused on specific standards such as ISQM 1, ISQM 2, ISA 220, ISA 315, and ISA 540. MICPA has also supported firms to improve on areas highlighted in the AOB annual report such as ISA 240, ISA 530, ISA 570, ISA 600, and ISA 701. Additionally, MICPA provides training courses on the revised assurance standards ISRS 4400.

Other activities by MICPA include ensuring that updated and new pronouncements by the IAASB are included in MICPA’s Members Handbook; organizing training courses and continuing professional development on ISA; and developing guidance such as audit and technical insights. For example, it has issued technical insights on: Audit Considerations in Respect of Going Concern Due to the Impact of COVID-9; COVID-19 Determining Materiality; COVID-19 Pandemic: Considerations for Assurance Engagements – Inventory Observations and COVID-19 Pandemic: Performing Roll-Forward and Roll-Back Procedures.

To support smaller firms, in 2020 and 2021, MICPA updated the Audit Guide for Practitioners incorporating all the newly issued and revised ISA. MICPA has also updated the Illustrative Audit Working Papers.

To support the implementation of ISQM, MICPA is currently producing guidance namely, ISQM1 Guide and Illustrative Manual which aligns with all the requirements of ISQM1.

Current Status: Sustain

In Malaysia, ethical requirements for professional accountants are established by the two professional accountancy organizations (PAOs): the Malaysian Institute of Accountants (MIA) and the Malaysian Institute of Certified Public Accountants (MICPA). Both PAOs set ethical standards under the oversight of the Audit Oversight Board.

MICPA has adopted the 2020 International Code of Ethics issued by the IESBA. On an ongoing basis, MICPA works to ensure that its Code is updated to include updates from the IESBA. MICPA has included an additional section in its Code which outlines additional ethical requirements and provides guidance on specific matters relevant to members in public practice.

To support implementation, MICPA also participates in the international standard-setting process by reviewing and responding to exposure drafts issued by the IESBA.

Current Status: Sustain

Formed in 1946, the Department of the Accountant General of Malaysia is responsible for the accounting functions of both Federal and State governments in Malaysia and endeavors to comply with the requirement of IPSAS where possible.

MICPA does not have responsibility for defining public sector financial reporting requirements, which are set by the Government Accounting Standards Advisory Committee (GASAC). MICPA is represented on the GASAC and has been an active participant in the development of the Accountant General’s roadmap for the transition from cash-basis to accrual-basis accounting. This roadmap saw Malaysia transition from cash to accrual basis MPSAS (based on the IPSAS).

MICPA endeavors to promote IPSAS by sharing information with the Accountant General Department, reviewing exposure drafts and other consultative documents issued by IPSASB and submitting comments thereon, and by sharing expertise towards the implementation of accrual accounting among public sector entities in Malaysia. MICPA has also conducted training on IPSAS for some Ministries and State Accounting Departments in Malaysia.

Current Status: Sustain

MICPA is responsible for establishing an investigative and disciplinary mechanism (I&D) for its members and maintains a system to execute this process. The institute has conducted a review of its system and reports that it has incorporated all the requirements of SMO 6.

MICPA’s I&D system includes both an investigation and disciplinary committee. The investigation committee, comprising of five members from the council, investigates complaints and refers matters to the disciplinary committee. The disciplinary committee comprises five members from the council and two others who are members of a national PAO in the jurisdiction.

MICPA reports that upon admission to membership with the institute individuals are provided with the institute’s constitution, which includes provisions and processes regarding I&D. MICPA coordinates with other bodies, including MIA, on processes to evaluate cases where MICPA members are suspected of possible involvement in serious crimes and offences.

Due to the COVID-19 pandemic, MICPA has switched to conducting its I&D activities virtually. These changes were ratified in MICPA’s Constitution and By-laws with approval from the Companies Commission of Malaysia.

Current Status: Sustain

Under the Financial Reporting Act 1997, the Malaysian Accounting Standards Board (MASB) was established as an independent authority to develop and issue accounting standards for the preparation of financial statements. Accounting standards for entities other than private entities are the Malaysian Financial Reporting Standards (MFRS), while private entities are required to apply the approved accounting standards for private entities (MPERS). MFRS framework is developed identical to IFRS and is updated on an ongoing basis. The MPERS is word-for-word IFRS for SMEs except for requirements related to real estate.

MICPA focuses on providing guidance on the implementation of MFRS, reviewing drafts and issuing comments on drafts issued by the MASB, and is involved in the standard-setting process of MASB by participating in its working groups and task forces.

In addition, MICPA indicates it participates in the Malaysian Institute of Accountants’ Financial Reporting Standards Implementation Committee to discuss issues related to MFRS and IFRS. Furthermore, MICPA educates its members on MFRS by sharing information, trainings, and offering technical assistance to facilitate proper implementation of the standards.

Lastly, aside from participating in the local standard-setting process, MICPA also participates in the international standard-setting process by reviewing and responding to exposure drafts issued by the IASB.

Current Status: Sustain