COVER

Mini-ENRONS
SHAKING UP Malaysia’s

Corporate Governance?
Abdullah Zaimee

20 ACCOUNTANTS TODAY • July 2007

20 ACCOUNTANTS TODAY • July 2007
 Mini-ENRONS Shaking Up Malaysia’s Corporate Governance?

amid this latest slew of accounting irregu-

It’s been some six years since the Enron Corp accounting
larities, just like when Datuk Dr. Abdul
scandal paralysed one of the world’s leading electricity, Samad was appointed at the time the
Enron scandal was still hot.)
natural gas, pulp and paper and communications Abdul Rahim agrees with Datuk Dr.
companies with claimed revenues of US$111 billion in Abdul Samad’s view stated in 2001 that the
human factor is the main cause for less-
2000. Houston-based Enron achieved infamy at the end of than-honest corporate reporting and that
there has been disparity in the public’s ex-
2001, following revelations that its reported financial pectations of the duties of auditors’ and
condition was sustained mostly by institutionalised, scope of audit, and auditor’s own ideas of
their roles. The responsibility of any
systematic and creatively planned accounting fraud. The wrongdoing in any company is on the
firm has since become a popular symbol of wilful corporate shoulders of directors, senior management
team as well as the auditors among others.
fraud and corruption. Abdul Rahim also agrees with his pre-
decessor that there are misconceptions

A
spate of mini-Enrons has been hit-
ting Malaysia lately, putting key “So far, no one has filed a complaint with
players in the local corporate gov- us on Transmile or Megan Media. We
ernance such as directors, managers, ac-
countants, auditors, corporate advisors, want to act proactively but there are legal
Bursa Malaysia, the Securities Commis-
sion (SC), and even analysts and business
risks involved. Right now, our Disciplinary
journalists under the microscope. The is- Rules say we act upon receiving com-
sue raised questions of investors’ confi-
dence in the system and the local stock plaints against members. We are in the
market. Disc maker Megan Media Hold-
process of
ings Bhd, state-controlled lender
Bumiputra-Commerce Holdings Bhd and changing
small technology firm Wimems Corp Bhd
are among several Malaysian firms that
this.”
have announced at least some form of fi- Abdul Rahim Abdul Hamid, President, MIA
nancial irregularities recently.
But air cargo carrier Transmile Group “At the height of the Enron debacle, the
Bhd is perhaps the highest-profile casu-
alty. Transmile was alleged to have over- first thing said by (former MIA presi-
stated its revenue by a total of RM522
million in financial years 2004, 2005 and
dent) Datuk Dr. Abdul Samad Haji Alias
2006. In addition, RM341 million in its when he became president was that
property, plant and equipment account
appear to have been fabricated as the there are Malaysian Enrons …”
amount was little suppor ted by docu- Datuk Dr. Abdul Samad Haji Alias
ments. The company was also said to have
made payments totalling RM189 million of the closet are not good news, but says that it is the auditor’s role to prepare the
last year and this year, without any sup- checks and balances are already within company’s set of accounts and that the
porting payment vouchers. the system with the likes of Bursa Malay- onus is upon directors and management
The Malaysian Institute of Accountants sia, the SC, Companies Commission of of a company to ensure that the financial
(MIA) too, being the regulator for the ac- Malaysia and even MIA. statement is prepared in compliance with
countancy profession in the country, has “At the height of the Enron debacle, the accounting standards and statutor y re-
been taken to task on what went wrong. first thing said by (former MIA president) quirements. The auditor’s responsibility
How can swift action be taken and should Datuk Dr. Abdul Samad Haji Alias when is to express an opinion as to whether the
such transgressions be severely punished? he became president was that there are set of accounts gives a true and fair view
MIA President Abdul Rahim Abdul Malaysian Enrons,” he adds. (Coinciden- of the company in accordance with the fi-
Hamid believes the skeletons coming out tally, Abdul Rahim became MIA President nancial reporting framework.

July 2007 • ACCOUNTANTS TODAY 21

Mini-ENRONS Shaking Up Malaysia’s Corporate Governance?

