Why things are out of joint at MIA

The MIA management is another area that seems in dire need of improvement as the word on the street is that “the good ones leave” for better opportunities elsewhere. At worst, the bad ones get promoted and to rub salt into the wound, not based on merit. This is also one of the main reasons why the institute is not seen to be doing enough for the profession. 

Concerned Number Cruncher

PREAMBLE

Lately the Malaysian Institute of Accountants (MIA) seems to be in the limelight for all the wrong reasons. Some members have been highlighting problem areas in its governance system, and this has led a certain faction to question whether the institute knows what it really needs to do in the interest of a better future for the accounting profession.

It would be meritorious for everyone concerned to gain a clear understanding of MIA’s true role of putting in place a system that enables, ultimately, the protection of public interest, but it does not take a rocket scientist to see cracks in the system caused by the way the institution is run.

QUESTIONABLE GOVERNANCE

Indeed, the World Bank, in a recent report on the observance in Malaysia of accounting and auditing standards and codes, pointed out gaps and loopholes that impede the development of the country’s accounting and auditing fraternity. It highlighted the need for MIA to review its governance structure so that it may fully deliver its mandate as the regulator of the Malaysian accounting and auditing profession. It said this review should address, among other areas, the structure and membership of the council that leads the institution, the membership admission processes, and the assessment of quality standards for university accounting degree programmes. MIA would also need to ensure effective monitoring and enforcement of standards and determine the level of resources required to enable it to deliver its mandate effectively, the report said.

Having observed the progression of events framing the role of the institution over the past years, as an accountant and therefore a party interested in the evolution of the profession, I am inclined to raise some pertinent issues that point to the need for reforms at MIA.

FALLING SHORT OF IDEALS

MIA was incorporated under the Accountants Act 1967, which sets out its role and powers as an institution that governs the profession. Given that accountants are professionals that undergo rigorous training in order that they may become members of MIA, it was apparent in its early days that those who decided on the direction for the profession had intended for it to be largely self-regulated, with members determining its direction and developmental needs.

Is the set-up of the MIA council conducive to enabling good governance within the institution, resulting in the profession being able to meet the needs of the nation? Issues in relation to the lack of accounting skills in Malaysia because of a brain drain continue to be raised at various levels, including in the ROSC report.  In addition, MIA through its very own Practice Review function has indicated that the quality of auditors in this country needs to be stepped up a great deal for them to be on par with their counterparts in developed nations. 

The lack of clarity regarding MIA’s role today is another signal that something is indeed not right with the way it performs that role. Previous MIA presidents Tan Sri Abdul Samad Alias and Nik Mohd Hasyudeen Yusoff did attempt to position MIA as a body with both regulatory and professional development functions, but where is this clarity today?

GETTING PRIORITIES RIGHT

Capacity building for the profession is paramount. However, in these last few years, MIA has not been seen to have been significantly building capacity for members. Instead, it appears to have been wielding its regulatory powers ever more actively. Members are told to pay for education and development, and this brings into question what value we are to derive from being members of an institution that is constantly raising the bars on how we should operate. The very fact that some members are proposing the establishment of a technical centre at MIA also raises red flags, because if MIA is unable to provide this service in a satisfactory manner to its own members, does this not point to a deficiency of skill and talent in the industry?

I believe that these are among the issues creating gaps in MIA’s governance system. We have been stuck in a mindset of preferential policies for too long, and these have filtered down into the MIA mindset. We should be going for quality, but current policies seem to be more in line with quantitative expansion. The Performance Management and Delivery Unit (Pemandu) in its Economic Transformation Roadmap indicates the need for all future accountants to have professional qualifications prior to being admitted as MIA members.  This is a move to step up the quality of Malaysian accountants so that they will be globally competitive, but not much has been done to bring this to the fore.

