This article was first published in the January 2020 Malaysia edition of Accounting and Business magazine.

The clock is ticking fast for Huang Shze Jiun, who was elected president of the Malaysian Institute of Accountants (MIA) last August. Since members elected to MIA’s council can serve a maximum of four years, Huang – who was first elected to the council in 2016 – must leave his post in September.

At the top of the institute’s to-do list is to keep pressing for pivotal reforms to the regulations governing the profession in Malaysia. MIA’s powers are enshrined in the Accountants Act 1967. ‘The act is very old, even older than me!’ says Huang, who is also managing partner at Baker Tilly’s Johor office. ‘How can it then govern the profession and the institute in this digital age where things are changing so fast? We need a new act which is more dynamic and versatile.’

A new act will address MIA’s structural weaknesses and constraints, and strengthen its regulatory powers and advocacy on critical matters like enhancing governance and driving digital transformation of the profession. For example, the current act stipulates a step-by-step postal voting process for elections, from sealing the envelope to posting ballots. ‘How can we go out and tell members that we need to be digitally savvy and up-to-date when our own elections are by post?’ Huang asks.

Other key proposed reforms include the appointment of independent non-members and non-accountants to serve on MIA’s investigative and disciplinary boards and the imposition of fines that are more punitive than the current ceiling of RM5,000. These will strengthen the enforcement and regulatory process, and ultimately boost governance and trust in the profession.

MIA is steadfastly engaging with the Ministry of Finance to get the new act passed. ‘This has been a long-standing issue and we have been in deliberations and talks throughout,’ Huang says. ‘If it can be done within next year that would be great. If not, we hope to lay the groundwork for it to be passed in the near future.’

In addition to regulatory reforms, MIA has stepped up advocacy for digital transformation across the profession. ‘We have released the MIA Digital Technology Blueprint, and have been conducting many technology-related CPD programmes. Moving forward, we will talk about how we can support members in implementation and to make a real impact on how they can run their businesses.’

SMP champion

Digitalisation is especially important for transforming small and medium practitioners (SMPs) ‘from being audit-reliant to being able to provide value-added services independent of audit’, Huang says. Guidance on adoption is imperative because many firms, especially more established ones, are led by very senior practitioners, he adds. But it’s not easy getting buy-in as accountants who are ‘prudent by nature’ might be deterred by challenges of cost and unpredictable returns: ‘The returns might not necessarily be slow, but can be hard to quantify or predict since the pay-off is not usually monetary in nature.’

One barrier is that many current technologies are available only on a subscription basis, which is a long-term cost. To commit, accountants will want to see immediate or fast results, but these might take time to manifest. ‘Very often, they expect a quick fix. They buy the software and implement it, but don’t give it time to gestate or to deliver the supposed benefits,’ explains Huang, who is familiar with the issues as he himself is from an SMP background.

To bridge adoption and expectation gaps, MIA engages with SMPs to identify their current level of technology adoption (ranging from those who are very savvy to firms still using pencil and paper). ‘We communicate to them how tech can help them add value to their clients, improve their work processes and alleviate challenges such as manpower and the recruitment and retention of talent within the country.’

The next step is operationalising the Digital Technology Blueprint to help members implement and access artificial intelligence (AI) tools, in order to go beyond traditional vouching to value-added analysis of accounts, extraction of figures and identification of key risk areas. ‘This eliminates a lot of the basic or menial tasks and makes the profession more exciting,’ Huang explains. ‘We do so much more than debits and credits. The real fun is when we identify issues and challenges to add value.’

Across the profession, accountants will face many more novel challenges and pressures to redefine the value they bring in the emerging digital economy. As the new landscape places a lot of reliance on systems, ‘it becomes very difficult for accountants to add value in the traditional way’, says Huang. For instance, it is no longer feasible for accountants to conduct ‘audits around the machine’, checking vouchers and sampling, given the tremendous volumes of transactions. ‘We can no longer pretend that the machine doesn’t exist,’ he says. ‘We have to able to run IT audits and to understand the system, to audit the system rather than ignoring the system.’

Digital dilemmas

Changing regulations in the digital economy likewise carry tremendous impacts on business and taxation that will affect the profession, notes Huang. In a borderless economy where services are provided online, how will accountants determine ‘at which point and in which jurisdiction you record the transaction and pay the tax?’ Malaysia recently unveiled a tax on digital services in its Budget 2020, but implementation is easier said than done. ‘How do you compel firms that are not registered in Malaysia and not formed in Malaysia to register and pay the service tax in Malaysia when the services they provide are through the internet?’

Within his own practice, which is a member of the Baker Tilly network, Huang has adopted audit and tax computation software, and tries to go paperless and digital as much as possible in terms of communications, data sharing and preparation of audit working papers and accounts.

‘We are also looking into AI audits but that will take time as we want to see the technology mature.’ But he relates that technologies such as OCR (optical character recognition) and machine learning are already enabling practitioners to automate menial tasks such as double entries, freeing them up to focus on high-end services such as analysis of data and advisory.

Huang also notes that once technologies like blockchain are implemented in the finance function, ‘the way we audit will become different. It’s no longer about looking at the transaction because with blockchain, transactions will become immutable. The value of audit then will be to assess whether things make sense. Although a transaction is correctly entered, it might not be logical and might be hiding certain flows or misuse of funds.’ Judgment and professional scepticism, which are the domain of accountants, will still be required to assess the substance and veracity of the transaction.

Implementation won’t be immediate, though. ‘The challenge with blockchain is that it must be used at every step along that particular value chain. If one part doesn’t use it, you can’t capture the entire transaction. And in order for it to be implemented there needs to be buy-in from every stakeholder within that particular value chain. How do you get everybody to come on board and adopt blockchain?’

Huang adds that it is also vital for the government, state agencies and multinationals to implement the process, co-opting their vendors and stakeholders into the blockchain ecosystem. ‘The basic rule would be: if you want to do business with me you have to come on board into the blockchain environment,’ he says, adding that a good starting point would be for MIA to implement blockchain within its engagements with members – for example, by ensuring that every CPD certificate it issues be traceable to a blockchain to negate the risks of fake certificates.

Other than transformation, stakeholder engagement will continue to be a top priority, as strategic collaboration and leadership is fundamental to MIA’s business model. In this, ACCA is a valued partner: ‘We collaborate through various committees and work together to engage various stakeholders,’ explains Huang.

Huang jokes that his father – also an ACCA member – ‘conned’ him into taking up accountancy by not bringing the work challenges home and so making it look like ‘an easy life’. The gains, he says, are two-pronged. ‘ACCA encourages deep and critical thinking,’ he says. ‘It helps to build your confidence because you have strong technical knowledge and the skill sets to convey that knowledge.’ Huang also credits ACCA’s strong professional networking and numerous events at central and regional level with helping to ‘build bridges and connections.’

Stakeholder engagement is equally vital to ensuring inclusivity across MIA’s membership. Huang is committed to making the institute ‘more relevant for members throughout the country. At the moment, we are often perceived as being Klang Valley-oriented and Kuala Lumpur-centric, so we hope to better assist those in the outskirts with their challenges.’

Finally, as a relatively young professional himself, Huang hopes to better engage with younger members and attract potential ones by demonstrating accountancy’s future relevance: ‘There is a lot of talk in the market whether accountancy has a future. Is it a dying profession that will be replaced by AI and technologies?’

‘Within the institute and the profession, we are very clear. This is not the end of accountancy. The profession has faced many challenges previously and become stronger. AI is not going to replace us; it is a tool that we can use to evolve and provide greater value to our stakeholders.’

Nazatul Izma Abdullah, journalist