Accountants’ integrity at risk? “The MIA cannot initiate investigations without receiving
Naturally, the integrity of accountants — both
as auditors and as part of the companies’ manage- complaints or referrals for fear that it can lead to a minefield.
ment — has come into question, putting the MIA
under the spotlight. Because it regulates the ac-
The main argument is that the members involved may sue on
counting profession, people wonder if MIA is do- the basis that the legal framework does not support such a
ing enough to ensure that its members are pun-
ished for unethical conduct. course of action. At the same time, it may be wrong to as-
“People are asking us what are you doing in light
of this? That’s difficult to answer. We have our own
sume that the recent series of accounting-related woes at
set of rules and regulations, and disciplinary pro- several listed companies are indications of trouble in the
cess,” Abdul Rahim says.
The MIA cannot initiate investigations without accounting fraternity.”
receiving complaints or referrals for fear that it
can lead to a minefield, he clarifies. The main ar-
gument is that the members involved may sue on
the basis that the legal framework does not sup-
port such a course of action. At the same time, it
may be wrong to assume that the recent series of
accounting-related woes at several listed compa-
nies are indications of trouble in the accounting
fraternity.
Says Abdul Rahim: “So far, no one has filed a
complaint with us on Transmile or Megan Media.
We want to act proactively but there are legal risks
involved. Right now, our Disciplinary Rules say we
act upon receiving complaints against members.
We are in the process of changing this.”

“MIA doesn’t regulate companies; we

regulate our members. Even if we
are to pursue someone, it’s going to
be quite challenging.”
Abdul Rahim Abdul Hamid, President, MIA

MIA, already foreseeing such problems since

the Enron debacle, has been persistently working
since then to have the law amended so that it can
immediately investigate members for suspected
wrongdoings without waiting for complaints and
referrals. The relevant statute is the Accountants
Act 1967, which last saw major changes about six
years ago.
The Institute is looking into proposing “quite sig-
nificant changes” to the Act that will allow it to en-
gage in the hot pursuit of bad accountants. “But
we don’t want to be a prosecutor or a judge at the
same time. MIA doesn’t regulate companies; we
regulate our members. Even if we are to pursue
someone, it’s going to be quite challenging,” Abdul
Rahim says.
He also suggests a greater co-operation between
MIA and other regulators like Bursa Malaysia and

22 ACCOUNTANTS TODAY • July 2007

 Mini-ENRONS Shaking Up Malaysia’s Corporate Governance?

the Securities Com- the cases were iso- nies), the Ananda Krishnan companies,
mission to facilitate
“The two or three cases are not lated and do not re- Genting, Public Bank and others are now
the Institute’s inves- that major to erode investors’ flect the true situa- world-class, and it shows. This Upper Crust
tigation by allowing tion on the ground. does Malaysia proud and ensures that our
it access to reports confidence. In fact, investors Investors’ confi- mini-Enrons do not become a systemic
or accounts of a are more careful now before dence in the Malay- problem,” Abdul Wahab says.
company alleged of sian market is still “The problems are coming from the
wrongdoing. investing in the market.” strong because the Lower Crust. Many among the lower end
MIA accepts com- Tan Teng Boo, Chief Executive Officer, country has done a comply with the Malaysian Code of Cor-
plains from anybody i.capital.biz Bhd lot over the years to porate Governance, but only do it to the
(including audit cli- beef up corporate barest minimum,” he adds.
ents and other users of accounts, such as governance and this is an on-going effort,
creditors), provided these are lodged accord- they add. Stern action is needed though
ing to its disciplinary rules. The Institute has “The two or three cases are not that Still, investors and the likes of MSWG,
also commenced investigations following re- major to erode investors’ confidence. In fact, which champions the cause of minority
ferrals by the authorities, usually the SC.
In the case of a referral, the president
or another MIA council member acts as
the complainant. Under the rules, such a
move is per mitted “where facts are
brought to the knowledge of the Council
which indicate that a member has done
something which renders an investigation
necessar y.”
A formal complaint against an MIA mem-
ber goes to the Investigation Committee,
which determines whether there are suffi-
cient grounds for disciplinary proceedings
to be taken against the relevant accountant.
If there is enough to support the com-
plaint, it is next taken up by the Disciplin-
ary Committee, which holds a hearing and
imposes punishments if the member is
found guilty of unprofessional conduct.
The Disciplinary Appeal Board presides
over the appeal process. “MSWG has urged the regulator to examine the role played
Between July 2001 and December last
year, the Disciplinar y Committee has
by the external auditors and take speedy action to bring those
heard 18 cases. Of these, eight have been at fault to task. And the SC and Bursa Malaysia have responded
dismissed, while three are pending. Mem-
bers who were found guilty in respect of that they will take swift action to clamp down hard on those
the seven other cases have been disci-
responsible and restore confidence in the market.”
plined; the punishments include a three-
year suspension of membership and pen-
alties of RM1,500 to RM3,000. investors are more careful now before in- shareholders in Corporate Malaysia, are
The MIA has about 23,000 members. Es- vesting in the market,” said i.capital.biz Bhd angr y and want the authorities to take
sentially, anybody who wants to be called Chief Executive Officer Tan Teng Boo. tough actions on those responsible.
an accountant has to be registered with the Minority Shareholder Watchdog Group MSWG has urged the regulator to ex-
Institute. This applies to those who prac- (MSWG) Chief Executive Officer, Abdul amine the role played by the external au-
tice through accounting firms. Wahab Jaafar Sidek, said the best compa- ditors and take speedy action to bring those
nies in Malaysia have taken the Code of Cor- at fault to task. And the SC and Bursa Ma-
Accounting irregularities a test of porate Governance to heart; hence there are laysia have responded that they will take
investors’ confidence few scandals involving the huge companies swift action to clamp down hard on those
Analysts and fund managers say the re- that could cause the market to crash. responsible and restore confidence in the
cent revelations were all “shocking,” but “The GLCs (government-linked compa- market. AT

