CIRCULAR MF23/2011: CLARIFICATION IN RESPECT OF CIRCULAR MF21/2011 DATED 19 OCTOBER 2011

17 November 2011

Circular MF23/2011

ALL MEMBER FIRMS

CLARIFICATION IN RESPECT OF CIRCULAR MF21/2011 DATED 19 OCTOBER 2011

It has been observed that certain member firms are seeking clarification in respect of circular MF 21/2011 dated 19 October 2011 issued by the Institute in respect of delivery of the bank confirmation request.

The points raised are in respect of the implementation date and the proper process flow for the delivery of bank confirmation request.

The Institute has since met with representatives from the 23 commercial banks at a dialogue arranged by the Association of Banks in Malaysia (ABM) on 14 November 2011 to clarify on this issue in particular, and to further discuss on how auditors and banks can have a better working relationship moving forward.

In this regard, it was clarified that the list of designated contact persons from the 23 commercial banks is only for the purpose of following-up on overdue responses on bank confirmation requests, and not for the delivery of bank confirmation request at present. Auditors should still send their bank confirmation requests to the address to which previous requests have been addressed, until further notification by the Institute.

The Institute will be having on-going discussions in the near future with the ABM and the banks. The Institute will inform members on the agreed procedures to be followed by auditors when requesting confirmation from the banks on an entity being audited when an agreement has been reached with the ABM and the banks.

Please be guided accordingly.


Thank you.


HO FOONG MOI (MS)
Executive Director
On behalf of the Registrar

DELIVERY OF THE BANK CONFIRMATION REQUEST

19 Oct 2011

Circular MF21/2011

TO ALL MEMBER FIRMS

DELIVERY OF THE BANK CONFIRMATION REQUEST

Historically, banks have requested auditors to send the requests of bank confirmation letter to a particular branch. However, many of the larger banks have now centralized such processes.

To enable auditors to send requests directly to a central address, the Institute has requested from The Association of Banks in Malaysia (ABM) for a list of designated contact persons for receipt of confirmation letter from 23 commercial banks (updated as at October 2011). We enclose herewith the said list for members’ reference. The turnaround time should be shortened by sending the bank confirmation request to the right processing department/branch.

Please be guided accordingly.


HO FOONG MOI (MS)
Executive Director
On behalf of the Registrar


Click HERE to download the List of Bank's Contact Person.

RPG' 8 – ILLUSTRATIVE LETTER OF ENGAGEMENT – STATUTORY AUDIT FOR SINGLE ENTITY AND GROUP

10 Aug 2011

Circular MF19/2011

TO ALL MEMBER FIRMS

MIA RELEASES REVISED RECOMMENDED PRACTICE GUIDE (''RPG'') 8 – ILLUSTRATIVE LETTER OF ENGAGEMENT – STATUTORY AUDIT FOR SINGLE ENTITY AND GROUP

The Institute is pleased to inform members that the Council has approved the release of the revised Recommended Practice Guide (''RPG'') 8 as guidance to members.

The guidance is revised pursuant to the clarified International Standard on Auditing 210, Agreeing the Terms of Audit Engagements which is effective for audits of financial statements for periods beginning on or after 1 January 2010.

Members can download RPG 8 – Illustrative Letter of Engagement – Statutory Audit for Single Entity and Group from the Institute's website at this link http://www.mia.org.my/new/1_tech_detail.asp?tid=1&rid=4&id=951.

Please be guided accordingly.


HO FOONG MOI (MS)
Executive Director
On behalf of the Registrar


Click HERE to download the RPG 8 - Illustrative Letter of Engagement - Statutory Audit for Single Entity and Group.

AXP e-Newsletter for Jul & Aug 2011

Please view and/or download AXP e-Newsletter from the following link:



<http://www.myaxp.com/enewsletters.php>
http://www.myaxp.com/enewsletters.php

NARROWING THE AUDIT GAPS – A CALL FOR CHANGE

In the Circular No. 26/2011 issued by the Institute on 25 May 2011, members were informed that the International Auditing and Assurance Standards Board ("IAASB") has recently released a Consultation Paper titled “Enhancing the Value of Auditor Reporting: Exploring Options for Change”. The Consultation Paper is issued following perceptions that auditor reporting is not meeting the information needs of financial statement users in a global business environment especially with increasingly complex financial reporting requirements. Thus, the Consultation Paper is released to obtain better understanding and to determine whether there are common views among users of the audited financial statements and other stakeholders on the current usefulness of auditor reporting.

