Lemah Temir - A re-visit

Malaysia is a multi religious and cultural society. It celebrates many special occasions which coincide with the religions and cultures of its citizens in addition to the more global holidays such as the New Year. While this could be considered a challenge by many employers, employees consider the many holidays as opportunities to take a break from their stressful daily routines.

Over the Thaipusam holiday, we had a family trip to Lembah Temir, around an hour drive from Kuala Lumpur. Located within a palm oil plantation in Raub, Lembah Temir provides visitors with a serene environment, with trees and streams within the compound. This was our second trip to this privately owned place. It is only available to friends and relatives of the owner who built a number of chalets for the benefit of his guests.

I hope the photos and videos here would provide you with some idea about what you could find in this peaceful place.

One of the streams at Lembah Temir

Water flowing down from the waterfall

A symbiotic relationship

One of the native inhabitants of Lemah Temir

Audit value is key to resolving issues of retention of accounting talent

MIA
23/01/2013

Transforming the perception of audit value is the key to optimising accounting talent in audit firms, says the Malaysian Institute of Accountants.

Communicating the true value of audit and assurance services, and closing the audit expectations gap that separates clients and audit firms is the key to resolving the on-going talent retention challenge for the accountancy profession, said the Malaysian Institute of Accountants (MIA) in its initial feedback to the 'Optimising Talent in Accounting Firms' recent survey jointly released by the Audit Oversight Board (AOB) and the Association of Chartered Certified Accountants (ACCA) Malaysia.

MIA CEO, Ms Ho Foong Moi

Unsurprisingly, the survey found that factors like opportunities to gain diversified experience, high future earning potential, job security, competitive compensation, career development support, and optimum work-life balance are pivotal to talent attraction and retention.

"MIA is well aware of these expectations from many years of engagement with its members and stakeholders. Nevertheless, we welcome these findings which reaffirm the challenges and shortcomings facing the profession in the Malaysian environment," remarked MIA's Chief Executive Officer, Ho Foong Moi.

However, the talent challenge cannot be addressed in isolation. In MIA's opinion, the issue of attracting and retaining talent in accounting firms cannot be resolved without concurrently addressing the perception of audit value among stakeholders, particularly audit clients.

"Industries are typically reluctant to pay competitive fees for audit and assurance services. In the experience of local audit firms, companies usually negotiate to bring down audit fees, treating audit and assurance like a commodity rather than a value-added service. Indeed, it is commonly believed that the level of audit fees in Malaysia is the lowest audit fee structure among ASEAN and Asia-Pacific markets," explained Foong Moi.

"Inadequate fees are one reason that audit firms are constrained from investing in talent and are unable to pay competitive salaries to retain staff. This results in inequitable distribution of work. In the long run, audit quality may declines."

However, the profession too is partly to blame for perpetuating the low-fee and low-value audit model.

"Audit firms should refrain from undercutting one another to win market share. They should also refrain from accepting low-fee low-value compliance assignments to educate the market that audit and assurance services are high-value services which deserve competitive fees," said Foong Moi.

"Value, not volume, is the key to erasing this mismatch between auditors and clients."

"MIA firmly believes that the solution to talent sustainability boils down to transforming the perception of the value of audit and communicating the value of audit in order to close the expectation gap between clients and audit firms," stressed Foong Moi.

"If audit firms and the profession as a whole are able to convince corporations about the value of the audit proposition, the entire audit eco-system will be able to move up the economic value chain," she said.

Promoting audit and assurance services as high-value and high-quality premium services should generate higher revenues and enable firms to invest more resources in competitive compensation and defined career development paths, two of the `wants on the bucket list' in the AOB-ACCA report.

This would spur a virtuous cycle whereby more talent can be recruited and retained to increase the audit talent pool. Augmenting audit talent would enable more equitable distribution of work and thus, a better work-life balance, another key factor for talent retention highlighted in the report.

Currently, MIA has embarked on key initiatives to rebrand and differentiate audit and assurance services. Internally MIA has set up a special taskforce which is responsible for creating awareness and communicating the true value and benefits of audits in order to raise the market perception of audit and assurance services.

At the same time, MIA is actively collaborating with our stakeholders such as fellow regulators, institutions of higher learning, professional accountancy bodies and firms to develop a sustainable talent pool. One key focus area is uplifting accounting education in order to produce higher numbers of qualified and competent accountants.