July 2007 • ACCOUNTANTS TODAY 23

COVER

Safeguarding
THE Integrity

OF Financial

Statements
Shamir Shah

UK companies spend
nearly £1.5 billion each year
on audits, but these offer
little protection to
stakeholders. It is time to
replace them, argues a
columnist in The Guardian.
“A common understanding is that
auditors are independent of the
company and its directors and thus
are in a position to make impartial
judgements. This is one of the
biggest hoaxes of all time,”
writes the columnist in the
London-based daily.

24 ACCOUNTANTS TODAY • July 2007

 Safeguarding the Integrity of Financial Statements

A
t this point in time, these words panies. Computer-storage product pro- earlier quoted columnist from The Guard-
will ring a bell for all market ducer Megan Media Holdings Bhd was the ian had this to say: “A common under-
related players in Malaysia, as next bearer of bad news. On 7 June 2007, standing is that auditors are independent
well. The local stock exchange it announced that a probe into a unit of the company and its directors and thus
has been kept busy with a number of showed ‘substantial irregularities’ that may are in a position to make impartial judge-
unfavourable accounting and governance lead to a RM456 million ringgit asset short- ments. This is one of the biggest hoaxes
gymnastics. The irregularities, causing con- fall. of all time. Company auditors are hired,
cern on the local stock exchange, bring into fired and remunerated by directors though
sharp focus the role and responsibilities of Managing the issue their decisions are rubber-stamped by
audit committees. Regulators and other relevant bodies are shareholders. Many auditors also sell tax
In order for audit committees to operate certainly taking the issues seriously. The avoidance and a variety of consultancy ser-
effectively, notes Malaysian Institute of Ac- SC has given a clear warning that it will vices to client companies. This gives them
countants President Abdul Rahim Abdul take ‘swift and firm enforcement actions’ a direct interest in corporate transactions
Hamid, the outfits must comprise individu- against perpetrators of market abuses. and they have rarely exposed any shady
als who are competent, independent, vigi- According to MIA’s records, the SC re- dealings.”
lant, experienced, proactive and willing to
ask challenging questions about their com- “The Institute notes with concern that
panies’ management.
“The Institute notes with concern that despite legislative support for the
despite legislative support for the establish-
ment of audit committees, some listed com-
establishment of audit committees, some
panies are resistant to an audit committee listed companies are resistant to an audit
that is independent both in substance and
in form,” he adds when commenting on the committee that is independent both in
spate of incidents of financial irregularities.
substance and in form.”
The shocker would cer tainly be
Abdul Rahim Abdul Hamid, President, MIA
Transmile Group Bhd, probably taking top
spot for being the highest-profile casualty
among a spate of Malaysian firms to an-
nounce financial irregularities. The Malay- ferred 10 cases to the Institute over the last On this issue, MIA President Abdul
sian air cargo carrier, backed by Hong two years. The cases are under various Rahim says since the committee comprises
Kong-based billionaire businessman Robert stages of investigation by the Institute. members of the board of directors of a com-
Kuok, was at one time a darling of the stock MIA has stated that members have not pany, it can never be said to be really inde-
market. Towards the end of May, Transmile been reprimanded as the Institute is still pendent. But the individual independent
told Bursa Malaysia that a special audit by in the midst of investigating the matter. directors need to uphold their “indepen-
Moores Rowland Risk Management re- Bursa Malaysia, operators of the local dent” roles effectively.
vealed that Transmile’s revenues and pre- stock exchange, have also sent out a clear For an audit committee to operate effec-
tax profits for 2005 and 2006 may have been warning to par ties involved. Selvarany tively, non-executive directors and mem-
overstated. Later, it even extended to 2004 Rasiah, the bourse’s Chief Legal Officer, said bers of the audit committee must also have
as well. action will be taken against any company a clear appreciation of their functions and
Just as the Transmile issue was unfold- which fails to comply with Bursa Malaysia’s duties, and that of the board of directors,
ing, on 28 May 2007, the Securities Com- Listing Requirements (LR). “We already have senior management and auditors, says
mission (SC) charged two directors of a very stringent framework, and if there are Abdul Rahim.
NasionCom Holdings Bhd and a share- any delays, misleading statements or lack of “If necessar y, non-executive directors
holder of a unit for their alleged roles in accuracy, action will be taken, not just against and audit committees should be empow-
submitting false infor mation in the the company but also its directors,” she said ered to seek independent expert advice not
company’s 2005 financial statements and when commenting on the recent alleged ir- only on financial reporting issues but also
its listing prospectus. Days later, regularities, reported Bernama. other matters they are not familiar with.
Bumiputra-Commerce Holdings Bhd, par- We believe that to enable the members of
ent to one of the country’s largest banks, Role of Audit Committees the audit committee and/or independent
announced that an audit showed Southern On the audit committees, as expected, the non-executive directors to carry out these
Bank Bhd, bought by the company last media has shown keen interest with regard onerous tasks, they must be appropriately
year, overstated its 2005 assets by RM160 to the independence of the committees. compensated and adequate resources
million. This was followed by revelations The key question anchored around the must be provided by the company to sup-
about a number of other public-listed com- independence of the audit committees. The port them in their duties. Members of the

