A tale of two professional Bodies (MIA & MICPA)

Dear students, as promised, here is little something to help you out with your professionalization of Accounting in Malaysia re-write ; )

The following has been extracted and condensed from Dr. Susela Devi’s Chapter (Chapter 5: The Malaysian Accountancy Profession and its Imperial Legacy) in Accounting & Empire edited By Chris Pollaous and Suki Sian.

The important thing to remember here is that, in the beginning, there was MACPA. Formed in the 1950s (1958 to be more exact). It wasn’t the first professional body in Malaysia (ACCA Malaysia chapter was established in 1936) but it was certainly the most influential of its time.

The Professionalisation of Acconting

Dearest Students, find the full opinion essay on the Professionalisation of Accounting HERE!

REFERENCES!!! - VERY IMPORTANT

References (IMPORTANT!!!!)

Birkett, W.P., Evans, E. (2005) Theorising professionalisation: a model for organising and understanding histories of the professionalising activities of occupational associations of accountants, Accounting History, 10,1, 99-127

Professionalisation of Accounting: Part 3

Part 3: Strategies!

According to (again) Birkett and Evans (2005) there are generally three types of strategies which contribute to the professionalization process. These are:

1. Professionalisation through securing favourable alignments in the domain of work, meaning that professionalization occurs through structuring work processes, job descriptions and competition in the workplace

2. Professionalisation through securing favourable alignments in the domain of market, meaning that professionalization will occur through the interaction with consumers, the understanding consumer powers, market uncertainty, etc.

3. Professionalisaton through securing favourable alignments with the state, meaning that professionalization will occur through state recognition of the profession, support from the state and conducive policies.

Professionalisation of Accounting: Part 2

Part 2: Conditions and dependencies of Professionalisation

According to Birkett & Evans (2005) (I hope you read them!) there are three conditions to professionalization:

1. Professional Power:

This condition talks about there being a power held by the group of professionals to push forth their agenda, to stand up for what is best for them, even in the face of intense resistance. Essentially this talks about the professional organisation’s ability to do what is right for the profession and not be pushed around by other parties (usually clients).

Professionalisation of Accounting: Part 1

Part 1: Where we are now

The accounting profession has come a long way in Malaysia, since our independence on the 31^st of August 1957 (or 16^th September 1963 if you include West Malaysia). We have grown from being a loose gathering of bean-counters to a well-organised, highly skilled batch of knowledgeable professionals.

In Malaysia, professional accounting is governed by the MIA (Malaysian Institute of Accountants), which was set up in the 1980s. The MIA has regulatory powers over the accounting profession as dictated by the terms set within the Accountants Act, 1967.

The History of Accounting

Dear readers, follow the link to learn more about the Awesome HISTORY OF ACCOUNTING!

HERE!

The History of Accounting (Final Part)

The History of Accounting: The Age of Scientific Accounting

As mentioned in the previous articles, European Imperialism spurred the development of new accounting practices because business itself was getting bigger and more complex. One of the new developments which arose in this period was the development of trading companies.

Trading companies such as the East India Trading Company (the shipping company, not the overly-expensive clothes brand!) can be seen to be one of the first ‘multinational companies’ (or MNCs as we say nowadays) with branches overseas and back in their home countries. The creation of trading companies was driven by the need to raise large amounts of capital (MONEY!!!) in order to finance trading ships which went out and did business in the world.

The History of Accounting (Part 3)

The History of Accounting: The Age of Stagnation

Stagnation. Its not a very pretty word. The word itself carries the meaning of stillness, no progress and eventual decay. The age of stagnation however, was not a period of stillness and decay, on the other hand it was a period which marked the beginning of European exploration of the rest of the world, the boom in the spice trades and the establishment of new trade routes worldwide. This period also marked the beginning of the Industrial Revolution in Europe which drove the demand for raw materials from all across the globe.

Why then do experts call it the ‘Age of Stagnation’?. Simply put, it is because while business was growing and doing great, accounting as a subject did not change much. Accountants were still recording the journals and ledgers and balancing them through trial balances all the while making sure that their business’ debits and credits were balance.

So the stagnation here was in the academic development of the accounting profession. Few new ideas were introduced and very little was done towards improving the quality of accounting records kept, basically, everyone was too busy making money to care about accounting development, and this included the accountants themselves who were getting fat and rich from all the money coming their way.

It is an interesting situation where because of the immense wealth generated by the accounting profession, they grew comfortable and complacent and did not really bother themselves with thinking of new ways to improve the standard of accounting.

Towards the end of the age of stagnation began what we know of in popular modern history as ‘the Age of Imperialism’, where European powers went out to colonise the world. This then marks the turning point in history for accountancy where businesses, being more global in nature as a result of Imperialism, turn to more sophisticated accounting practices to record their ever-growing wealth.

Next: To the Present Day!

The History of Accounting (Part 2)

The History of Accounting: The Birth of the Double-Entry system

Eventually, man’s society evolved in to more complex forms. As hunting tribes began to settle down and start planting crops, mankind was faced with new challenges, mainly in the form of having more resources than they need. What did they do with all this excess? After several (failed) attempts at trying to finish it all, they eventually came into contact with other tribes who were willing to trade their resource for the other tribe’s resource. It was a very simple means of fulfilling each other’s needs.

If tribe A has a shortage of chickens and a surplus of wheat, it made financial (or chicken-cial?) sense for them to trade their wheat with tribe B which has a surplus of chickens but a shortage of wheat. Trade became more complex and eventually currency evolved in human society, from giant gold plates in the BCs to the sophisticated anti-forgery bills and notes we have today.

