Showing posts with label Accounting. Show all posts

Thursday, June 2, 2022

UK audit shake-up after spate of corporate failures; The two sides of the EY break-up

UK audit shake-up targets big firms after spate of corporate ...

The Big Four

Britain to shake up audit market after Carillion crash

Britain to shake up audit market after Carillion crash - Reuters

FILE PHOTO: A view of the London skyline shows the City of London financial district, seen from St Paul's Cathedral in London, Britain February 25, 2017. REUTERS/Neil Hall/File Photo/File PhotoReuters

UK Audit Shake-Up Targets Big Firms After Spate of Corporate Failures

LONDON (Reuters) - Britain set out sweeping reforms of big company audits on Tuesday after high-profile collapses at builder Carillion and retailer BHS in recent years hit thousands of jobs and raised questions about accounting quality.

The business ministry detailed changes to auditing and corporate governance that will be put into law, though the measures are unlikely to come into force until 2024 or later and smaller firms will be shielded from the new rules.

The reforms are in response to 150 recommendations from three government-sponsored reviews on improving auditing in a market dominated by KPMG, EY, PwC and Deloitte, known as the Big Four.

The new law would create a more powerful regulator, the Audit, Reporting and Governance Authority (ARGA), to push through changes set out by government.

In the meantime, the current watchdog, the Financial Reporting Council (FRC), will have powers to vet audit companies and ban failing auditors, the ministry said.

Britain will also review a European Union definition of "micro entities", which benefit from simplified accounts. They typically have a balance sheet of no more than 350,000 euros ($377,230) and employ no more than 10 people.

Loosening the definition would mean more firms saving money by filing simplified accounts, though it could raise investor protection concerns. Other reporting requirements will also be reviewed to help attract growth companies to Britain.

The FRC currently focuses on big listed companies, but ARGA's remit would expand to include about 600 private firms with more than 750 staff and an annual turnover of over 750 million pounds ($949 million), a higher threshold than initially flagged. BHS was unlisted.

NO UK SARBANES-OXLEY

To curtail the dominance of the Big Four, the top 350 listed companies would have to appoint a non-Big Four accountant, or allocate a certain portion of their audit to a smaller accountant such as Mazars, BDO or Grant Thornton.

The business ministry could introduce market share caps on the Big Four if there is no improvement in competition.

Directors of premium listed companies would also have to state why they think their internal controls are effective.

This would be done under Britain's "comply or explain" corporate governance code, which the FRC can change without legislation.

UK companies pushed back against enshrining in law a version of mandatory U.S. Sarbanes-Oxley rules, which force U.S. directors to personally attest to the adequacy of internal controls, and face prison for breaches.

"Lessons from Carillion and other recent company failures have been ignored, with little emphasis now on tightening internal controls and modernising corporate governance," said Michael Izza, chief executive of ICAEW, a professional accounting body.

FRC chief Jon Thompson said: "The Government’s decision not to pursue the introduction of a version of the Sarbanes-Oxley reporting regime is, the FRC believes, a missed opportunity to improve internal controls in a proportionate, UK-specific manner."

Big firms would also have to state what external checks, if any, were made on the reliability of their non-financial information in annual reports, such as risks from climate change.

Larger companies would have to confirm the legality of their dividends, a lesson from Carillion.

Source link

Insight - The two sides of the EY break-up

For its part, EY is under particular pressure due to its auditing of collapsed German payments firm Wirecard AG – although it’s not clear that a break-up would rid it of any liabilities arising from that failure. Perhaps EY is preempting tougher regulation.Or perhaps it just sees an opportunity to monetise some of it assets.

A possible split of EY into separate audit and consulting firms must confront the problem faced by all break-ups: How do you create attractive businesses out of both when one is likely to be seen as inferior?

Here, that would be the newly established standalone auditor. EY – or any Big Four accounting firm that attempts such a separation – has its work cut out to make pure-play audit a success.

The revelation by Michael West Media that EY is considering the move heralds a potentially seismic shift for the industry.

A succession of accounting scandals has long prompted attacks on the Big Four for earning fees from audit clients by selling consulting services such as strategy or restructuring advice.

There’s an inherent conflict of interest in offering these to the same executives whose homework you’re meant to be marking.

While regulatory scrutiny is forcing firms to tread carefully, creating distinct companies is the most reliable remedy.