In order to facilitate better understanding and feedback on the IAASB Consultation Paper, the Institute has summarized the essence of the paper in an article titled “Narrowing the Audit Gaps – A Call for Change”. In the article, the expectations vis-à-vis the information gap identified by some stakeholders of the auditor reporting is diagrammatically drawn to illustrate the gap which is currently occurring between users’ expectation of the auditors and the financial statement audit and what the actual audit is. The article also summarises the three (3) models suggested in the Consultation Paper as possible options for change to reduce both gaps and to improve the communicative value of auditor reporting.

The Institute would like to highlight that improvements toward auditor reporting will introduce a shift in the auditing landscape and change the responsibilities of many stakeholders especially the auditing professionals. All stakeholders should take this opportunity to channel their concerns, suggestions and comments to IAASB in relation to the Consultation Paper via the Institute.

Please refer to the article by visiting Narrowing the Audit Gaps - A Call for Change for further information on how to submit your response.

CIRCULAR MF14/2011: PROPOSED REVISED INTERNATIONAL STANDARD ON ASSURANCE ENGAGEMENTS 3000

CIRCULAR MF14/2011: PROPOSED REVISED INTERNATIONAL STANDARD ON ASSURANCE ENGAGEMENTS 3000 - ASSURANCE ENGAGEMENTS OTHER THAN AUDITS OF REVIEWS OF HISTORICAL FINANCIAL INFORMATION

01 Jun 2011

Circular MF14/2011

TO ALL MEMBER FIRMS

PROPOSED REVISED INTERNATIONAL STANDARD ON ASSURANCE ENGAGEMENTS 3000 - ASSURANCE ENGAGEMENTS OTHER THAN AUDITS OF REVIEWS OF HISTORICAL FINANCIAL INFORMATION

The Institute is pleased to inform members that the Council has approved the release of the exposure draft on revised International Standard on Assurance Engagements (ISAE) 3000 “Assurance Engagements Other Than Audits or Reviews of Historical Financial Information” for distribution to members, regulatory bodies and other interested parties for comment.

The exposure draft is drawn primarily from the pronouncement issued by the International Auditing and Assurance Standards Board of the International Federation of Accountants.

Proposed ISAE 3000 is a principles-based standard that can be applied effectively to a broad range of assurance engagements. Such engagements may range from assurance on statements about the effectiveness of internal control, for example, to direct engagements such as performance or “value for money” audits, to possible future engagements addressing integrated reporting or corporate social responsibility reporting.

Proposed ISAE 3000 covers both reasonable and limited assurance engagements. Among other proposals, the ISAE introduces guidance designed to help readers better understand these two levels of assurance. It also includes guidance addressing direct engagements that have become common in the public sector and have been undertaken increasingly in the private sector.

Proposed ISAE 3000 also includes material from the existing International Framework for Assurance Engagements that is necessary for the ISAE to be understood without reference to the Framework. Accompanying the exposure of the proposed ISAE are also proposed consequential amendments to the Framework reflecting the impact of the proposals in ISAE 3000.

		Deadline for comment
ED ISAE 3000/2011	ISAE 3000 (Revised), Assurance Engagements Other Than Audits or Reviews of Historical Financial Information Click HERE to download the ED ISAE 3000/2011.	1 July 2011

Comments may refer to any specific principles, paragraphs or group of paragraphs and suggestion for alternative solution or wording with supporting reasons. These comments will be collated and, where appropriate, incorporated into the proposed standard before being issued in the form of an Approved Standard on Assurance Engagements.

Comments should be submitted in writing by the deadline and addressed to:

The Secretariat
Auditing and Assurance Standards Board
Dewan Akauntan
2, Jalan Tun Sambanthan 3
Brickfields
50470 Kuala Lumpur
Tel : 03 2274 5055
Fax : 03 2273 4319
Email : technical@mia.org.my
Website address: http://www.mia.org.my


Please be guided accordingly.