"This is critical because the demand for qualified accountants remains buoyant and is anticipated to increase over the next few years. The Government and the economy are in need of highly competent accountants and financial talents to support Malaysia's economic transformation programme (ETP) towards becoming a high-income and developed nation by 2020," said Foong Moi.

At present, more than 29,000 MIA members are working in a wide spectrum of businesses and industries, both in Malaysia and cross-border.

"Our country is not short of young talents. What is needed is a concerted effort by all quarters to nurture and develop these talents into a competitive professional workforce," she concluded.

Asean audit regulators need to work together prior to AEC

KUALA LUMPUR: Asean audit regulators are increasingly working together to create consistency and address industry challenges in the region.

According to Malaysia's Audit Oversight Board (AOB) executivechairman Nik Hasyudeen Yusoff, collaboration among audit regulators is crucial to improve audit quality in the region.

Pointing to the imminent formation of the Asean Economic Community (AEC), when regional markets were supposed to be more liberalised, Nik Hasyudeen said it became even more important for regulators to work together to ensure information shared across countries is properly audited and adopts consistent standards.

In an exclusive interview in conjunction with the 2nd Asean Audit Regulators Group Forum held in Malaysia recently, Nik Hasyudeen, together with Singapore's Accounting and Corporate Regulatory Authority chief executive Juthika Ramanathan and assistant chief executive Julia Tay, and the director of the Accounting Supervision Department of the Securities and Exchange Commission of Thailand Thawatchai Kiatkwankul, spoke to StarBiz on some of the critical issues faced by the industry.

(From left) Nik Hasyudeen, Tay, Juthika and Kiatkwankul speaking to StarBiz

Below are excerpts of the interview:

What are the priority issues for improving the work of audit firms in your respective countries?

Nik Hasyudeen: In Malaysia, one of the things we always emphasise is the tone set by the leadership of audit firms. We recognise that for a good, high-quality audit to be performed, the leadership must be committed.

They have to invest in the necessary resources such as human capital, and the leaders have to make sure they are independent of their clients.

Every year, we conduct inspections on audit firms and engage the larger ones to discuss critical issues facing the industry, including setting the right tone and implementing a monitoring system to ensure quality.

What we're trying to do here is ensure that audit firms develop a very strong tone and culture on a quality that is supplemented by a sound framework of monitoring system.

All stakeholders (and not just the regulators) have a role to play in ensuring a healthy financial reporting ecosystem. Directors and preparers at company-level, for instance, have to ensure that their financial statements are prepared in compliance with the required standards.

Juthika: In Singapore, we are also looking at the tone set at the top and the emphasis on quality work.

The other area that we're looking at is improving professional scepticism. We want to encourage greater engagement between auditors and their clients to ensure that there is better contribution to the work that is being audited.

We also put a lot of emphasis on compliance with financial statement standards, and we are looking at educating company directors on their responsibility to prepare good sets of financial statements.

Kiatkwankul: Our priorities are pretty much the same as what Juthika had just mentioned.

The audit oversight system is new for our country, but we concur with the fact that the tone at the top is very important. 

What do you expect to come out of the collaboration among Asean audit regulators, and what are the key issues to address?

Nik Hasyudeen: One of the main objectives is ensuring consistency among audit regulators. This is important to facilitate business, as many companies nowadays operate in more than one jurisdiction. For instance, we cannot have several different rules and definitions on the same subject.

It's important for regulators in the region to work together, especially with the AEC coming into force in 2015.

When markets become more liberalised, and information has to be shared across countries, it becomes even more important to ensure that the financial statements are audited with the same rigour and adopt the same standards.

Juthika: We can share best practices and learn from each other the developments in each of our jurisdictions. There's a lot of learning and sharing which we find very useful.

Sometimes, different issues surface in different countries at different points of time. By sharing with each other developing issues, it helps us to understand what is on the horizon and how to tackle it based on the experiences of other regulators.

We also play a role in trying to encourage our fellow Asean countries to set up similar oversight bodies. By getting them to participate in our workshops, they then shorten the learning curve, as they would learn what is to be expected and the issues to be overcome in the early days of setting up such a body.

Tay: In the longer term, we hope that with the larger number, we can have a bigger voice at Ifiar (International Forum of Independent Audit Regulators).

