KUALA LUMPUR (June 8): Accountants have an important role in taking the lead in good corporate governance, ensuring integrity, trustworthiness and good reputation of businesses and the country.
At the Malaysian Institute of Accountants (MIA) Conference 2021, its president Dr Veerinderjeet Singh said that one key area of governance that is vital to support the nation’s future sustainability is tax transparency, tax administration and tax governance, as well as highlighting the importance of integrating environmental, social and governance (ESG) into business and corporate reporting to meet market and investor demand.
“The MIA’s stance is that tax transparency is also a key factor to be considered under the governance aspect of ESG. Importantly, stronger tax governance and compliance are vital in order to improve tax collection, which is needed to finance the nation’s proposed stimulus, digital transformation, talent upskilling and sustainable development programmes,” he said.
He added that by virtue of their expertise and competencies, accountants should also be taking the lead in fighting corruption, fraud and other leakages that threaten the development of the nation.
“In everything that we do, especially in public practice and the public sector, the profession must always uphold our code of ethics and our core values of accountability, integrity and trust in the public interest,” Veerinderjeet added.
Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz said that accounts are an important influence and advocate of informed decisions, adding that accountants play a key role in driving digitalisation, applauding the MIA’s Digital Technology Blueprint.
Tengku Zafrul added that another area related to this is the adoption of integrated reporting. He highlighted that the MIA is the national trainer appointed by the International Integrated Reporting (IR) Council and that the institute had been a champion in advocating the adoption of IR.
The minister stated that while the momentum of IR among public listed companies is to be lauded, IR is something of the story of public-sector value creation and to build public trust through increased transparency and accountability.
“Of course, the MIA’s support and guidance, as the government began implementing financial reporting standards and gradually shifting to accrual-based accounting, have also been invaluable in enhancing public-sector finance. The government’s embracing of public-sector financial management has even been the subject of global comparative case studies, with Malaysia and the MIA as role models,” he added.
American Institute of Certified Professional Accountants president and chief executive officer (CEO) and Association of International Certified Professional Accountants CEO Barry C Melancon stated that the development of ESG standards and auditing is something that the industry is working on.
“The accounting side has been developed over a century. We are talking about a more agile and rapid space of time as it relates to ESG,” Melancon said, adding that there is active work being done to establish a board that develops sustainability standards on a global basis, akin to the International Finance Reporting Standards (IFRS) now in place.
Melancon added that the tentative date of execution for these global ESG standards is November 2021, but noted that there two unknowns in terms of how the US and Europe will respond to such standards.
What to expect in global economy?
During a panel discussion, World Bank East Asia and Pacific Chief Economist Research Center senior economist Tobias Pfutze stated that moving forward, slow or limited vaccination roll-outs or vaccine hesitancy in regions with high infection rates will be a major source of uncertainty. He noted that Covid-19 is likely to be endemic in large parts of the world with the risk of vaccine-resistant variants developing.
He added that in terms of fiscal policy, sustained support will be needed in the short to medium term, and that there is risk of sovereign debt crises in emerging economies.
At the same time, Pfutze added that the pandemic had given rise to a larger state in the form of more social protection and redistribution, with more efficient spending and higher revenue collection.
According to Bank Islam chief economist Dr Mohd Afzanizam Abdul Rashid, the country has fiscal space, but has to decide on what sort of fiscal stimulus it wants amid the overall context of the domestic and global economies.
Academy of Sciences Malaysia fellow and Professor Emeritus Professor Dr Jomo Kwame Sundaram said there is a need to keep one's ears close to the ground to see what is happening with the local economy.
He stated that stay-in-shelter lockdowns are a very blunt instrument and not very effective, and viewed that this had resulted in a resurgence in Covid-19 cases at the locations.
The economist said there is a need to ensure greater accountability in government spending, adding that this should not curb government spending.
“If we are going to prevent the recession from becoming longer-term depression, we really need to supplement private spending with government spending,” Jomo said, emphasising the need for bolder fiscal policy, but with stronger checks and balances.