The Malaysian Accountant - The Malaysian Institute Of Certified ...

More documents

Recommendations

Info

FEATURETowards Selecting and Maintaining anEffective Internal Audit Function?BY RAYMOND CORRAY & RYAN CHONGThe Malaysian Code of Corporate Governancerequires listed companies to state whether theyhave an internal audit function or, if not, whatalternative they have in place to provideassurance with regards to the adequacy and integrity of thesystem of controls. In fulfilling this requirement, listedcompanies have either established their own internal audit(“IA”) function or have outsourced the function toprofessional service providers. The Institute of InternalAuditors has issued The International Standard for theProfessional Practice of Internal Auditing (“Standards”)that provides guidance on the principles and frameworksfor setting up an IA function or when outsourcing.When contemplating the appropriate course of actionfor an effective internal audit function, as a first step,organisations should keep in mind the following:• Whether to have an in house function or to outsourcethe function;• The expectations of an internal audit function, i.e. to meetregulatory compliance or to be a value adding partner;• The independence and stature to be accorded to thefunction;• The investment that the organisation is willing to make;and• The availability of people resources in terms of skillsand experience.In setting up an in-house function the main challengefaced by organisations is in sourcing skilled and experiencedIA personnel and the costs involved. Due to the lack of suchpersonnel, a solution that is frequently employed is tooutsource the function. When faced with outsourcing andfor purposes of ensuring that an appropriate service provideris selected, organisation needs to bear in mind the following:• Reputation of the service provider;• Standards that the service provider adopts, for example,The Institute of Internal Auditor’s Standards;• The resources of the service provider, both in terms oftechnical and industry and operational skills;• The approach and the methodology in maximising theservice;• The ability to work with other service providers, to valueadd and respond to sudden request; and• The independence and integrity of the firm.Today, internal audit functions, apart from facing theinherent challenges associated with maintaining aprofessional function, are faced with additionalexpectations arising from corporate irregularities. Theseare casting question marks with regards to:• how internal audits function:• the standards that they employ;• the people that they have; and• ethical standards that they subscribe too.In overcoming and meeting such challenges and forpurposes of being able to respond to changing demandsand remaining relevant, continuous assessment, challengeand improvement need to be undertaken by the internalaudit function. A solution recommended by the Institute ofInternal Auditors is to undertake a Quality AssessmentReview (“QAR”).The objective of a QAR is to undertake an assessmentof the function for purposes of ensuring that the:• mission;• people;• processes; and• technology,employed within the function are relevant in meeting everchanging stakeholder expectation. The objectives behindsuch assessments are:I. To ensure that the mission of the internal auditdepartment is aligned with the overall vision andmission of the organisation;II. That people with relevant skills and experience areemployed to undertake engagements and to providevalue add; andIII. That the processes (methodology) and technologyemployed are designed to foster efficiency, effectivenessand economics of the function.With the present demand for greater governance andtransparency, an organisation cannot afford complacencyor deviations from acceptable practices. Having aneffective internal audit function is a fundamentalrequirement of a well run company and more importantlyprovides an independent framework for check and balanceand value in management.This article first appeared in BizDo, issue 18, August 2007, thenewsletter of BDO Binder. Produced with kind permission.Raymond Corray is a Director and Ryan Chong, PrincipalConsultant of BDO Governance Advisory Sdn Bhd.18 | The Malaysian Accountant | June/August 2007 www.micpa.com.my
PEOPLEBY MALKEET KAURAt The HelmThe recent Annual General Meeting of the MICPAwitnessed the election of a new President and Vice-President. YBhg Dato’ Nordin Baharuddin waselected the 28th President while YBhg Dato’Ahmad JohanMohammad Raslan, the Vice-President of the Institute.This is indeed an interesting combination as Dato’Nordin and Dato’ Johan are two extremely remarkableleaders of the accounting profession and with these twostalwart Accountants at the helm, steering the wheel, thenext few years would be an interesting journey for the MICPA.Dato’ Nordin, the former Executive Chairman of Ernst& Young Malaysia from 1999 to 2004 and Dato’ Johan, thecurrent Executive Chairman of PricewaterhouseCoopersMalaysia, between them, possess 60 years work experiencein a vast area of their profession. Both are members of theInstitute of Chartered Accountants in England and Wales(ICAEW) and of course, the MICPA.Shortly after their election to their posts, Dato’ Nordinand Dato’ Johan spared some time from their busy schedulesto have a chat with The Malaysian Accountant and both hadinteresting views and opinions on a variety of topicstouching the Accountancy profession as well as the Institute.www.micpa.com.myJune/August 2007 | The Malaysian Accountant |19
Page 1: June/August 2007 www.micpa.com.my K
Page 4 and 5: PERSPECTIVEIt was a night of fellow
Page 7 and 8: FEATUREInternet Piracy- Copyright I
Page 9: license of the owner of the copyrig
Page 12 and 13: FEATUREBasis ofRecognitionof Income
Page 14 and 15: year by year. Upon completion of th
Page 16 and 17: Revision of Estimatesand Tax Comput
Page 18 and 19: towards auditors for the assurance
Page 22 and 23: Dato' NordinBaharuddinIt’s after
Page 24 and 25: Dato’ JohanRaslanHis gracious and
Page 26 and 27: INSTITUTE NEWSYB Dato’ Dr Ng Yen
Page 28 and 29: INSTITUTE NEWSRECIPIENT OF ANUGERAH
Page 30 and 31: dented the image of the profession.
Page 32 and 33: updates on recent developments at t
Page 34 and 35: INSTITUTE NEWSExtraordinaryGeneral
Page 36 and 37: INSTITUTE NEWSAcknowledgementsThe M
Page 38 and 39: INSTITUTE NEWSNOVEMBER 2007 EXAMINA
Page 40 and 41: The following candidates passed Mod
Page 42 and 43: AccQuiz for Secondary Schools(Prize
Page 44 and 45: INSTITUTE NEWSACCA-MICPA MUTUALRECO
Page 46 and 47: consistent in all material respect
Page 48 and 49: IASB UpdateIASB welcomes US SEC pro
Page 50 and 51: any restrictions that may be in pla
Page 52 and 53: IFAC UpdateIFAC Seeks Proposals to
Page 54 and 55: interest by setting high quality et
Page 56 and 57: GLOBAL INSIGHTNEWSfrom Down UnderA
Page 58 and 59: GLOBAL INSIGHTWORLDNEWSUNITED KINGD
Page 60 and 61: But respondents also reported that
Page 62: trapping gases that are so essentia

The Malaysian Accountant - The Malaysian Institute Of Certified ...

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?