July 2007 • ACCOUNTANTS TODAY 25

Safeguarding the Integrity of Financial Statements

audit committee and/or independent non- Key measures cation (CPE) has always stressed the
executive directors require sufficient time MIA has also taken a number of mea- need for accountants, when providing
to devote to the tasks at hand,” he said. sures to enhance its monitoring and professional ser vices, to do so with
MIA notes with concern that despite legisla- regulation mechanism. Among others, proper regard for the technical and
tive support for the establishment of audit com- these are: professional standards expected as a
mittees, some listed companies are resistant 1 Entry Requirement for Membership member of the Institute
to an audit committee that is independent both — At the entr y level for admission to
3 Standards on Auditing — The Insti-
in substance and in form. membership, the Institute has used
tute issues standards on quality con-
“Greater awareness and acceptance the International Education Guide-
trol for audits as well as the Malay-
needs to be inculcated among corporate lines issued by the IFAC as a bench-
sian Approved Standards on Auditing
players as to the long-term value and ben- mark for accreditation, whereby
which are adopted from international
efits that can be derived through indepen- these guidelines place significance on
quality control and auditing
dent audit committees and ac-
standards issued by the Inter-
tive independent non-execu-
national Federation of Ac-
tive directors with public con-
countants (IFAC). These qual-
fidence being the primary ben-
ity control and auditing stan-
efit. Otherwise, the audit com-
dards are required to be ad-
mittee is rendered an ineffec-
hered to by approved com-
tive corporate gover nance
pany auditors who are all
mechanism or a ‘toothless ti-
members of the Institute,
ger’,” he said.
when carr ying out audits on
On improving the function
financial statements of compa-
and accountability of the audit
nies and other entities.
committees, Abdul Rahim says
it can be done through better 4 Practice Review — The In-
understanding and implemen- stitute in 2002 initiated a qual-
ity assurance programme for
tation of corporate governance “We strongly feel that corporate accountability
and effective internal controls. audit firms through the pro-
“We strongly feel that cor- and effective internal controls are fundamental in cess of Practice Review. This
porate accountability and ef- process involves the manda-
achieving good corporate governance, and can tory inspection of audit firms’
fective internal controls are
fundamental in achieving only be safeguarded through appropriate practices in carrying out audit
good corporate governance, work, in order to assess due
and can only be safeguarded
disclosure and transparency when reporting to the compliance with quality con-
trol, auditing and ethical stan-
through appropriate disclo- capital markets.”
sure and transparency when dards, and to monitor the qual-
Abdul Rahim Abdul Hamid, President, MIA
reporting to the capital mar- ity of audits of financial state-
kets,” he says. inculcating principles of profession- ments carried out by company
MIA takes the view that there is a con- alism, high standards of quality and auditors. As to those firms which
tinuing need to remind the board of di- independence in accountancy stu- have no adequate processes or which
rectors and senior management of pub- dents even prior to embarking on a fall far short of the desired standards,
lic-listed corporations and other public in- career as approved company audi- complaints will be lodged against
terest entities of their fundamental roles tors. them and they will then be subject to
and responsibilities and to ensure that investigation and disciplinar y pro-
these roles and responsibilities are ceedings.
2 Continuing Professional Education
clearly understood and accepted. — The Institute has always stressed 5 The Investigation & Disciplinary Pro-
“To achieve this, the corporate gover- the need for members to be compe- cesses — The Institute is empowered
nance framework must have a clear delin- tent and to keep up to date with the by the Accountants Act 1967 to inves-
eation of power and responsibilities, and latest developments af fecting the tigate and take disciplinar y action
must encompass appropriate mechanisms profession through compliance with against its members, which power it
for checks and balances between the key mandatory requirements for Continu- exercises regularly and conscien-
players. Audit committees, independent ing Professional Education that are tiously, for breaches of ethical and
non-executive directors, executive directors consistent with international stan- professional standards or unprofes-
and senior management all play vital roles dards. The Institute through its By- sional conduct. This is under taken
in good corporate governance,” he said. Law on Continuing Professional Edu- through its Investigation and Disci-

26 ACCOUNTANTS TODAY • July 2007

 COVER

plinar y Committees and the Disci-

plinar y Appeal Board, which are
statutor y committees established un-
der the Accountants Act 1967.
6 Financial Reporting Standards
Implementation Committee (FRSIC)
Fighting THE
-— The Institute recently formed a
FRSIC to provide assistance to MIA
members on matters of common in-
terest relating to accounting stan-
dards by way of providing implemen-
Perpetrators
OF Market Abuse
tation guidance to both preparers and
auditors. FRSIC consists of up to
seven members experienced in the
technicalities of financial reporting.
The membership includes four Coun-
The Securities Commission Chairman says it will come
cil Members of the Institute, one of
whom is the Chairman, and three down hard on those who abuse the country’s markets
members from professional bodies

T
recognised under Part II of the First
he Securities Commission, is apparent that even in the most developed
Schedule to the Accountants Act
regulators of the financial mar- and highly regulated markets, corporate
1967. There are also five obser vers
kets, has given a clear warning shenanigans will unfortunately rear its ugly
from regulators and standard setters,
to the market. It will take ‘swift head periodically.
namely SC, BNM, BM, SSM and
and firm enforcement actions’ against the “We have seen this happen here over the
MASB. The involvement of the regu-
perpetrators of market abuses. last few years with the likes of Energro,
lators is to ensure that they are aware
Securities Commission (SC) Chairman Pasaraya Hiong Kong, GP Ocean and
of issues arising in the profession and
Datuk Zarinah Anwar, in a recent speech, Nasioncom and more recently Transmile
to enable them to provide FRSIC the
said that there would always be the few and Megan Media. Our response to these
views of the agencies they represent.
attempting to abuse the markets either developments is very clear — the SC will
However, they are not voting mem-
through manipulation of share prices or take swift and firm enforcement action
bers.
through perpetrating corporate fraud and against the perpetrators,” she said in a
7 Financial Statements Review Com- transgressions, such as manipulating the speech at the Malaysian Investment Bank-
mittee (FSRC) — Review exercises financial accounts of companies. This hap- ing Association (MIBA) Regional Capital
ar e under taken by the Institute pens across countries and across time. It Market Conference.
through the FSRC for the purpose of
determining compliance with statu-
tory requirements, approved account- “We have seen this happen
ing and auditing standards, and gen-
here over the last few years
erally accepted accounting and audit-
ing principles and practices. The re- with the likes of Energro,
view covers public-listed companies,
non-listed companies and gover n-
Pasaraya Hiong Kong, GP
ment-linked corporations. The Insti- Ocean and Nasioncom and
tute looks into matters referred to it
by the regulators and also reviews the more recently Transmile and
financial statements where there are
public interest issues.
Megan Media. Our response
It also has to be noted that the Insti- to these developments is
tute has recently endorsed a policy
very clear — the SC will take
whereby priority will be given to re-
ferrals by other regulators. This is to swift and firm enforcement
ensure that such cases are dealt with
urgently in order to safeguard public
actions against the perpetra-
interest. AT tors.” Datuk Zarinah Anwar, Chairman, Securities Commission

