Say No To Hudud

Monday, March 14, 2011

Burning questions for Ms Selvarany Rasiah to answer: If you want Bursa Malaysia to be a world class bourse, the critical issue of non audit fees must be addressed.

Letter from the General Counsel of Maxis, Mr Stephen Mead. Received from a Maxis insider.
Ms Selvarany,

Bursa Malaysia aspires to be the preferred partner in Asia for fund-raising, trading and investment; or in other words, a world class bourse.

How will this aspiration become a reality when the accounting firms are allowed to provide non audit services  to the Public Listed Companies at a level which will not be allowed even in Singapore?

"Where a statutory audit client is an entity of significant public interest, the significance of the threat should be evaluated and, if the threat is other than clearly insignificant, safeguards such as those in 290.206 should be considered and applied as necessary to reduce the threat to an acceptable level in all cases where:

(a) the amount of the fees received for the non-audit services compared to the total annual audit fees is 50% or more;or

(b) the total size of the non-audit fees paid for the services is significant."
SG290.206B (Accounting and Corporate Regulatory Authority, Code of Professional Conduct and Ethics Consultation Document 2007)

Non audit fees paid to PricewaterhouseCoopers far exceeds the audit fees
Ms Selvarany Rasiah, Chief Regulatory Officer for Bursa Malaysia
Auditor Independence is considered as the cornerstone of the auditing profession as it forms the foundation of the public's trust in the accounting profession.

The United States of America, the United Kingdom, South Africa, Belgium, Singapore and many other countries have taken the steps to address the question of non-audit fees. What is Bursa Malaysia's stand on this burning question?

Even the Teachers Pension Plan group of Ontario, Canada has this rule for investing:

"1.5 Non-Audit Fees Compromise Independence
A significant majority of revenues generated by the accounting firm through its relationship with the company should come from the audit function proper. Where there is no disclosure or a breakdown of the fees shows the non-audit fee is greater than the audit fee without further clarification, we will not support the re-election of the outside auditor.
We are committed to the principle of the independence of external auditors and we have accordingly recognized these principles within our own proxy voting guidelines. Shareholders must be able to rely on the independent auditor. If they perceive that there is a lack of independence, whether or not such a deficiency exists, much of that value is lost."

If a group of teachers can state their stand on the question of Auditor Independence so clearly, why can't Bursa Malaysia, which is a front-line regulator tasked with protecting the interests of the investors and the citizens, at least do the same?

If auditors claim that non-audit fees will have no impact on their independence when signing the audit findings,
why then have the non-audit fees fallen from a high of 51% of total fees received to about 21% in the worlds largest economy?

Ms Selvarany, what is Bursa Malaysia's answer to all the threats that arise to the question of auditor independence because of non-audit fees and services, as shown by the International Federation of Accountants above?

Chin Kwai Fatt. Till today he has not denied the fraud involving PricewaterhouseCoopers Consulting Sdn Bhd (464379-U)
and the bogus firm and directors of PwC Consulting Sdn Bhd (289801-A)

No comments:

Post a Comment