The United Kingdom’s competition watchdog called for an “operational separation” of audit and consulting within the existing firms in 2019, stopping short of demanding full break-ups because of cost and complexity.

Perhaps EY is preempting tougher regulation.

Or perhaps it just sees an opportunity to monetise some of it assets.

One option under consideration is the sale of a stake in the consulting business to a private buyer or to the stock market, creating a windfall for EY’s current partners, according to the Financial Times. Demand would likely be strong.

Just look at the private-equity money piling in lately. PwC sold a tax advisory practice to Clayton, Dubilier & Rice for a reported US$2.2bil (RM9.6bil) last year, while KPMG offloaded its UK restructuring arm to HIG Capital LLC.

But what about the rump that remains?

While the underlying economics of the Big Four are opaque, there’s a widespread suspicion that consulting subsidises audit.

At the very least, the ability to share costs means audit fees are lower than they would be for a distinct firm, regulators have found.

Retaining talent

The biggest challenge is how a standalone auditor would attract and retain talent without offering an in-house career in consulting as an option.

Short-sellers and forensic investigators aside, checking company accounts is for many a laborious gateway to other roles.

Audit partners accused of getting it wrong have regulatory probes hanging over them for years (an investigation into Rolls-Royce Holdings Plc’s 2010 accounts only just closed).

No wonder juniors tend to jump ship to better paid and less risky careers in consulting or investment banking not long after they’re qualified.

So auditing will have to be made more attractive, both financially and culturally.

One place to start is expanding the function beyond checking financial statements to offering sophisticated checks on companies’ claims on non-financial performance such as climate and social impact.

When the United States Securities and Exchange Commission is clamping down on greenwashing by investment funds, it’s clear the future of environmental, social and governance investing rests on companies proving they’re not cooking the books on these issues too.

These public-interest assessments are going to be increasingly scrutinised by investors in future.

They are already offered under the umbrella of so-called assurance services, but ought to become a more developed part of corporate reporting.

That would involve transferring some skills over from the consultancy side. The trick will be to add in parts of the current consulting business that are relevant to a more modern vision of audit, without just recreating a new auditor-cum-consultancy.

Of course, separation won’t eliminate all the conflicts in audit.

The chief culprit is the way managers often effectively appoint the audit partners who are meant to be their policemen.

But the prize for stock-market investors is improved audit quality, and a break-up could support that.

The goal should be to create a virtuous circle.

Make audit more enticing as a long-term career, attract people who do the work better – and hopefully cut the number of blow-ups. — Bloomberg

Chris Hughes is a Bloomberg Opinion columnist covering deals. The views expressed here are the writer’s own.

Source link

Inside EY's break-up plan: why it could radically reshape the ...

EY plans to spin off audit business in shake-up for industry

Revolutionising accounting for a new era

School grades don't matter much?

Accounting firms PwC and EY start a trend in recruitment to help business and society

Big Four

Probe on ‘Big 2’ accouting firms: KPMG and Deloitte still on over 1MDB accounts

Financial scandals are pandemic too

Saturday, July 11, 2020

Financial scandals are pandemic too

QUESTION: What do Wirecard, Luckin and Hin Leong have in common, although all three are based thousands of miles apart in Munich, Beijing and Singapore respectively? Answer: Accounting and/or financial scandal?

That’s right, despite having seen numerous cases in the past with the likes of Enron, WorldCom, AIG, Lehman Brothers, Bernie Madoff and of course, our very own Transmile, the corporate world has not learnt its lessons as we continue to see scandal after scandal that rock markets and test investors’ nerves. Losses derived from these scandals are getting bigger and bigger, and is normally more obvious during trying times like an economic recession or at the height of an economic boom that has created a massive financial or stock bubble.

In the scheme of things that are related to financial or accounting scandals, it is common that they are carried out not just by one person but a host of others including third parties who are entrusted by shareholders to oversee the operations of a company.

This include potentially, not only the board of directors, but also lenders, auditors, investment bankers, regulators, employees and most often, the key management personal, especially the CEO, or other C-suite high-ranking officials.

In Wirecard’s case, the scandal was unearthed when the auditors could not locate some missing cash amounting to €1.9bil as it was trying to wrap up auditing the company’s finances for 2019. Kind of ironic when we think about it that Wirecard’s business model was in fact about transmitting monies electronically on behalf of banks to merchants as it was seen as a trusted source in the e-commerce space and yet it failed to account for its own cash.

