Malaysian Institute of Certified Public Accountants

In Malaysia, both the Audit Oversight Board (AOB) and Malaysian Institute of Accountants (MIA) are responsible for establishing quality assurance mechanisms in the jurisdiction. The AOB is responsible for reviewing audit firms that audit public interest entities (PIEs), while MIA is responsible for reviewing audit firms that audit non-PIEs. A memorandum of understanding is in place between the AOB and MIA, in the event that there is a firm that audits both PIEs and non-PIEs, where the responsibilities of both the AOB and MIA are clearly outlined to eliminate any instance of overlaps. All audit firms in Malaysia are required to be registered with MIA.

While MICPA is not required to conduct QA reviews of its members who are registered auditors, the institute has established a voluntary QA review mechanism that allows MICPA members to be reviewed by MICPA’s Financial Statements Review Committee. MICPA members who are auditors are also members of MIA and consequently are required to follow the rules established by MIA and the AOB. MICPA reports that its QA review mechanism incorporates a majority of the requirements of SMO 1 but gaps exist in the requirements related to the review cycle, corrective and disciplinary actions, and consideration of public oversight.

To support the implementation of quality control standards and to ensure that members are kept up to date on applicable standards, MICPA organizes ongoing training on ISQC 1 and other pronouncements issued by the IAASB. MICPA reports that since 2014, it has issued, maintained and updated an Audit Guide for Practitioners to assist members during their audit work.

In addition, since 2016, to enhance the audit quality of small and medium-sized practices (SMP), MICPA and MIA have in collaboration with the MIA have been operating the Quality Assessment Program, which is a continuing professional development program that aims to enhance the audit quality of SMPs.

In the next update of its SMO Action Plan, MICPA is to report on an plans to address the gaps identified in its QA review mechanism.

Current Status: Review & Improve

MICPA is responsible for establishing initial professional development and continuing professional development (CPD) requirements for its candidates and members. MICPA does not have its own qualification and therefore, administers and adopts the Chartered Accountants Australia and New Zealand (CA ANZ) qualification program, except for the module on taxation, to assess students who wish to become members of MICPA. The module on taxation, as reported by MICPA, is administered by the institute. MICPA has also developed other requirements for its members, including practical training and CPD that it reports meets the revised 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.

To keep members informed on updates to the standards, MICPA disseminates pronouncements and updates by the IAESB and other international standards. 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. In 2017, MICPA and the Malaysian Institute of Accountants organized a joint training on the Audit Guide for Practitioners and Illustrative Audit Working Papers publications. MICPA’s training calendar is located on its website.

In the next update of its SMO Action Plan, MICPA is encouraged to clarify if it participates in the international standard-setting process by reviewing and responding to exposure drafts issued by the IAESB.

Current Status: Review & Improve

MICPA is not responsible for adopting auditing standards in Malaysia, which are issued by the Malaysia Institute of Accounting (MIA) Auditing and Assurance Standards Board (AASB) and are based on the 2016 ISA. MICPA however, plays a role in the local standard-setting process by having representation on MIA’s AASB, which is responsible for adopting national auditing standards.

MICPA and MIA have formed a working group to create awareness amongst stakeholders in the country on the new standards on auditor reporting, and MICPA reports that the group is considering the various implementation challenges and how to address the issues arising. In addition to this initiative, MICPA, MIA and Bursa Malaysia have organized a briefing session to educate listed entities on the requirements of the new auditor reporting standard.

Additional activities by MICPA to support implementation of auditing standards 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 auditing technical releases and circulars. In July 2017, MICPA published the third version of the Audit Guide for Practitioners, which incorporates the revised ISA and ISQC 1, and conducted a joint training with MIA for members. Through the AASB, MICPA participates in the international standard-setting process by reviewing and responding to exposure drafts issued by the IAASB.

Current Status: Sustain

MICPA is responsible for establishing ethical requirements for its members and has adopted the 2016 IESBA Code of Ethics as the MICPA Code of Ethics.

To support implementation of the Code, MICPA organizes ongoing training for its members on the Code organized training for its members. MICPA also participates in the international standard-setting process by reviewing and responding to exposure drafts issued by the IESBA.

In the next update of its SMO Action Plan, MICPA is encouraged to report if it has incorporated the 2016 Code into its initial and continuing professional development program and provide examples or an overview of specific activities it has undertaken or will undertake on the new Code. In addition, MICPA is to consider if developing and adopting a unified Code of Ethics in Malaysia with MIA would prove feasible and beneficial for the profession as a whole.

Current Status: Review & Improve

MICPA does not have direct 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 plays a key role in the development of the Accountant General’s roadmap for the transition from cash-basis to accrual-basis accounting.

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 experience and 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.

In the next update of its SMO Action Plan, MICPA is encouraged to clarify the government’s timeline to complete the transition to accrual-basis accounting in Malaysia. As there are MICPA members in the public-sector, the institute is encouraged to report on activities it has undertaken to keep members updated on updates by the IPSASB.

Current Status: Review & Improve

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

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

MICPA reports that upon admission to membership with the institute, members are provided with the institute’s constitution, which includes provisions and processes regarding I&D.

In the next update of its SMO Action Plan, MICPA is encouraged to consider collaboration with other accountancy profession regulators on I&D.

Current Status: Review & Improve

MICPA has no responsibility for the adoption of accounting standards that are adopted by the Malaysian Accounting Standards Board (MASB). MICPA focuses on providing guidance on the implementation of IFRS, 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 FRS. Furthermore, MICPA educates its members on MFRS by sharing information with its members, trainings, and offering technical assistance to members 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.

In the next update of its SMO Action Plan, MICPA is encouraged to report on the types of continuing professional development it offers to members on accounting standards.

Current Status: Review & Improve