Stronger needs for ethics-based culture, says ACCA
One lesson learnt from recent cases of corporate mismanagement in Corporate Malaysia shows that there is a lack of a 'top to bottom' ethics-based culture, says Tay Kay Luan, ACCA Director for ASEAN & Australasia. All parties must be responsible for the development of ethical culture that promotes, inculcates and walk the values of integrity and ethics, and act in the interest of organisations and their stakeholders.
“The accounting standards and audit practices in Malaysia are more than adequate to ensure good governance, however, the real difficulty lies in setting and maintaining someone's ethical compass. Regulations and rulebooks cannot legislate for someone's lack of moral fibre. On top of that, commitment is needed to act on those ethical principles, “ Tay explains further.
Recent cases of Transmile Group Bhd, BCB and Megan Media Holdings Bhd are reminders for all parties in walking the talks on ethics and integrity. A good code of ethics should include the five fundamental principles, which must be observed and practiced by the professional - objectivity, integrity, competence and due care, confidentiality and professional behaviour.
“All these principles should not be the sole premise of the finance professional, but of all employees in an organisation for its benefit. The case of Enron proves that having a code alone is insufficient. Managers at all levels must champion an ethics-based culture and provide a framework for 'doing the right thing',” says Tay.
According to Tay, the non-executive directors (NEDs) need to remind themselves that they are not there to make the numbers or do someone a favour. Instead they should devote sufficient time and attention to ensure the credibility and the accuracy of the financial statements, instead of just being a ‘rubber stamp’. They should know the stuff and be prepared to pose questions on any irregularities or inconsistencies in the financial statements, and also be prepared to walk away should these not be resolved or answered by management – in short they must focus on acting for the interest of shareholders rather than the board or management team.
“The role of NEDs remains a live issue not only in Malaysia but also in the region, especially in terms of their availability, fitness for role and their ability to make a positive impact through the prevalence of company cultures. ACCA believes NEDs should be more involved in the appointment of auditors, along with audit committees, to protect the independent status of the audit. Clearly, this depends on the willingness of independent non-executive directors to take the baton,” says Tay.
For further information please contact:
Ainul Ibrahim / Manager, Corporate Communication / +(603) 2713 5051ext: 17, 019-2869068 / ainul.ibrahim@my.accaglobal.com