July 2007 • ACCOUNTANTS TODAY 27

Fighting the Perpetrators of Market Abuse

The warning comes in the wake of bent on members of the audit commit-
a string of companies reporting ac- tee to ensure that they effectively dis-
counting irregularities or other audit- charge their responsibilities.
ing issues since the start of May. The “Audit committees have a key role
concer ns began when Transmile to play in ensuring the integrity of the
Group Bhd, an air-freight company financial statements that are approved
backed by billionaire Robert Kuok, by the company for release to the in-
revealed financial irregularities in its vesting public. Members of the audit
books. This was followed by com- committee must evaluate the quality
puter-storage products maker Megan of the external and internal auditors.
Media Holdings Bhd announcing ‘sub- They must probe and assess the ex-
stantial irregularities’’ in one of its tent of issues that management and au-
units. ditors pay attention to. They must be
In the speech, entitled “Future Di- able to assess the quality and compe-
rection of the Legal and Regulatory tence of the company’s financial man-
Framework for Malaysia’s Capital agement. An effective audit commit-
Markets,” Zarinah said there was a tee can play a key role in enhancing
range of enforcement powers avail- the reliability of financial statements
able to the SC and “I will be very clear of public companies.
- we will use all these powers and leave “Over the last few years, company
no stone unturned in our investigative auditors have come under intense fo-
and enforcement ef for ts, to come cus worldwide in light of some spec-
down hard on any one that abuses our tacular corporate failures and I fully
market.” share the sentiments of my colleagues
The regulating body chief said she was members concerned have not been repri- globally on the role of the audit and ac-
heartened to note that many aspects of the manded as the Institute was still in the counting profession in maintaining the in-
existing framework for corporate gover- midst of investigating the matter. tegrity of the financial reporting process,”
nance and financial reporting had played she said.
a key role in maintaining high overall stan- Company directors and audit She also discussed the reliability of finan-
dards and that this has been acknowledged committee cial statements, a key element in some re-
internationally. In the speech, Zarinah also discussed cent financial irregularities on the local
“Our whistle blowing provision, for in- some salient areas concerning key players market.
stance, has played a key role in assisting of the market: company directors and au- “Investors rely on financial statements
the SC’s enforcement efforts. We also have dit committee. as a key medium to evaluate their decisions
in place a mandatory requirement in law With regard to company directors, she and therefore we will always be concerned
for compliance with accounting standards pointed out that they are under a fiduciary about the quality of information provided
that, coupled with a robust corporate sur- duty to act in the best interest of the com- in these financial statements. If auditors fail
veillance programme in the SC, has helped pany, to protect the company’s assets and to deliver a quality audit, investor vulner-
identify instances of corporate financial ir- safeguard the interest of all shareholders. ability to misstated financial statements
regularities and is even being replicated in “They must exercise the requisite duty and fraudulent financial reporting will con-
other jurisdictions in the region. of care; there must be heightened aware- tinue to remain,” she said.
“However, I am firmly of the view that a ness of the need to be vigilant and to over- Zarinah pointed out that the SC’s ultimate
lot more can be done by company direc- see management, foster integrity and pre- focus was to protect investors and ensure
tors, audit committees and auditors among vent transgressions. Independent direc- the integrity of the capital market.
others to instil the right level of self disci- tors must not only be independent in their “However I cannot but emphasise yet
pline that will reduce the occurrence of the decisions and protect the interest of share- again that accountability is not limited to
types of corporate transgressions that we holders but must have the necessary lev- regulator-led prosecution under securities
have been seeing,” she said. els of experience, knowledge, diligence laws. A diligent and responsible board,
The SC has been working with the Ma- and skills to be able to question and chal- honest and ethical management led by the
laysian Institute of Accountants (MIA) on lenge and review the adequacy of the com- CEO, proactive and responsible profes-
this matter. panies’ internal control systems,” she sionals all play an impor tant role in
The SC has referred 10 cases to the In- said. complementing the efforts of the regula-
stitute over the last two years. The cases Where some of these responsibilities are tor to prevent wrongdoing and to identify
are under various stages of investigation delegated to board committees like the and assist us to prosecute wrongdoers,”
by the Institute. MIA has stated that the audit committee, she added, it is incum- she added. AT

28 ACCOUNTANTS TODAY • July 2007