CIRCULAR MF9/2011: PROPOSED INTERNATIONAL STANDARD ON REVIEW ENGAGEMENTS 2400

CIRCULAR MF9/2011: PROPOSED INTERNATIONAL STANDARD ON REVIEW ENGAGEMENTS 2400, ENGAGEMENTS TO REVIEW HISTORICAL FINANCIAL STATEMENTS

23 Feb 2011

Circular MF9/2011

ALL MEMBER FIRMS

PROPOSED INTERNATIONAL STANDARD ON REVIEW ENGAGEMENTS 2400, ENGAGEMENTS TO REVIEW HISTORICAL FINANCIAL STATEMENTS

The Institute is pleased to inform members that the Council has approved the release of the exposure draft on International Standard on Review Engagements (“ISRE”) 2400 (Revised), Engagements to Review Historical Financial Statements for distribution to members, regulatory bodies and other interested parties for comment.

The exposure draft is drawn primarily from the pronouncement issued by the International Auditing and Assurance Standards Board of the International Federation of Accountants.

A review of financial statements in accordance with the proposed ISRE consists primarily of making inquiries of management and others within the entity involved in financial and accounting matters, applying analytical procedures, and evaluating the sufficiency and appropriateness of evidence obtained. The practitioner reports on whether anything has come to the practitioner’s attention that causes him/her to believe that the financial statements, taken as a whole, are not prepared in all material respects in accordance with the applicable financial reporting framework. The procedures performed in a review are substantially less than those performed in an audit, and the practitioner does not express an audit opinion.

The proposed ISRE will help practitioners around the world who perform review engagements converge towards use of a globally accepted benchmark, and facilitate development of practice in jurisdictions that currently do not have national standards in this area.

		Deadline for comment
ED ISRE 2400/2011	ISRE 2400 (Revised), Engagements to Review Historical Financial Statements Click HERE download ED ISRE 2400/2011.	24 March 2011

Comments may refer to any specific principles, paragraphs or group of paragraphs and suggestion for alternative solution or wording with supporting reasons. These comments will be collated and, where appropriate, incorporated into the proposed standard before being issued in the form of an Approved Standard on Review Engagements.

Comments should be submitted in writing and are to be received by the deadline.

Members can download the said exposure draft from the Institute's website at http://www.mia.org.my under the Professional Standards and Practices - Auditing and Assurance - Circulars link.

Please be guided accordingly.

CIRCULAR MF4/2011: AUDITORS' REPORTING PURSUANT TO BURSA MALAYSIA SECURITIES BERHAD LISTING REQUIREMENTS ON DISCLOSURE

CIRCULAR MF4/2011: AUDITORS' REPORTING PURSUANT TO BURSA MALAYSIA SECURITIES BERHAD LISTING REQUIREMENTS ON DISCLOSURE OF REALISED AND UNREALISED PROFITS/LOSSES IN THE NOTES TO THE QUARTERLY REPORT AND ANNUAL AUDITED FINANCIAL STATEMENTS

28 Jan 2011

Circular MF4/2011

TO ALL MEMBER FIRMS

AUDITORS' REPORTING PURSUANT TO BURSA MALAYSIA SECURITIES BERHAD LISTING REQUIREMENTS ON DISCLOSURE OF REALISED AND UNREALISED PROFITS/LOSSES IN THE NOTES TO THE QUARTERLY REPORT AND ANNUAL AUDITED FINANCIAL STATEMENTS

Bursa Malaysia Securities Berhad (“Bursa Malaysia”) issued a directive on 20 December 2010, requiring all listed corporations to disclose the breakdown of unappropriated profits or accumulated losses into realised and unrealised on group and company basis, as the case may be, in the notes to the quarterly reports and annual audited financial statements (hereafter referred to as “Bursa Malaysia Disclosure”).

International Standard on Auditing (“ISA”) 700, Forming an Opinion and Reporting on Financial Statements, governs the forming and reporting on financial statements by external auditors. In forming an opinion and reporting on the financial statements, ISA 700 requires auditors to form an opinion on whether the financial statements are prepared, in all material respects, in accordance with the applicable financial reporting framework. ISA 700 is written in the context of a complete set of general purpose financial statements, i.e. financial statements that are prepared in accordance with an applicable financial reporting framework.

In Malaysia, the applicable financial reporting framework refers to the approved accounting standards issued by the Malaysian Accounting Standards Board (“MASB”). The MASB standards do not deal with the distinction of profits and losses into realised and unrealised, nor do they require the disclosure of such distinction. Accordingly, the Bursa Malaysia Disclosure is construed as supplementary information that is not required by the applicable financial reporting framework to be disclosed in the financial statements.

