Notes on MIA By-Laws for AUD 689 Audit and Assurance Services

MIA By-Laws on Professional Ethics, Conduct and Practice
SECTION B200: METHOD OF PRACTICE
Key Regulations: Members in public practice must adhere to specific methods of practice as outlined in the by-laws. This includes guidelines on how to conduct professional services, ensuring adherence to ethical standards, and maintaining the confidentiality of client information. Members are expected to engage in continual professional development to stay updated on best practices and advancements in their fields.

Examples

  • A member attending workshops or seminars on new accounting software to enhance service delivery.

  • Regularly updating their knowledge through relevant certifications or courses.

SECTION B210: PROFESSIONAL INDEMNITY INSURANCE
Requirement: Members are mandated to have a professional indemnity insurance policy, serving as a safeguard against potential claims of negligence or malpractice that may arise during the course of professional services.
Insurance Policy:
Must be obtained from licensed insurance companies that are recognized by the Malaysian government.
Minimum coverage requirement is RM250,000.00 at the commencement of public practice, which must be reviewed periodically to ensure that the coverage meets evolving risk assessments.
Insurers should provide clear terms regarding the scope of coverage, including any exclusions that may apply to reduce liability in specific circumstances.

Examples

  • A practitioner selecting an insurance provider after comparing policy terms from several licensed insurers.

  • Regularly reviewing their insurance policy every two years to ensure adequate coverage for new risks associated with their practice.

SECTION B220: DEATH OR INCAPACITY OF A SOLE PRACTITIONER
Implication: The incapacity or death of a sole practitioner can lead to significant inconvenience for clients, interrupting services and diminishing the value of the practice. Such events can cause disruption in ongoing projects and financial management, leading to potential losses for clients.
Protection Mechanisms:
Arrangements must be made within two (2) years from the establishment of the firm to ensure continuity of services. This includes appointing a successor or establishing a formal plan for handling client affairs in the event the principal practitioner is unable to continue.
This protects both the practice's stability and the clients' interests, ensuring they do not suffer from a lapse in service.

Examples

  • A sole practitioner hiring a junior partner as a successor to take over responsibilities in case of unforeseen circumstances.

  • Creating a business continuity plan that includes detailed procedures for transferring client files to a designated successor.

SECTION B240: REFERRALS
Guidelines for Practitioners:
Practitioners receiving assignments by referral must not offer additional professional services to the referring member’s client without prior communication. It is essential that the referred practitioner keeps the referring member informed about the nature of services rendered.
It is crucial that the referred practitioner does not impair the referring practitioner's position for ongoing services by ensuring that the client’s best interests are prioritized and that no conflicts of interest arise from the referral process.

Examples

  • A practitioner referring a tax client to a financial advisor while ensuring the advisor informs them of all communications.

  • Ensuring that the client understands that the referring practitioner has recommended them to maintain trust and clarity in service provision.

SECTION B250: QUALITY ASSURANCE AND PRACTICE REVIEW
Objective of Practice Review Program:
The primary aim is to ensure compliance among members in public practice with applicable professional standards and legal requirements. This process provides a framework for assessing and enhancing the quality of services rendered by practitioners.
This applies specifically to firms not covered by the Audit Oversight Board (AOB). Regular reviews can uncover areas for improvement and ensure that best practices are being pursued actively to benefit both clients and the profession.

Examples

  • Conducting an internal review of practice procedures every year to ensure compliance with updated regulations.

  • Utilizing feedback from client surveys to improve service offerings and address areas needing enhancement.