Wirecard’s auditors in Germany, Ernst & Young (EY), had failed to obtain crucial banking information from a bank in Singapore. Interestingly, this was only revealed after Wirecard’s board actually commissioned a special audit as allegation of fraud was made by UK’s Financial Times in January. The newspaper said it suspected that Wirecard’s staff had inflated sales and profits to mislead its auditor, EY.

What was astonishing on Wirecard is how market had perceived the company. From a fintech start-up to one of Germany’s largest listed company with market capitalisation of €24bil. But despite its high profile status, short-sellers were going for the kill for years. Some of them have been shorting Wirecard since early 2000 while others at a later stage.

Even Germany’s financial regulator, BaFin, defended Wirecard against short sellers by investigating them on the grounds of market manipulation. Short sellers on Wirecard were confident that something was amiss on its financials and hence they were daring enough to take on large positions. However, it was only after the FT report, that BaFin turned around and started to investigate Wirecard instead. During this time, the auditors remained silent as they had vouched Wirecard’s financial statements for the previous years and right up to 2018. According to a Bloomberg report, EY accused its client of “an elaborate and sophisticated fraud” that allowed the monies to go missing.

In Hin Leong’s case, according to a PricewaterhouseCoopers (PWC) report, the company had overstated its assets by an “astonishing” sum of more than US$3bil, which consists of US$2.23bil in accounts receivables which have no prospect of recovery and another US$0.8bil in inventory shortfalls. The oil trading giant had also fabricated documents on a “massive scale” to conceal losses of some US$800mil accumulated over the past decade.

The PWC report also highlighted that despite posting losses in the past, the company paid out dividends totalling US$90mil in FY2017 and FY2018. Founded by tycoon, O.K. Lim, Hin Leong is one of Singapore’s oldest oil trading company but the volatility in oil prices especially in the Covid-19 environment probably resulted in them not being able to withstand the pressure.

By the time the company filed for bankruptcy on April 17, it was revealed that it owed US$3.85bil to 23 lenders. Despite the financial scandal and even after it had filed for bankruptcy, its auditors, Deloitte, stood firm on the quality of its audit carried out “based on the information provided to them at the time”.

From Beijing, Luckin is another scandal that rocked investors as the coffee chain store, a.k.a. China’s Starbuck, after an internal investigation, revealed that the company’s revenue and expenses were inflated. Its co-founder and Chairman, Charles Zhengyao Lu, had pledged shares of the company for a margin facility amounting to US$300mil and as the scandal unfolded, its share price collapsed. Luckin, founded just three years ago and deemed as one of China’s brightest young start-up, raised some US$645mil in its US initial public offering last year and was aggressive in its expansion programme. The company had also dismissed its CEO, COO and some other employees reporting to the C-suite officers.

We all know that scandals arose due to pure greed and this greed is driven by financial interest of persons involved either via the value of their shareholdings, or in the case of Hin Leong, a pure personal interest as the company was privately owned. In Luckin, the company’s ambitious plans to take on its number one rival was perhaps the very reason for its downfall while the pledging of his shares to bankers probably provided him an added reason to falsify the accounting statements, in order to sustain the company’s share price.

Auditors are just auditors

Every time a scandal erupts, it is not uncommon for people to ask questions like “where was the auditor?” or “what was the auditor doing?” Whether it was Wirecard, Hin Leong or even Luckin, we cannot blame the auditors entirely for financial scandals as there are more hands in play to conceal facts, documents, evidence.

The job of an auditor is to audit financial statements to ensure they represent a “true and fair” view of the financial affairs of the company based on acceptable and recognizably accounting standards, for example the Malaysian Financial Reporting Standards (MFRS) and International Financial Reporting Standards (IFRS). Auditors used what is known as approved standards in auditing In Malaysia as well as International Accounting Standards when auditing a company.

It is not an auditors’ job to do a 100% audit of a company but, of course, if there are reasonable ground to be suspicious of the accounting practices, the auditor is required to probe further to gain assurance of the company’s financial statements. The question is then, how can we avoid such scandals occurring time and again?

Governance and independence are keys

Auditors are paid by the company and so are the board of directors. Globally, this has been the practice but in order to move away from “dependence” of a particular audit job and the fees that come with it, there needs to be a change. Auditors play a crucial role to ensure they remain independent and if their fees are dependent on the unqualified opinion, then it is obvious their role as an auditor has been compromised.

