This article was first published in the January 2014 Malaysia edition of Accounting and Business magazine.
This year looks set to be an eventful one for accountants in Malaysia. The expected unveiling of an action plan for the Malaysian accountancy sector will by itself be a major turning point, but that is not all. In 2014, we will also see the run up to the introduction of the goods and services tax (GST) and perhaps the enactment of a new Companies Act.
The coming 12 months will likely be a period of learning, adjustments and, hopefully, improvements. Here is a look at several anticipated developments this year that will have significant impact on accountants and businesses in Malaysia:
A plan for a stronger profession
Following the World Bank’s assessment of the accounting and auditing environment in Malaysia, the Committee to Strengthen the Accountancy Profession (CSAP) was formed last year to come up with strategies and measures to bolster the profession and to enhance its capacity to raise the country’s competitiveness.
Audit Oversight Board executive chairman Nik Mohd Hasyudeen Yusoff chairs the multi-agency committee. Its other members represent the finance ministry, Bank Negara, the Companies Commission of Malaysia (CCM), the Accountant General’s Department and the Malaysian Institute of Accountants.
The original target was for the CSAP to release a report by the end of last year. However, the task of gathering input from stakeholders has taken longer than planned. That may not be a bad thing. If the action plan is to be a game changer, it should take into account the spectrum of interests and views.
Getting ready for GST
As part of the country’s biggest tax restructuring ever, the GST will be imposed in Malaysia from April 2015. This will surely be preceded by plenty of dialogue, education, training and investments in systems. The services of indirect taxation specialists will be in great demand, and businesses will rely on their accountants to ensure a smooth transition to the GST regime.
Corporate law revamp
Almost a decade after the start of the Corporate Law Reform Programme, which centred on the review of the Companies Act 1965, the authorities are ready to replace the legislation. In July last year, the CCM published an exposure draft on the Companies Bill. The consultation period has ended, and presumably the Bill is being tweaked to incorporate some of the feedback. It will probably be tabled in Parliament this year.
Resolving transitional issues
The Malaysian Accounting Standards Board has thrice allowed agriculture and real estate companies to defer the adoption of the Malaysian Financial Reporting Standards Framework. This is because the International Accounting Standards Board is still working out the issues arising from standards that apply to plantation and property players in Malaysia.
A satisfactory resolution will help demonstrate that the global convergence of accounting standards is indeed practicable.
A few years ago, the Malaysian government decided to switch to outcome-based budgeting (OBB) so that its budget allocation and expenditure would be more efficient and effective. The OBB approach emphasises the impact and effectiveness of projects and programmes.
This requires a focus on value for money and on projects with high multiplier effect.
This year, for a start, the performance of three ministries will be evaluated based on OBB. It will be a test of this new way of budgeting.
Errol Oh is executive editor of The Star