June/August 2007 www.micpa.com.my KDNPP 3809/3/2008 The Malaysian Accountant JUNE/AUGUST 2007 EDITORIAL BOARD Datuk Robert Yong Kuen Loke (Chairman) Loh Lay Choon Dato’ Hj Maidin Syed Ali Ng Kim Tuck Dato’ Nordin Baharuddin See Huey Beng Sam Soh Siong Hoon Tan Chin Hock Chia Kum Cheng (Co-opted) Esther Tan Choon Hwa (Co-opted) INSTITUTE NEWS page 24 FEATURE page 5 LIFESTYLE page 59 PRINCIPAL OFFICE BEARERS President PERSPECTIVE Dato’ Nordin Baharuddin Vice President FEATURES Dato’ Ahmad Johan Mohammad Raslan Intellectual Property Rights. The Right to Protect & Profit From It 3 PRINCIPAL OFFICERS Internet Piracy - Copyright Infringement and Adequacy of Malaysian Law 5 Executive Director Basis of Recognition of Income for Property Developers 10 Foo Yoke Pin ([email protected]) Wither the External Audit in Corporate Governance? 15 Technical Manager Towards Selecting and Maintaining an Effective Internal Audit Function? 18 Melissa Yeoh ([email protected]) Training Manager PEOPLE Joseph Leong ([email protected]) Dato' Nordin Baharuddin Public Affairs At The Helm Dato’ Johan Raslan } 19 & Communications Manager Vicky Rajaretnam ([email protected]) INSTITUTE NEWS Assistant Operations Manager Suzana Mohd Hulaimi ([email protected]) 49th MICPA Annual Dinner 24 Examination Officer Recipient of Anugerah Presiden 2007: Lee How Lai ([email protected]) YM Raja Datuk Arshad Raja Tun Uda 26 Membership Services Officer 49th MICPA Annual General Meeting 29 Adzlyn binti Aladzimy Extraordinary General Meeting 32 ([email protected]) Membership Update 34 Single Copy: RM7.50 November 2007 Examination 36 Subscription: 6 issues May 2007 Examination Results 37 RM43.50 per annum 11th MICPA Accountancy Week 39 (including P&P within Malaysia only) ACCA-MICPA Mutual Recognition Agreement 42 The Malaysian Accountant is published by: The Malaysian Institute of PROFESSIONAL NEWS Certified Public Accountants (3246-U) MASB Update 43 15, Jalan Medan Tuanku IASB Update 46 50300 Kuala Lumpur, Malaysia IFAC Update 50 Tel: 03-2698 9622 Fax: 03-2698 9403 E-mail: [email protected] Website: www.micpa.com.my CASE LAW HIGHLIGHTS Sanjung Selamat Sdn Bhd v C L Chin & Associates 53 Note: The views expressed in this journal are not necessarily those of the Institute or the Editorial Board. GLOBAL INSIGHT All right reserved; no part of this publication may be transmitted in any form or by any means, electronic, News from Down Under 54 mechanical, photocopying, recording or otherwise, without prior pernission of the Institute or the Editorial World News 56 Board. Concept & Design LIFESTYLE Digibook Sdn Bhd Leaving a Legacy for the Future 59 Reign Associates Sdn Bhd Printer Thumbprints Utd Sdn Bhd PERSPECTIVE t was a night of fellowship and camaraderie among fellow members of the accounting fraternity at the MICPA’s 49th Annual Dinner on June 22, 2007. Close ties were forged not Ionly with the business community but also with the government sector. Deputy Minister of Finance I, YB Dato’ Dr Ng Yen Yen was the Institute’s distinguished guest of honour at the dinner. It was also a night for acknowledging individuals who made contributions in one way or another to the Institute. This year’s Anugerah Presiden was presented to YM Raja Datuk Arshad Raja Tun Uda, in recognition of his exceptional contributions to society, the accountancy profession and the Institute. The Institute also held its Annual General Meeting (AGM) and its Extraordinary General Meeting (EGM) on June 23, 2007 and at the Council Meeting held following the AGM, former Vice-President, YBhg Dato’ Nordin Baharuddin was elected the 28th President of the Institute replacing YBhg Dato’ Abdul Halim Mohyiddin. The Vice-President’s post went to YBhg Dato’ Ahmad Johan Mohammad Raslan. Age differences aside, both men expressed similar views where the Institute is concerned. The interviews are featured in the People section. With the accountancy profession becoming increasingly competitive, MICPA realises that there is an urgent need to build the CPA Malaysia as a global brand, equivalent to the Chartered Accountants and Certified Public Accountants designations of the more established accounting bodies in the world. To this end, on August 13, 2007, The Malaysian Institute of Certified Public Accountants (MICPA) and the Association of Chartered Certified Accountants (ACCA) signed a global Mutual Recognition Agreement (MRA). The agreement was reached on the basis of equivalence of qualifications and sound educational review of each others’ syllabus. The MICPA, recognising the increasingly global nature of the accountancy profession is also looking for ways and means to participate and contribute to the international accounting organisations. But it is also important that the involvement is focused