Regulations and laws ought to be amended to have auditors to be paid out of a pool of funds managed by an independent body. The choice of auditors needs to be made by this independent body and not at the whims and fancies of a company while the duration of an auditor being engaged by a company should be restricted to a term not exceeding five years.

The audit profession has its own shortcomings as it tends to be a breeding ground for young graduates for a few years before they move to greener “non-audit” pastures. Audit firms ought to have better compensation schemes for young auditors to remain in the profession to enable them to gain more audit experience. The high turnover in the field of audit is another reason why auditors sometimes do not understand a client’s business model or as to how transactions, whether suspicious or otherwise, are carried out, resulting in accounting scandals that are not easily detectable.

As for board of directors, they owe a duty to stakeholders to ensure that the affairs of the company are carried out in the best interest of the company and not individuals. As this column has highlighted before, the need for independent directors to not only be independent in form but in substance, it is their duty to ask the right questions to the board in terms of the finances of the company to ensure they represent the true and fair representation of the affairs of the company.

Independent directors should ask the right questions
New disclosure rules required for board of directors/senior management

From Enron to WorldCom and from Transmile to Luckin, there are few things we could learn. First, is in relation to the company’s financial performance and meeting market expectations. We see in these cases where companies try very hard to show sustained revenue and earnings to ensure that stock price do not collapse or pull back as there are personal interest associated to certain individuals (board members or C-suite officers) of the company. These individuals could have margin facilities taken up as they have pledged their shares to the banks.

When the market eventually finds out the truth about the affairs of the company, it is likely too late to realize what causes it in the first place. But of course, investigations later would reveal the level of personal interest associated with the scandal itself as the persons have financial interest in ensuring the company’s stock price remains elevated.

To overcome this, regulators or even the Companies Act, 2016, should be amended to ensure full disclosures are made publicly as to the number of shares that are pledged by board members as well as C-suit personnel on a quarterly basis as this will provide some guidance to investors as to the level of personal interest involved and for the auditors to be more mindful and to probe further if the situation warrants it.

Of course, the investment research fraternity ought to take stock when recommending buy calls on stocks as they are led to believe the company’s expected performance in the future by the company itself. In the heydays of stocks like Aokam Perdana and Transmile, stock price target levels were raised rapidly by analysts on the believe that the company’s fortunes are made in heaven and the shares of these companies skyrocketed before reality set in.

Driven by either rising selling prices or simply capacity expansion and demand growth, analysts do sometimes get carried away with innovative valuation models to justify a higher and higher market price each round. We saw that in the 1990s, during the dotcom bubble and even specifically on individual stocks or sectors. Sounds familiar?

In conclusion, like a pandemic, financial scandals can easily spread especially in desperate times or in times when the going is too good. Financial or accounting scandals will always be there but it is the duty of stakeholders, i.e. board members, the auditors, the regulators, the legal framework and the investment fraternity to ensure they are able to keep up with the changing landscape and to provide the check and balance much needed to protect, not only the minorities, but also the potential rippling effect to the market and financial system as a whole.

The views expressed here are the writer’s own.

Source link

Related:

Insight - Battling Wirecard's short sellers – Germany's move ...

Wirecard collapses owing US$4bil

Bank Negara monitoring Wirecard

Related:

Recalling Bank Negara’s massive forex losses in 1990s

Break free of US dollar hegemony: What’s next?

Monday, February 11, 2019

China's new tech soft power

Foreigners are tapping Chinese innovation to network and build businesses

International market: Foreign visitors to an expo in Nanning, the Guangxi Zhuang autonomous region, evince interest in forestry by-products and pay for them using WeChat Pay. [Photo by Peng Huan / for China Daily]

China's innovations impress foreigners, change startup game, boost confidence

The consumption power of more than 1 million foreigners working or studying in China is disproportionately bigger than their tiny share (0.07 percent) of the total population - and whizzes of the country's homegrown tech ecosystem are sitting up and taking notice, as the economy transitions from export and investment-led growth to a consumption-driven model.

Manufacturers of gadgets, providers of technology-enabled services, and developers of intellectual property like innovative technologies are all vying to make life easier for the relatively small but monetarily significant foreigner community in China.

French engineer Sebastien Bernard, 37, will probably agree. He came to work and live in Beijing four months ago. The first thing he was asked to do by his friends and colleagues was to download and install WeChat, the all-in-one killer app, on his smartphone.

He complied, and his life is much the better for it, he said. As it transpired, Bernard was e-invited to join a WeChat group.

Initially, 15 foreigners chatted with each other and shared their life experiences on the e-group. Gradually, the group grew to a 200-member community of sorts that shared not just useful information like job links or party invitations but, wait for it, e-commerce discount coupons and weekend getaway packages.

Friendly advice sensitized Bernard to other treasures on WeChat. Among many other things, he learned to use the app to order food, book a taxi ride, buy movie tickets, and make digital payments for e-commerce.

Using Chinese apps, some of his friends even play online games, and borrow or lend money using e-credit channels that are redefining inclusive finance.

According to a WeChat report, by May 2017, foreigners in China sent 60 percent more WeChat messages than Chinese users on average per month. They also use WeChat audio calls 42 percent more than Chinese users.

Notably, foreigners in China are good at using different functions or features of WeChat. On average, they use emojis 45 percent more than Chinese users per day. Typically, a foreigner sends 10"red packets" - cash e-gifts - per month. Nearly 65 percent of foreigners who use WeChat use the app's digital payment tool WeChat Pay.

"Here in China, having WeChat and Alipay accounts is like being plugged into the world. The apps include almost every conceivable service that can help make modern life easy," said Bernard.

Agreed Yang Qiguang, 26, a researcher from Columbia University's Tow Center who is pursuing PhD at the Renmin University of China in Beijing.

"Chinese companies are creating a tech ecosystem that helps everyone, including foreigners, to work and live in a more convenient way."

Forming social networks using e-tools has become integral to modern life, particularly in urban areas - and China's tech ecosystem perhaps performs this function better than any other, by bundling consumption-related conveniences, he said.

"The tech ecosystem here facilitates people, including foreigners, to spend more. It is also boosting the confidence of both domestic and foreign companies operating in China. They know they now have powerful and reliable e-tools like apps to drive sales in a humongous market with more than 1 billion consumers," he said.

That's not all. Yang said China's tech ecosystem is fostering entrepreneurialism. Even foreigners living in China are beginning to use Chinese apps to start up in a variety of fields, including technology, education and entertainment. All this business activity is a long-term positive effect for the Chinese economy, he said.

Yang could well have been speaking about David Collier, 52, a Briton who has founded four startups so far, respectively in the United States, the United Kingdom and China.

Rikai Labs, his WeChat-based e-learning business in China, helps Chinese users to master the English language through proprietary automated software. Collier said every seven years, a big platform shift comes along - from web to mobile apps; from apps to messaging platforms - that creates huge opportunities.

"We chose to base our business on WeChat because it provides a great platform for a knowledge service. You have to build your business where people are spending their time, and the biggest messaging platform of all is WeChat," he said.

"Also, we can use WeChat payment for instant payment, QR codes for marketing purposes and to track user acquisition channels. Now with WeChat's mini programs, we can add interactive games and other features."

There's more. Links to Rikai Labs and related content can be shared socially online. "It provides a very compelling platform with real-time features, social distribution, marketing hooks and monetization," Collier said.

But risks abound too, he said. Platforms such as WeChat have become extremely competitive for startups. "If you don't move at high speed, riding with WeChat is like taking the maglev."

Data, however, suggest that foreigners appear to have an edge over Chinese users in exploiting the local tech ecosystem for small businesses and online social networking, which actually helps businesses directly or indirectly.

A case in point is Baopals, a startup founded by three expatriates. Call it the English Taobao, if you will. Baopals is anchored in Taobao and Tmall, the online shopping platforms owned by Alibaba Group, China's tech giant.

Foreign visitors to an expo in Nanning, the Guangxi Zhuang autonomous region, evince interest in forestry by-products and pay for them using WeChat Pay. [Photo by Peng Huan / for China Daily]

In July 2015, Charlie Erickson, Jay Thornhill and Tyler McNew, all US citizens in their late 20s and early 30s, developed Baopals, a website that helps translate product information on the Chinese Taobao and Tmall into English. In one stroke, the trio thus opened up the astonishing world of Chinese e-commerce, or 800 million products, to non-Chinese consumers in China.

Baopals already boasts 40,000 registered users, with 16,000 of them joining last year alone, doubling the user count in 2017. A Baopals user buys 58 items on average per year, and spends about 2,500 yuan ($368) to 3,500 yuan annually.

In addition to English, the website has Korean and Russian versions, making e-shopping simpler for foreigners in China.

The website is going from strength to strength on the back of the trio's innovations. It has introduced attractive sections like "The Cool, The Cheap& The Crazy". It accepts Alipay, WeChat Wallet and China UnionPay for payments.

Although e-commerce destinations are dime a dozen in China, most of them are in Chinese, and cater to Chinese consumers, so Baopals stands out, said Thornhill.

"Even on Amazon China, the default language is Chinese. When you switch to English, you still see lots of content in Chinese. They just haven't made the effort to serve China's expat population properly," he said.

That gap should spell business opportunities for those looking to start up, he said. "We are also changing the stereotype that Chinese goods are cheap products with low quality," he said, adding that several products including Xiaomi air purifiers and Huawei products are very popular among foreigners.

According to Thornhill, Baopals' revenue comes from service fee paid by shoppers. It charges a service fee of 5 percent of each item's price, plus a small fixed fee based on the item's price - 2 yuan for items priced below 30 yuan, and 8 yuan for items priced above 90 yuan. More than 2.3 million products had been sold by Jan 17 this year, a huge increase from the same period last year.

Given the experience in China, it is clear that homegrown technologies can succeed outside the mainland, he said. "This year is going to be a big year for Baopals, as we'll be launching our global service. Expats leaving China can continue buying things they love here, and foreigners everywhere can discover the treasures of China's online shopping."

Agreed Yang from the Tow Center. China's tech ecosystem, he said, provides foreigners on the mainland with well-rounded platforms to do business not only in China but across the world.

"It may take years for foreigners to build such infrastructure themselves. The time and energy saved during the process can be used for bolstering their own products and business."

It's not just small players such as Baopals that are drawing confidence from their success in China. Even e-payment giants such as WeChat Pay and Alipay, emboldened by their rapid adoption among foreigners in China, are confident of replicating their success worldwide.

Alipay has introduced its payment services, including departure tax refunds, at 10 major international airports in Japan, Thailand and New Zealand. Although the initial goal is to serve Chinese tourists traveling overseas, the larger plan is to roll out Chinese technologies worldwide and gain a global visibility and footprint.

So, it has struck cooperation agreements with local banks and companies in foreign markets, to provide e-payment services. For instance, its partners in Japan are Hida Credit Union and Kyoto Shinkin Bank, which helps attract Japanese users as well. Using such strategies, Alipay has accumulated more than 1 billion users in all, including 300 million outside China.

Sources: China Daily/Asian News Network

Related posts:

Why Huawei’s 5G technology is seen as a threat by the US

Reuters pic. The term 5G stands for a fifth generation — to succeed the current fourth generation of mobile connectivity that has made...

Don’t blame China for global economic jitters; China contributed >25% global growth

China battles US for AI and robotic space: Who’s ahead?

G20 summit recognizes China's success, a historic starting point for the world, expert said

Malaysia Finance Minister Lim Guan Eng's credentials as an accountant questioned

On Malaysia Finance Minister Lim Guan Eng's website, it is stated in his biodata that he graduated from Monash University, Australia, with a Bachelor of Economics degree and was a qualified professional accountant by 1983.PHOTO: ST FILE

PETALING JAYA (THE STAR/ASIA NEWS NETWORK) - Malaysian Finance Minister Lim Guan Eng's qualification in accounting is the latest to come under scrutiny following a series of alleged false education credentials involving Pakatan Harapan leaders.

Malaysian Chinese Association (MCA) president Wee Ka Siong, in questioning Mr Lim's credentials as an accountant, said according to Monash University's website, Mr Lim obtained his Bachelor of Economics in 1984.

(MCA) president Wee Ka Siong

"I have no doubt over his degree qualification. However, I wonder how he became a qualified professional accountant in 1983 before he even graduated (in economics)?" he asked in a Facebook posting on Sunday (Feb 10).

On Mr Lim's website: https://limguaneng.com/ , https://limguaneng.com/index.php/biodata/ , it is stated in his biodata that he graduated from Monash University, Australia, with a Bachelor of Economics degree and was a qualified professional accountant by 1983.

Datuk Seri Wee, who is the Ayer Hitam MP, also wanted to know how Mr Lim's qualification as a "qualified professional accountant" was accredited.

"Was it by a local or foreign institution? Which country accepts an economics graduate to pass as a 'qualified professional accountant'?

For a minister who always stresses on the concept of Competency, Accountability and Transparency, please explain and don't keep quiet," he added.

Dr Wee also described as "suspicious" Johor Mentri Besar Osman Sapian avoiding questions from the media on his supposed UPM Bachelor in Accounting obtained in 1985.

"UPM's official website stated that the course was introduced in 1985. How is it possible that there could be such a super-fast graduate produced in the same year!

"If Osman fails to prove the genuineness of his academic credentials, will he still have the dignity to lead the state? This is a question of integrity among leaders," he said.

Citing examples of several world leaders who resigned or were sacked for having fake academic credentials, Dr Wee questioned if the Pakatan Harapan leadership would remain quiet and behave as if nothing happened.

"Or will they respond with the standard Pakatan answer, that a person's academic qualifications have nothing to do with political position," he added.

In Teluk Intan, Bernama reports Perak DAP chairman Nga Kor Ming as backing Tronoh assemblyman Paul Yong Choo Kiong who comes under public scrutiny for his dubious Masters in Business Administration (MBA) from Akamai University, United States, claiming that he had obtained it "legitimately".

This is despite the fact that DAP adviser Lim Kit Siang had labelled the university as a degree mill in 2005.

Mr Yong, 48, was also questioned by Dr Wee as to how he could do his MBA without having a first degree.

The Perak executive councillor has in his biodata listed his primary and secondary school education followed by his MBA.

Responding to the controversy, Mr Yong claimed that his way to enhance his self worth has been blown out of proportion.

He, however, did not reveal how he obtained his MBA.

"What is the relationship between this and politics?" asked Mr Yong.

Sources: https://www.straitstimes.com/asia/se-asia/malaysia-finance-minister-lim-guan-engs-credentials-as-an-accountant-questioned and
https://www.thestar.com.my/news/nation/2019/02/11/lims-credentials-as-an-accountant-questioned/

Related:

How to Become an Accountant: Skills, Degrees | All Business Schools

How to become a professional accountant in Malaysia? - Afterschool.my

"Accountancy is a very worthwhile profession": Michael Lim ...

‘Degree and awards-buying show poor character and stand to lose credibility’

Under scrutiny: A photo of the Cambridge International University and logo taken from its website. https://youtu.be/x90SmWqP2V4 ...

Zuraida is latest target of 'fake degree' attacks - The Sun Daily

Five Pakatan Harapan leaders accused of having dubious degrees ...

Malaysia Finance Minister Lim Guan Eng's credentials as an accountant questioned

(MCA) president Wee Ka Siong

How to Become an Accountant: Skills, Degrees | All Business Schools

How to become a professional accountant in Malaysia? - Afterschool.my

"Accountancy is a very worthwhile profession": Michael Lim ...

‘Degree and awards-buying show poor character and stand to lose credibility’

Under scrutiny: A photo of the Cambridge International University and logo taken from its website. https://youtu.be/x90SmWqP2V4 ...

Zuraida is latest target of 'fake degree' attacks - The Sun Daily

Five Pakatan Harapan leaders accused of having dubious degrees ...

Tuesday, September 18, 2018

Revolutionising accounting for a new era

The field of accounting is in need of a new breed of professionals who can contribute more than a quantifiable value to companies.

Increasingly, accountants in business are given the opportunity to be less involved in automated operations and focus more on bigpicture strategies, which gives a clear indication of the type of skills required in the near future. Bryan Chung, FCPA

WHEN talking about the Industrial Revolution, images that often come to mind include the extensive use of steam power, the birth of heavy machinery and ironworks, and bleak factories in England.

However, two more industrial revolutions have since passed and the 21st century is paving its way for the Fourth Industrial Revolution (IR 4.0), which is seeing the rise of autonomous decision making of cyber-physical systems and machine learning through cloud technology.

In simple words, IR 4.0 is the usage of artificial intelligence (AI) and the Internet to transform age-old processes and operating procedures across all industries.

With such change taking place, what does this mean for the accounting industry and where do accountants find their relevance in an era that looks to automate everything?

Calculating assets

In an interview with international education provider Kaplan, Malaysian Institute of Accountants’ (MIA) chief executive officer Dr Nurmazilah Datuk Mahzan said, “Among the current trends that are creating waves in the accountancy profession are big data and analytics.

“Companies of all sizes create massive structured, unstructured and semi-structured data every day. Organisations harnessing big data would be able to find new insights and discover unique patterns of their customer behaviour or even create new businesses that were previously not possible.”

Echoing her sentiments is Bryan Chung, Fellow of CPA Australia (FCPA), divisional councillor at CPA Australia (Malaysia), who believes that even though AI is good at matching patterns and automating processes – making technology useful to many functions in companies in the process – accountants still play a vital role.

He says, “While there is a lot of hype surrounding blockchain and AI in accountancy with more firms taking steps to increase or experiment with their use, it is unlikely that accountants (or auditors) will be out of a job anytime soon.

“It is likely that most of the administration process will be the first to be introduced to AI. Increasingly, accountants in business are given the opportunity to be less involved in automated operations and focus more on big-picture strategies, which gives a clear indication of the type of skills required in the near future.”

The challenge, however, is turning the current workforce in the accounting field into professionals who truly understand the implications of IR 4.0, not just in terms of their personal skills but also movements within the industry.

Discovering market potential

Gone are the days when sales numbers, website traffic and KPIs were sufficient information to measure monthly net profits.

In the same Kaplan interview, the organisation’s global professional accountancy head Tanya Worsley said, “Businesses today depend on their accountants beyond purely checking financial figures and balancing books.

“Financial professionals are expected to be able to provide their clients with actionable insights that can add value to the organisation’s overarching strategic goals.”

The changing role of accountants in the digital economy is what prompted MIA to launch the Digital Technology Blueprint in July this year, a document that outlines the five driving principles to help guide Malaysian accountants to respond appropriately to digital technology.

These principles are related to digital technology trends, the identification of capabilities, harnessing of digital technology, funding and governance.

Accountants who fail to stay updated with the latest trends and knowledge will cause their employers to lose out in the long run, while competing firms take advantage of the evolving cloud system.

For these reasons, upskilling and obtaining professional qualifications from MIA or accountancy bodies such as CPA Australia, Association of Chartered Certified Accountants, Institute of Chartered Accountants in England and Wales or Chartered Institute of Management Accountants should be considered a necessity instead of mere steps for higher management.

As most professional accountancy bodies require members to undergo regular training to maintain their memberships, these certified professionals are expected to be fully prepared for IR 4.0 and, by and large, artificial intelligence experts.

Chung adds, “IT knowledge is no longer an option. Lest we aim erroneously, it is not how extensive the IT knowledge is (as this is available in abundance and can be acquired easily), but the ability to understand the evolution of the profession and apply the knowledge appropriately.”

Explaining that accountants must use technology in their favour to elevate companies to new heights, he gives the example of successful tech businesses that used e-platforms to achieve massive scalability and visibility within a short time, despite having owners or founders who were not IT graduates.

“In the same way, accountants should be more strategic, make sense of the vast data available and deliver services based on the twin pillars of speed and quality,” he continues.

Eliminating liabilities

When combining this piece of information with the future route of total automation for jobs that are repetitive, rule-based and involve limited or well-defined physicality, the traditional job scope of accountants is coming to an end.

Employers are bemoaning the skill gaps currently present in the knowledge of digital technologies, forcing companies to spend resources retraining and reskilling their employees.

At the other end of the spectrum, constant news reports highlight the more pressing issue of employers having difficulty finding good graduates who can hit the ground running upon entering the workforce.

These situations highlight the dire need for a new breed of accountants who can provide more all-inclusive corporate reporting, which tells less about the numbers and more about the narrative of a company.

The Malaysian education system, for one, must move towards becoming an ecosystem for continuous upgrading of skills, working together with employers, be they officials from the Government, small business entrepreneurs or industry experts from professional organisations.

Colleges and universities need to continue reviewing their course offerings so that graduates have an accurate understanding of the evolving industry while being trained to adapt to new technologies and autonomous changes at the workplace.

However, it is not all doom and gloom. Chung points out, “There are now many initiatives being undertaken by various professional organisations and associations to provide education to accountants to increase awareness of the changes taking place.

“There are efforts now by professional bodies, corporates and academia to come together to address the disconnect between what’s being studied at universities and what’s relevant in the business world.”

Given how the financial technology space has demonstrated the willingness of companies to use innovative methods, Chung is optimistic about the future as the accounting profession can not only make positive inroads but ride on the back of this momentum to accelerate the learning and adoption of technologies as the nation moves into a new era of automation.

Credit: Bryan Chung, FCPA

Related posts:

Pages

Share This

Thursday, June 2, 2022