New regulatory body for CFOs to improve checks and balances

A new proposal is currently being considered whereby Chief Financial Officers (CFOs) in Malaysia's public interest entities will need to register with a proposed new regulatory body to further improve the sector's professionalism.

Malaysian Institute of Accountants (MIA) President Datuk Mohammad Faiz Azmi said the new regulatory body (NRB), which is proposed to be set up by the Committee to Strengthen the Accountancy Profession (CSAP), will help monitor the CFOs and recommend appropriate improvements as and when needed.

The establishment of the NRB is part of the 15 recommendations in the report on Strengthening of the Accountancy Profession in Malaysia prepared by the CSAP.

He said the move is also in line with current implementation of International Financial Reporting Standards in the country, which requires consistent application of complex global accounting standards.

"The proposal to register CFOs is to understand the degree of experience and training that person has to be able to do that job, and it is a fundamental requirement that the person signing (financial statements) must have the right knowledge of accounting standards.

"We realise that Malaysia is a bit late in making CFOs accountable, as they have in other countries in the region where they have already taken a much further step than us. It is time," he told Bernama.

On the current situation in Malaysia, Mohammad Faiz said although Bank Negara Malaysia (BNM) has strict criteria for CFOs in the banking industry, there are no such requirements for the non-banking sector.

He said it is equally crucial for CFOs in listed companies to be accountable for the financial statements signed by them which could enable investors and other users of financial statements to compare the financial performance on a like-for-like basis with their international peers.

Mohammad Faiz said the regulators in the country, including BNM, Companies Commission of Malaysia, Accountant General's Department and Securities Commission Malaysia, would run the NRB, which has yet to have a name.

The two main roles for NRB are to act as an enforcement body for professional conduct as well as the regulator for policy-making of the accounting profession in Malaysia, he said.

The implementation committee of the report will take all 15 recommendations and draft them into an Act. The proposal to make the registration for CFOs mandatory will be included in the draft Act, which will be submitted by the CSAP Implementation Committee to the Securities Commission by year-end for approval.

"So by next year, we will start talking about getting the Act to Parliament," he said. - BERNAMA