The evolution of currency demanded a more, well, accountable form of accounting rather than making rudimentary markings on paper (or goat-skin, which was probably more widely available then). With currency, transactions also grew more complex, with the development of the concept of giving and taking loans, purchasing in bulk (large quantities) and hiring of employees.

Enter Luca Pacioli, who in 1424, published a textbook on mathematics called : Summa de arithmetica, geometria, proportioni et proportionalità – (It’s Italian, in case you didn’t notice). This book outlines the foundation for double-entry accounting and speaks of journals and ledgers and the accounting cycle. Apparently the book also cautioned wannabe accountants to ‘not sleep until the debit equals the credit!’. Apart from giving many accountants of the day sleepless nights, the textbook outlined the classic account classifications we use today (assets, liabilities, equity, expense, income) and proposed the use of a trial balance to balance the business ledger.

What the double-entry system does is that it creates a system where accounting errors can be spotted and corrected very easily. Basically, when your accounts don’t balance, something is wrong. It can either be due to human error and /or ignorance (see: stupidity) or someone is messing around with your inventory and accounts (see: fraud and theft!). Beyond the obvious benefits of the double-entry system, it also contributed to the development of more sophisiticated transactions and allowed traders to effectively record their ever-growing businesses with greater ease and simplicity.

Through double-entry, accountants or those with a knowledge of accounts became more important in society as they were the ones who held the keys to recording the wealth and property of businesses. The double-entry system is indeed the greatest weapon in an accountant’s arsenal, using it to fight off the ever-present shadow of financial stupidity!... and fraud and error and etc...

Next: Stagnating in Wealth

The History of Accounting (Part 1)

Ok, here is the History of Accounting, the first in a feature series of articles which I will be publishing which closely follow the lessons taught in class. All my students are encouraged, oh I mean MUST read these articles and use it in their lessons (and generate more readership for my blog!).

Without further ado, here it is:

The History Of Accounting: Age of Record-Keeping

Accounting, as we know it today, is more than just numbers and figures put together to represent how much money a business/individual/group has. Accounting is the art of recording value, and it is an art which has been around for thousands of years.

Back in the early days, before the invention of computers, the internet or even the number zero, record-keeping existed among early human tribes. Of course, back then the primary means of recording was through crude, rudimentary drawings of objects or they were represented by stone chips thrown in a basket (assuming you could afford a basket back then).

Why was there a need for record keeping? Well, consider this, say you are living off the land in a fur-clad tribe of say maybe 20 people, including women and children. Human beings, like all creatures of God, need to eat to survive, so you take some 5 of your strongest, most able bodied men to go off and hunt. After a long, tiring day of hunting, you come back, tired, sore and hurting with a meagre 5 rabbits to share with 20 people. As the leader of your tribe, you can’t simply give the 5 rabbits on a first come first serve basis, but you needed to be able to divide it equally amongst your tribe members so that everyone can survive the day (note that surviving back then was a lot more difficult than it is today). So cutting the 5 rabbits into 20 equal portions (as equal as cavemen can) you distribute it among your tribe members. How do you ensure that each tribe member takes only what is due to them and nothing more and that everyone gets a fair share? Note that failure to do so will result in the eventual death by starvation and/or hunger-driven violence of your tribe.

And this is how record-keeping saves the day. You have a resource (Rabbit meat) and you have an interested party (Hungry cavemen/women). In order to fairly distribute the resources and keep track of it, you need to make a physical mark, hence the birth of the crude drawing. If you couldn’t draw, you can use stone chips to represent a portion of rabbit meat, and keep it in a basket (or whatever stone-age holding thing they had back then).

So there we can see how record-keeping is an integral part of mankind’s social evolution from naked animals to the suit-wearing, smart-phone using techno-god of today.

Next: Double Entry- The Accountant's Greatest Weapon against Financial Stupidity!

This Face Good MONEY!!!

Uh, wait, that can't be the right picture, anyway, pending the posting of a more proper picture of myself, welcome to Mr. Sam's blog!

What is Mr, Sam's blog? Gosh! you didn't know? well, *cough* if you MUST know, it is a one-stop reference centre for all accounting/finance wannabes and students. If you came here because you are one of my students, GOOD! This blog will help you much in your studies. If you came here because one of your friends recommended it to you, again, GOOD! This blog will help you in your financial life. If you came here googling for 'hot studs', GOOD for you, for I am as HOT as they get! Nyarh!

Alright, I've beat around the bush enough! This blog is mainly intended to distribute relevant financial and accounting information to my students who are too lazy to use SPECTRUM. However, you will find more than just boring lesson-related stuff, you will also find useful financial information, money-saving tips and dumbed-down, honest-to-goodness opinion pieces (by ME!) on current financial and accounting issues.

I realise that not everyone is a financial whiz and not everyone is a godly accountant, therefore this blog also aims to reach out to the un-financially educated masses and deliver sound financial advice in simplistic terms so that we normal people don't have to fork over $400 an hour to some snotty, foreign educated young brat who drives a BMW to tell you how to open a savings account!

Lets face it, the Economy is going to heck, the world is still reeling from the Global Financial Crisis and our beloved subisidies are getting cut left and right. The average Malaysian (and/or international citizen, wherever you are from) needs to know how to make sense of his/her financials to survive.

Oh right, I forgot to make introductions, My Name is Samir Harith, small-time Awesome Tutor of financial subjects in a Malaysian University (my students should know where). My students know me simply as 'Mr. Sam'. I love numbers, I love counting and I LOVE money (hey, who doesn't?). You will enjoy what you read in this blog, and you will gain a lot of useful financial knowledge and nformation from this blog. With it, I hope that you can make sense of your own financials and use it to make good money!

Oh, yes, this is the right picture: