YBhg Datuk Wira Rahadian Mahmud, Chairman of AppAsia Berhad, Dr Nurmazilah Dato’ Mazhan, Chief Executive Officer, Malaysian Institute of Accountants, Mr Calvert Wong, Executive Director of AppAsia Berhad and Extol Corporation Sdn Bhd, Distinguished Guests, Members of the Media, Ladies & Gentlemen
It is my pleasure to welcome you in celebrating the official e-launch of the Electronic Bank Confirmation Platform.
First and foremost, let me congratulate all those who have worked hard to materialise this Platform. The challenges presented by the delay in receiving bank confirmation replies, and the actions needed to address them on an industry-wide approach, require the tremendous collaborative efforts of a wide range of stakeholders, ranging from auditors, audit clients, bankers to regulators.
Today’s launch is another significant milestone for MIA, on our mission to implement digitally driven initiatives that benefit our members and the profession. I am especially excited to launch this Electronic Platform today, as it attests to MIA’s commitment to continuous improvement in the current bank confirmation process; advances MIA’s digital transformation agenda; AND brings in significant benefits for our stakeholders such as the banks, reporting entities and the capital market as a whole.
This Platform will address the prevalent challenge of delays in receiving bank confirmation replies, that have seriously impacted on the timeliness of financial statements being approved by the Board of Directors and hence, delay the signing of audit reports. In some cases, practitioners signed the audit reports without even obtaining the original bank confirmation replies from banks due to time constraints. Therefore, one of the common findings of practice review is the failure to obtain bank confirmation.
Allow me to share the history of this project, which has taken many years of tireless efforts to come to fruition. The idea of an electronic bank confirmation platform emerged during a forum between MIA and the Association of Banks in Malaysia (ABM), to address several issues pertaining to manual bank confirmation process. The idea was then conceptualised for implementation in 2016 with MIA, under the leadership of the then MIA President, i.e. YBhg Dato’ Mohammad Faiz Azmi, spearheading the strategic efforts, together with relevant stakeholders such as auditors, bankers, Bank Negara Malaysia (BNM) and the Association of Banks in Malaysia (ABM) within the electronic bank confirmation ecosystem. The plan was supported by the MIA Council and the ABM.
At the beginning of our journey, MIA did consider various providers in the global market before we decide to select a vendor via an open tender process. A local vendor – Extol Corporation Sdn Bhd (Extol) – was eventually awarded the tender to develop the Platform, after taking into consideration the local banks’ IT compliance requirements, location of servers, localised functionality of the Platform and the usage fee charged. The usage fee of eConfirm.my is much more economical if compared to the current fee charged by a global vendor in the market.
The Platform would not be possible without the support from BNM and the ABM. Both organisations are present virtually today and I would like to especially express our heartfelt gratitude to them. Our thanks also go to participating banks and audit firms who have given us positive response and assistance. Our collaborative efforts are the driver behind the successful launch of the Platform today.
Ladies and gentlemen
Earlier, I said that this Platform will manifest significant benefits. One key benefit is greater efficiency and savings by replacing the paper-based confirmation process with secure electronic confirmation processes. Auditors, reporting entities and banks can minimise manual processes, eliminate duplications and loss of confirmations, and expedite confirmation replies to the auditors. This will in turn support compliance with approved standards on auditing, financial reporting deadlines and practice review requirements.
By establishing a way to authenticate the parties involved in the confirmation process, reporting entities are able to reduce the risk of fraud which may potentially go undetected by auditors and at the same time protect the interest of stakeholders that rely on audited financial statements. A dishonest client can create third-party credentials that resemble real credentials, e.g. establishing and directing the auditor to a fake ﬁnancial institution website to provide false contact information. Manual confirmation does not require the authentication appears to have emboldened unethical management at companies like Parmalat to engage in massive confirmation fraud schemes, where they manipulated the balances and contact details using a scanning machine. The improvement in scanning and printing technology makes it much more difficult to detect these types of activities.
The capital market benefits from shorter turnaround time in clearance of audited financial statements. It also mitigates the risk of confidential information being wrongly sent to other parties through postal services. Accountability is enhanced because the system is able to trail the confirmation status at any point in time.
Econfirm.my enhances the professional accountants’ capability in the midst of a new normal skewed towards a low contact economy. This platform supports protocols for health and wellness in the COVID-19 new normal, as econfirm.my reduces unnecessary human contact and promotes social distancing through a technology platform. Therefore, this platform is a practical solution for audit efficiency in these challenging times.
Looking ahead, we will continue to engage with the auditors and banks in order to materialise the idea of an industry-wide electronic bank confirmation platform. Engaging the audit clients will also be particularly critical to scale up adoption.
I would like to once again thank BNM and ABM for their support and we look forward to continued collaboration with the relevant agencies and stakeholders such as The Association of Islamic Banking and Financial Institutions Malaysia (AIBIM), The Association of Development Financial Institutions of Malaysia (ADFIM) and the Malaysian Investment Banking Association (MIBA) and their respective member banks. I would also like to commend the MIA Council members both past and present for supporting the vision of an electronic bank confirmation platform, MIA management team for their leadership in spearheading this initiative and the MIA Project management team for working hard to materialise this platform. My sincere thanks also go to our technology partner, Extol Corporation Sdn Bhd for collaborating with MIA in this endeavour.
There is tremendous potential for this Platform in terms of enhancing its functionality to extend beyond bank confirmations and expand cross-border market reach. So do watch this space for more exciting announcements in the near future.
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The use of the word ‘Accountant’
In Malaysia, the word ‘Accountant’ is protected as provided for under the provisions of the Accountants Act 1967 which states that no one can hold himself out or practise as an Accountant unless he is registered as a member of the Malaysian Institute of Accountants.
‘The Malaysian Institute of Accountants is committed to the observance and practice of the highest ethical standards of the accountancy profession. All PC holders are reminded that under the MIA By-Laws (On Professional Ethics, Conduct And Practice), no person shall practice or hold out anything on audit/tax services without a license approved by the Ministry of Finance. Every PC holder is therefore expected to comply fully with Section B200.1 to B200.6 of the MIA By-Laws (On Professional Ethics, Conduct And Practice) failing which, you may be held liable for unprofessional conduct and disciplinary action may be taken against you.’