CURRENT ISSUES IN ACCOUNTING AND AUDITING ACT4193

1. CURRENT ISSUES IN ACCOUNTING AND AUDITINGACT4193 CORPORATE GOVERNANCE PRACTICES IN MALAYSIA GROUP MEMBERS: LIM SENG WAI 114755 TAN CHIU SWAN 115004 NYAM VEI JUAN 116013 TAI HOOI SAN 116041 LAU HEE CHING 119629

2. INTRODUCTION • Initiated from East Asian economy collapsed • Triggered in Thailand – transmitted to other countries • In Malaysia, reflected in massive fall in equity prices • Poor corporate governance – reason of crisis • Ownership concentration • Berle and Means (1932),

3. CORPORATE GOVERNANCE IN MALAYSIA • Before and during the financial crisis –consider poor. • high concentration in ownership, audit committee and Board of Director did not perform their duties as expected. • personnel failure in managing the corporation due to lack of director governance can directly affect the corporation as the whole • For example: Perwaja

5. REASON TO REFORM • No measurement to improve - Fairness & Transparency - Accountability - Responsibility • Poor accounting system & practice disclosure • To facilitate and enhance communication between the external auditors and the board of directors • Review corporate policies and practices in the light of ethical considerations • Monitor the manner in which the company’s affairs are conducted and compliance with the company’s code of corporate conduct.

6. DEVELOPMENT OF CORPORATE GOVERNANCEIN MALAYSIA • Malaysian Code of Corporate Governance • Capital Market Master Plan • Financial Sector Master Plan • Companies Act 1965 • Code of Ethic

7. (a) MALAYSIAN CODE OF CORPORATE GOVERNANCE • Finance Committee of Corporate Governance • Principles areas • Board of Director • Shareholder • Accountability • Audit

8. (b) CAPITAL MARKET MASTER PLAN (CMP) • Initiated by Securities Commission • Direction chart of Malaysia capital market • Vision - Efficient mobilization and allocation of funds • Corporate Governance is the key strategy • Mandatory disclosure of compliance of Malaysian Code of Corporate Governance

9. (c) FINANCIAL SECTOR MASTER PLAN (FSMP) • Launched by Bank Negara Malaysia • Promoting shareholders’ and consumers’ activisms, regulatory control and priority sector financing

10. (d) COMPANIES ACT 1965 • To ensure the observance and compliance with all laws, regulations and codes of conduct and best practices. • More transparency an actions by company directors - new provisions • For example: 132A, 132B, 132C. 132D, 132E and Division 3A of Part IV of the Companies Act 1965.

11. (e) CODE OF ETHIC • Based on the beliefs and values of a person. • Imposes more requirements for efficiency by company directors. • 3 main parts: • Corporate administration; • Relations with shareholders, employees, creditors and customers; • Environmental and social responsibilities

12. CORPORATE GOVERNANCE REFORM • Company and securities law entrenches key corporate governance requirements • Framework for corporate governance under the exchange listing requirements • Accounting standards and regulation

13. MEASUREMENTS TO PROTECT MINORITY SHAREHOLDERS INTEREST On 4 Oct 1999, the President of KLSE’s complete revamp the listing rules. The new rules require: • An independent corporate adviser • Board of directors • Interested directors, substantial shareholders or connected person

14. MINORITY SHAREHOLDERS WATCHDOG GROUP • Established in August 2000 • Encourage independent and proactive shareholder participation in listed companies • Safeguard auditor independence • Carry out shareholder activism • Become the resource centre for minority shareholders • Influence the decision-making processes in listed companies • Recommend action against the management of listed companies • Continuously monitor listed companies for breaches and non-adherence to good corporate governance practices

15. CONCLUSION • Encourage Mr. Danish Crawford to invest in Malaysia share market (Bursa Malaysia).

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