DANGEROUS BRAIN DRAIN

Indeed this is a very pertinent issue for a nation that is in the midst of an economic transformation process, one in which I believe accountants have a very important role to play. There is a need for MIA to have its goals aligned with Prime Minister Datuk Seri Mohd Najib Tun Razak’s vision to produce people who are capable of supporting the nation’s transformation needs. However, with MIA’s present structure and policies, it would seem that these concerns are not being met. Instead, I hear of young professionally qualified accountants leaving the country for greener pastures because they cannot see a clear career path here. Who can blame them when it is so difficult, for instance, to secure an audit licence here and there are better opportunities abroad? If global mobility is the norm, and the Malaysian accounting landscape is as attractive as in other countries, then why are we not attracting talent from other countries?

A QUESTION OF NEW LEADERSHIP

Let us look at the structure of MIA and see whether it is optimally set up to ensure dynamism in the profession. The council of 30 members, which guides MIA and its management, is headed by a President who is assisted by a Vice President. The council and the two top officials are supposed to have clearly defined roles. But there has been no such clarity in the practice of those roles in the last couple of years. It seems as if there are precious few or no other individuals who can be tasked with leading the institute. In some cases, we see the same people returning to leadership positions. Is this how we want our profession to be seen? Are we so incapable of nurturing new leaders who are able to bring fresh insights and position the institution in a new light, such as was done quite exemplarily by Nik Hasyudeen, who took over the helm from Abdul Rahim Hamid between 2007 and 2009? At the time, MIA was seen to be dynamic and responsive to issues facing the profession.

Abdul Samad did his fair share to lead the institute following the restructuring in 2001 and put in place fundamentals that were meant to propel the institution forward.

I also feel strongly that appointment of President of the Institute should be based on merit, with consensus from members and no other consideration, especially not preferential policies. It would go against the interest of the profession if leadership positions were accorded on grounds other than merit.

DE-POLITICISE THE INSTITUTE 

The composition of the present council also needs re-examining.  It is rigid and prone to political abuse, if politicisation of the professional institution hasn’t already happened. If as a nation we are able to practice democracy in how we elect our leaders, why is it that MIA’s council is overwhelmed by government appointees? The council reports to the Accountant General (AG), who in turn reports to the Minister of Finance. Given that the AG is a representative of the Minister of Finance, do we need 19 others to be appointed by him or should we be looking at providing equal footing to every member who harbours an aspiration to serve fellow members while at the same time contributing to the growth of the profession and the nation?

Why are we so afraid of meritocracy? Is there fear of power abuses? I am convinced that a group of professional accountants would be able to devise checks and balances to ensure this does not happen.

It is important to understand that MIA members, who fund the institution with their subscription fees, have the onus of self-regulation. Nobody would be able to understand the challenges of the profession better than the members themselves, and it makes sense to enable them to choose among themselves who are best able to guard the credibility of the profession. As educated professionals, they surely realise that any abuse of power or negative behaviour that is not aligned with national goals would only hurt the profession. If we cannot run our own organisation, how does it make sense that we are tasked as gatekeepers and guardians of other people’s companies?

MANAGEMENT UNDER FIRE

The MIA management is another area that seems in dire need of improvement as the word on the street is that “the good ones leave” for better opportunities elsewhere. At worst, the bad ones get promoted and to rub salt into the wound, not based on merit. This is also one of the main reasons why the institute is not seen to be doing enough for the profession. It does not have the quality talent with the passion required to drive the evolution of the profession and power the transformation that the Malaysian accounting profession really needs at this juncture. The appointment of a new chief executive officer (CEO) is yet to take place more than half a year after the departure of the previous one. Again, we hope the appointment is based on merit and a proven track record.

As an accountant, I am saddened to note that an institution set up with the noble intention to lead and develop a sector of professionals so important to the growth of the nation continues to be mired in, among other things, petty politicking and a crisis of its own identity and relevance to members. It is clear as day that in this age of reforms and transformation for Malaysia, MIA too needs its own set of reforms so that it is able to help accountants maintain their relevance as public expectations of our work continues to grow.