on areas that are relevant to local needs. MICPA is also flexing its marketing muscle by organising exciting events to raise the profile of the Institute and attract new entrants to the CPA Malaysia programme. Enhancing and promoting the CPA Malaysia qualification is priority for the MICPA. With regards to the CFiA qualification, MICPA hopes to assist graduates to achieve a professional qualification that meets the relevant international requirement and at the same time ensure membership growth. The call for an improvement in the communication process between the Institute and members has yielded results as more and more members are now aware of the developments at the Institute as well as in the business environment. The week long 11th Accountancy Week held in August was a resounding success as accounting students throughout the country met, interacted and fostered closer ties. Aside from promoting accountancy as a profession, this year’s event, appropriately themed AAA- Accountants Are Assets, also commemorated the International Federation of Accountants (IFAC) 30th Anniversary celebration. The lifestyle section touches on the environment. Our busy and hectic lives leave little time for us to remember the importance of preserving our surroundings. Neglect and disregard is having a bad effect on the environment and Mother Nature is not going to take mankind’s carelessness lying down. She is making her displeasure known. Read all about it inside. 2 | The Malaysian Accountant | June/August 2007 www.micpa.com.my FEATURE Intellectual Property Rights The Right to Protect & Profit From It BY LIM KIEN CHAI Introduction Crimes do not pay. That used to be the conventional and ‘play-safe’ mindset. The mushrooming of black markets around the world bears vivid testimony to the fact that this trite quote may not have a place in today’s highly competitive and globalise societies. Today’s mankind is always in search of ingenious but unfortunately conniving ways to profit from whatever that they can lay their hands on. To add further injury to the wound, this is done at the expense of someone’s legal rights and privileges. It is done without conscience of transgression and injury it inflicts to ethics, moralities and religion. The mindset is being repositioned from “crimes do not pay” to “crimes pay”. Intellectual Property Intellectual Property (IP) allows anyone to own his or her creativity and innovation, however intangible or non-physical in form in the same way that he or she can own physical property. Intellectual property is divided into two categories: Intellectual Property Rights • Industrial property, which includes inventions (patents), trademarks, industrial designs and geographic The Intellectual Property Rights (IPR) is not spared either. indications of source; and Recent assaults on these rights heightened the issues. IPR • Copyright, which includes literary and artistic works refers to but is not limited to five (5) distinctive but such as novels, poems and plays, films, musical works, complementary types of proprietary rights. Traditionally, artistic works such as drawings, paintings, photographs they have been classified as trademarks, copyright, and sculptures and architectural designs. patents, industrial designs and trade secrets. The advent of e-commerce adds variations to these conventional Rights related to copyright include those of performing classifications. artists in their performances, producers of phonograms in At one extreme of the issue are people who believe their recordings and those of broadcasters in their radio that IP should be unprotected and unrestricted while those and television programmes. at the other end feel that Government needs to pass and www.micpa.com.my June/August 2007 | The Malaysian Accountant | 3 enforce laws to protect intellectual property. The key issue set aside a budget of about 10% of its turnover on protecting here is about producer rights and user rights. IPR. This “investment” may prove to be well worth. Piracy, In Malaysia, fortunately we have a strong intellectual counterfeit, copycat reproduction, imitation, illegal passing property regime. We have a comprehensive legislation to off and the like must be challenged and checkmated or else protect IPR. More legislations and amendments and re- this black market will overwhelm the white market. amendments to existing legislative instruments are in the pipeline. These laws are intended to provide and make Malaysia as the choice country for investors and to let the Legal Protection of IPR world know that their IPR will not be reaped-off and that their market share not diluted illegally, unethically and The first step toward combating the growth of this black immorally. However, the issues of regulatory