Trust in Malaysia’s financial reporting ecosystem depends on the integrity of the information on which decisions are made. Financial statements must be prepared in accordance with applicable standards and laws, reflect the underlying financial position of an organisation fairly, and be subjected to appropriate independent scrutiny.

Under the Companies Act 2016, directors have statutory responsibilities including that the financial statements give a true and fair view of the financial position and performance. Financial statements must be approved by the Board, with directors making the requisite statements in accordance with applicable accounting standards.

“This responsibility is fundamental. Management is entrusted to prepare the financial information, but the Board is responsible for the oversight and stewardship of the company and its financial reporting. The auditor’s role is to independently obtain reasonable assurance and express an opinion on whether the financial statements are free from material misstatement, in accordance with applicable accounting standards,” said Dato’ Saniza Said, President of the Malaysian Institute of Accountants (MIA).

These responsibilities operate within Malaysia’s financial reporting framework. The Malaysian Accounting Standards Board (MASB) independently issues financial reporting standards. Through its standard-setting function and process, MIA’s Auditing and Assurance Standards Board (AASB) issues auditing and assurance standards, while MIA’s Ethics Standards Board (ESB) issues ethics standards that are included in the MIA By-Laws (On Professional Ethics, Conduct and Practice) for compliance by MIA members.

“These standards are aligned with globally accepted international standards to uphold the transparency, comparability and reliability of financial reports, enhance investor and stakeholder confidence, and integrate Malaysia with the global financial and business community,” said MIA Chief Executive Officer G Shanmugam.

“For MIA members, compliance with the approved financial reporting, ethics and auditing standards is mandatory. Depending on the circumstances, non-compliance with applicable standards and other requirements may also have legal or regulatory consequences,” he said.

Where public funds, financial institutions or public interest entities are involved, the effects may be wider still. Public confidence can be eroded, regulatory or Government intervention may become necessary, and the costs of failure may ultimately be borne by investors, taxpayers, employees and other stakeholders.

While management and the Board are primarily responsible for an organisation’s governance and financial reporting, the accountancy profession plays an important role in maintaining the integrity of the broader financial reporting ecosystem.

Accountancy professionals must uphold integrity, objectivity, professional competence and due care, confidentiality and professional behaviour. These principles are particularly important when exercising professional judgement in complex or subjective areas such as estimates, valuations, impairment and disclosures.

“Ethics are not separate from professional competence. They are integral to how professional judgement is exercised,” said Dr Veerinderjeet Singh, Chair of the MIA Ethics Standards Board.

“When accountants face difficult or complex decisions, integrity and objectivity must remain central. Professional standards provide the framework, but public trust depends on professionals having the competence and ethical discipline to apply those standards properly.”

Audit quality is another important safeguard. Auditors must apply professional scepticism and judgement, comply with applicable auditing and quality management standards, and communicate appropriately with those charged with governance.

“An audit is not a guarantee against corporate failure or fraud. The auditor’s role is to provide reasonable assurance and an independent opinion within the scope of the applicable auditing standards,” said Teoh Soo Hock, Chair of the MIA Auditing and Assurance Standards Board.

“However, audit quality matters greatly to public confidence. It requires auditors to approach their work with professional scepticism, exercise sound judgement and remain alert to matters that may give rise to material misstatement.”

Malaysia’s system of regulatory oversight and enforcement involves multiple authorities, operating within their statutory mandates. MIA exercises its responsibilities and powers under the Accountants Act 1967 to regulate and develop the profession. This includes its ethical framework, investigation and disciplinary processes in appropriate cases.

“The Practice Review mechanism is an important part of strengthening audit quality in the market,” said Siti Hajar Osman, Chair of the MIA Practice Review Committee.

MIA’s Practice Review Programme assesses whether audit practices comply with applicable professional standards and legal and regulatory requirements, while promoting continuous improvement in audit quality.

“It enables MIA to assess areas where improvements may be needed and to drive remediation. The objective is accountability and continuous improvement in practices that support stronger audit quality and, ultimately, the protection of the public interest.”

Key to this is strengthening professional capability, ethics and the effective implementation of evolving standards. Effective January 2026, MIA has mandated two Continuing Professional Education (CPE) hours on ethics-related education for its members.

The integrity of Malaysia’s financial reporting ecosystem ultimately depends on every participant discharging their respective responsibilities.

“The strength of Malaysia’s financial reporting ecosystem depends on strategic collaboration and a shared commitment to accountability, competence and integrity. A failure by any party, particularly in relation to large organisations, can have costly consequences for the nation’s economy. MIA will therefore continue to discharge its statutory mandate to regulate and develop the profession through standards, ethics, quality assurance, regulatory processes and professional development, strengthening its capacity to serve the public interest,” said G Shanmugam.

“Safeguarding trust is therefore a collective responsibility. When boards, management, professional accountants, auditors and regulators fulfil their respective roles, the result is a stronger financial reporting ecosystem that protects stakeholders, supports confidence in Malaysia’s institutions and contributes to nation-building,” concluded Dato’ Saniza.

While the management prepares the financial statements and the Board exercises oversight, auditors provide reasonable assurance on the reporting. When each party acts with integrity, accountability and professional judgement, financial information becomes more reliable and transparent. Ultimately, high-quality financial reporting builds trust, protects investors and other stakeholders, and strengthens confidence in financial information.