(Ifiar is a global body of regulators based in London. It currently has 44 member countries, including Malaysia, Singapore and Thailand.)

There may be certain issues that are unique to this region. We think that if we have a combined view, we can bring that to Ifiar and across the global leadership of the firms we regulate. In a way, we think that the issues we face can then be brought to a higher level of attention and the speed in which it can be addressed can be improved.

What are the most common challenges faced by the regional audit industry?

Nik: One common issue that we face in the industry, especially in Malaysia and Singapore, pertains to the availability of talent and the ability of firms to retain talent. As in many industries, having the right talent is critical because in order for a good job to be done, the firm must have good people.

Another issue that we are concerned about is the level of professional scepticism among auditors in the region. This is one thing that we're currently discussing. We hope our auditors can exercise their professional judgement better when it comes to auditing clients' financial statements to enhance reliability of the information given.

Tay: The point is for auditors not to take things at face value, but to probe with a questioning mind. Professional scepticism comes with experience, and therefore, we are concerned about talent. Accumulation of experience gets one to a higher level of scepticism.

Juthika: Many of the issues that the industry faces are inter-related. Professional scepticism, which is a key element of quality audit, is an important issue, but it could be linked to the talent issue.

We are concerned about whether firms here are able to retain people with the right level of expertise and experience, as the business environment here becomes more and more complex.

Talent is a critical foundation for good audit work. You must have people with the right experience and capability to support critical issues like professional scepticism to provide quality audit.

We hope that an independent survey that is being done in Singapore, Malaysia and Thailand (in collaboration with the Association of Chartered Certified Accountants or ACCA) will help firms understand why people remain or leave an audit firm, and what they should do to manage talent effectively.

What are some of the things firms can do to address the issue of talent?

Tay: From our experience, we can see how firms are trying to innovate and find new ways to improve the workflow.

For example, many firms have gone into electronic work papers to reduce manual work and save time. This is because one of the factors that drove talent away from the industry in the older days was the mundane nature of the work and the long working hours.

Another thing that we see firms trying to do is put into place a standardised methodology training so that everyone in the firm thinks consistently and people do not have to rework what another colleague has done.

Nik Hasyudeen: We need to know how to tap the female talent pool. We now have significantly more female accounting graduates than male. Firms have to be realistic in terms of the talent pool that we have.

At present, there are not many women at the higher levels of management in audit firms.

Maybe we should encourage firms to admit more women as partners to attract talent and retain experience.

Golfing Around Jakarta

To some golf is only for "Golongan Orang Lemah Fikiran" or those with weak minds. Well, maybe I am one of them but somehow I am attracted to the sport. This is one of the sports where you are competing with yourself rather than with your golf partners as your performance is determined by you and you alone. Off course the course you are playing will also influence your game as some courses are tougher than others. Some are well kept and designed while there are golf courses where improvements could be made.

Indonesia is one of the golf destinations in this part of the world. There are many golf courses around Jakarta alone. We can have courses near the city and there are many nice and challenging courses around greater Jakarta. Some of my friends do go to other provinces in Indonesia such as Surabaya and Bandung.

Emeralda Golf Club

The guards of the Par-3 hole at Emaralda

Most of the courses in Indonesia are well kept. I suppose the availability of labour and their cheap cost allows many courses to be maintained very well with nice landscaping. I like the mountain courses. Although they are normally tougher, the geography and scenery would certainly provide you with some peace of mind, even when you are not playing that well.

Landscaping at Kelub Golf Modern

Golf is very important for business in Indonesia. Many deals are conceived and agreed on golf courses. This is the reason why many Indonesian executives play golf. I believe this is also happening in many other places.

Other then golf courses, you can find many places offering a wide range of Indonesian food which are mouth watering. I went to play at Emeralda Golf Club, just at the outskirt of Jakarta, towards Bogor. A part from playing at a world class course, this club is attractive because you can find a specially grilled Ikan Patin at one of the restaurants near the club. Even at 4pm, the restaurant was full with locals enjoying themselves there.

Patin fish grilled in bamboo!

The grill section at Rumah Ikan Bakar Kalimantan

I played my last game for 2012 in Jakarta and played my first game in 2013 there as well. Looking forward to more golfing opportunities there this year.

Have a great 2013!