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.

e-SPC system and User Manual

The Inland Revenue Board (IRB) has launched the e-SPC (Sijil Penyelesaian Cukai / Tax Clearance Certificate) system which allows the online submission of notifications of cessation of employment (ie., Forms CP22A, CP22B or CP21) by employers for the purpose of obtaining tax clearance for their employees.

The system also provides for the updating of employees’ information, the online checking of the status of application(s) made and the printing of the Tax Clearance Certificate.

You may access the e-SPC system and/or view the user manual at the IRB’s website at:

https://ekls.hasil.gov.my/espc/.

Members may also view the user manual at the Institute’s website at:

http://www.ctim.org.my/technical_techdev_direct.asp.

E-mail scam – Tax refund

The Inland Revenue Board (IRB) has issued a Press Release dated 21 July 2010 to caution the public against a new e-mail scam purportedly issued by the IRB and requesting taxpayers to take immediate action to claim his/her tax credit amounting to RM700.

The Press Release may be viewed at the website of IRB at

http://www.hasil.gov.my/lhdnv3e/documents/maklumat_terkini/Kenyataan%20Media%20e-mel%20Bayaran%20Balik%20PALSU.pdf

PRACTICE CONTINUATION ARRANGEMENT

Dear Member Firm

Section 520 of the Institute's By Laws: Death or Incapacity of a Sole Practitioner requires a sole practitioner to ensure that he or she has entered into an arrangement to enable his/ her practice to continue with minimum disruption in the event of his/ her death or incapacity, in either of the following ways :-

(a) by entering into an agreement with another sole practitioner or with a member firm; or

(b) by satisfying the Council that other adequate provision has been made.

It is therefore important for a sole practitioner, to protect both his or her own interests as well as the interests of the clients to enter into such arrangements with another member or firm as this will enable the practice to be carried on with minimum disruption in the event of incapacity or death.

In this regard, the Institute has decided to assist sole-practitioners in complying with the said By-Law by way of providing a guideline in the preparation of a practice continuation arrangement. The document can also be downloaded from the Institute's website under the Public Practice section. Copied below is the direct link to the page:

http://www.mia.org.my/new/pp_knowledge_guide_managing.asp

Please take note that to determine the value of your firm you are requested to seek an expert's advice and not just rely on the guideline. The continuity agreement is a legal document and it is important that you obtain legal advice to ensure the arrangement is properly drawn up, can be implemented quickly and contains appropriate termination clauses.

Please note that failure to comply with the above is an infringement of the By-Law and may subject the member to investigation and disciplinary proceedings.

Please refer to the direct link below to find more information on the Institute's By-Laws under Section 520: Death or Incapacity of a Sole Practitioner:

http://www.mia.org.my/downloads/institute/legislation/bylaws20080731.pdf

Please also find attachments for more information about the Practice Continuation Arrangement.

Should you require further clarification, please contact Azlina/Azuraini from the Membership Department at 03-22799305/342 or email at memberfirm@mia.org.my.

Click HERE to download PCA-Outline of the salient clauses.

Click HERE to download Practice Continuation Arrangement guideline (PCA).

Guidelines on Petroleum Income Tax (PITA)

In the 2010 Budget it was proposed that, with effect from the year of assessment 2010, upstream petroleum companies subject to tax under the Petroleum (Income Tax) Act 1967 (PITA) will be placed under the self-assessment system and assessed to tax on a current year basis.

In view of the above, the Inland Revenue Board has issued guidelines (available only in the Bahasa Malaysia language) on 03 June 2010 to explain the amendments to the PITA.

Members may download the guidelines from the website of the IRB at http://www.hasil.gov.my/lhdnv3/documents/GarisPanduanTeknikal/Garis_Panduan_PITA.pdf

or view the guidelines on the Institute’s website at http://www.ctim.org.my/technical_techdev_direct.asp

Deadline to submit tax return forms and payment of balance of tax for year of assessment 2009 (business source of income).

The IRB has issued a Press Release dated 11 June 2010 detailing the types of return forms which need to comply with the filing deadline of 30 June 2010. Mention was also made about the fines which will be imposed for late filing of the said return forms.

The press release may be viewed at the website of IRB at

http://www.hasil.gov.my/lhdnv3e/documents/maklumat_terkini/Press%20Release%20dateline%2030%20June%202010%20-%20business%20income%20earner-%20edited.pdf

Public Ruling No. 2/2010 - Allowable pre-operational and pre-commencement business expenses

The Inland Revenue Board (IRB) has issued Public Ruling No. 2/2010 (effective for year of assessment 2010 and subsequent years of assessment) on 3 June 2010. This Public Ruling supersedes the earlier Public Ruling No. 2/2002 issued on 8 July 2002.

Some of the changes observed are as follows:

-       The maximum authorised share capital requirement for companies eligible to claim a deduction for incorporation expenses has been increased from RM250,000 (for companies incorporated in Malaysia on or after 1.1.1973 but prior to 13.09.2003) to RM2,500,000 (for companies incorporated in Malaysia on or after 13.09.2003).

A sole proprietorship or partnership which converted to a private limited company, with an authorised share capital of not more than RM2,500,000, is also eligible for the above deduction.

-       Establishment expenditure of the following types of entities may also qualify for a deduction against the gross income in ascertaining the adjusted income of the business:

·         a Real Estate Investment Trust (REIT)

·         a Property Trust Fund (PTF), and

·         an Islamic stock broking company

-       With effect from the year of assessment 2009, a person may claim a deduction for expenses incurred in respect of recruitment of employees prior to the commencement of his business. The expenses must be incurred within 1 year prior to the commencement of its business.

The Public Ruling may be downloaded from the website of IRB at:

http://www.hasil.gov.my/lhdnv3e/documents/maklumat_terkini/Allowable%20pre-op%20%20business%20expenses%203%206%202010.pdf

Members can also view the information from the website of the Institute at http://www.ctim.org.my/technical_techdev_direct.asp