Arising from its communication with the regulators, the Institute takes cognizance that Bursa Malaysia expects auditors to provide assurance on the Bursa Malaysia Disclosure as supplementary information to the annual audited financial statements. The auditor may address this reporting responsibility within the auditor’s report on the financial statements under a separate sub-title of “Other Reporting Responsibilities” to clearly distinguish this from the auditor’s responsibility under ISA 700 to report on the general purpose financial statements.

The directors of the listed corporations are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants (“MIA Guidance”) and the directive of Bursa Malaysia Securities Berhad.

The auditor may report whether the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad. The auditor shall not include a statement, whether explicitly or implicitly, that the Bursa Malaysia Disclosure achieves a true and fair presentation in the context of general purpose financial statements.

As a guide, the auditors may consider using the following wording in the report:

Other Reporting Responsibilities

The supplementary information set out in Note XX is disclosed to meet the requirement of Bursa Malaysia Securities Berhad and is not part of the financial statements. The directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants ("MIA Guidance") and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.

Please be guided accordingly.

CIRCULAR MF17/2010: MIA PROVIDES GUIDANCE ON DETERMINATION OF REALISED AND UNREALISED PROFITS OR LOSSES

22 Dec 2010

Circular MF17/2010

ALL MEMBER FIRMS

MIA PROVIDES GUIDANCE ON DETERMINATION OF REALISED AND UNREALISED PROFITS OR LOSSES

The Institute has, on 20 December 2010 issued Guidance on Special Matter No. 1 "Determination of Realised and Unrealised Profits or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements" in response to the new requirements introduced by Bursa Malaysia Securities Berhad (“Bursa Malaysia”) requiring all listed corporations to disclose the breakdown of unappropriated profits or accumulated losses into realised and unrealised on group and company basis, as the case may be in quarterly reports and annual audited financial statements.

The aforementioned disclosure requirements are as detailed in the directives issued by Bursa Malaysia to all listed corporations on 25 March 2010 and 20 December 2010.

About the Guidance

Guidance on Special Matter No. 1, which provides the guiding principles in distinguishing between realised and unrealised profits or losses at individual legal entity level, is issued as part of the Institute’s initiatives to assist Bursa Malaysia in ensuring consistency and comparability in respect of the aforementioned disclosures amongst listed corporations in Malaysia.

The guiding principles contained in Guidance on Special Matter No. 1 recommend that any charge or credit to the profit or loss of a legal entity is deemed as realised when it is resulted from the consumption or depletion of resource.

As Guidance on Special Matter No. 1 is specially developed in response to the aforementioned disclosure requirements, it should be read in conjunction with the relevant Bursa Malaysia directives and it is not to be applied for any other purposes.

Please be guided accordingly.

Update on Standard Documents available in Audit Express

We are also pleased to inform you that we have added 19 new documents to the AXP’s standard audit programmes, letters and correspondences, and made revision to certain standard documents! A summary of these latest developments is available in the attached file - New and revised AXP documents.pdf for your information.

Should you wish to install these documents, kindly contact our Technical Support Team members at 1300 882 297 or support@myaxp.com.

ISQC 1 Compliance Checklists

From: AXP

Background

ISQC 1 has been in effect since 1 July 2006 and in March 2009, MIA issued a revised ISQC 1 which is effective from 1 January 2010. Has your Firm established a system of internal control to comply with the ISQC 1? Or you are not sure how and where to begin with? In response to your needs, AXP Technical Support Team decided to embark on this project with the aim of assisting you to better understand and implement ISQC 1. Then … here come the ISQC 1 compliance checklists!!

Specially for Small and Medium Practitioners …

In view of the limitation of resources to establish and maintain a system of quality control for smaller firms, ISQC 1 has included specific considerations for smaller firms. Among others, documentation and communication of policies and procedures for smaller firms may be less formal and extensive than for larger firms. For instance, smaller firms may use more informal methods in documentations, such as manual notes, checklists and forms. Therefore, we think that these ISQC 1 compliance checklists would be very helpful for you to be complied with the ISQC 1!

Furthermore, if your Firm has adopted AXP’s standard documents, you may note that certain checklists and forms required to perform an audit engagement are already available in the existing standard documents in Audit Express!

Unzip the folder ISQC Compliance Checklists.zip and you can start to fill in the forms immediately. You are advised to begin reading with 1 - ISQC Main.doc as this document entails how the entire set of checklists work. In addition, to enable you to complete these checklists easily, you are advised to do it from computers installed with Audit Express. Should you have any enquiry on how to use the checklists, please feel free to contact our Technical Support Team members.