October 02, 2016

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The Implications of the new MAC Law for Private Business Enterprises and management’s and the auditor’s responsibilities in regard to the financial statements

By Tin Shein (CEO, MICPA)
The new Myanmar Accountancy Council (MAC) Law was enacted by Pyithuhluttaw on 5 June, 2015. It empowers the MAC, which was formed under that law, to regulate the accounting profession in the Republic of the Union of Myanmar, and also recognizes the Myanmar Institute of Certified Public Accountants (MICPA) as the National Accountancy Body that has the right to develop close relationships with the professional accounting bodies in the ASEAN countries and other international accounting bodies, such as ACCA, ICAEW, CIMA, etc. Thus MICPA has been enabled to exchange with them knowledge of the latest developments in the fields of financial and cost accounting, financial management, auditing and related subjects.
Though the new MAC Law has long been passed by Pyithuhluttaw and published in the newspapers, it does not seem that management personnel and chief financial officers (CFOs) of the majority of the business enterprises, both local and foreign, have studied its provisions that have direct bearing on them, in so far as the maintenance of proper accounts, the preparation of their financial statements and the running of their operations are concerned.
So the aim of this article is to bring to their notice the pertinent Sections of the new MAC Law they have the obligation to comply with without fail.
The objectives of the MAC Law are as follows:–
(a) to increase qualified professional accountants and skilled accountants to contribute to the development of national economy;
(b) to work for the development of modern accounting;
(c) to raise the ethical integrity of Practicing Accountants and to maintain the quality of accounting;
(d) to enable both the Government sector and private sector reporting to be done in accordance with the International Accounting Standards and Standards on Auditing;
(e) to open up more job opportunities by developing the professional accounting firms.
As the regulatory body, MAC has prescribed the Myanmar Accounting
Standards (MAS), Myanmar Financial Reporting Standards that all corporate bodies (business enterprises/companies) have to follow in preparing their respective financial statements. Of course MAS and MFRS are the same as the International Accounting Standards (IAS) and the International Financial Reporting Standards (IFRS), the only exception being that certain IAS and IFRS that are not currently relevant to our present situation have been carved out and that the word ”international” is changed to “Myanmar”. However, it may be mentioned that steps are now being taken to adopt full IFRS by conducting negotiations with the International Federation of Accountants (IFAC), which may pave the way for MICPA to join IFAC as a full member. Membership in IFAC will bestow upon our professional accountants ( CPAs) the status of fully qualified accountants that will be recognized by other foreign professional accounting bodies as well as the World Bank, International Monetary Fund (IMF), Asian Development Bank (ADB) and other UN agencies.
The requirements of the MAC Law to be fulfilled by all business enterprises/companies, public and private, are given below:-
Section 1 (t): The manager of an organization means the person who has to practically manage a business organization for shareholders or on their behalf or for the owner or on his behalf, or the organization that has so to manage. That expression includes the management committee, board of directors, working committee, trustee, administrative committee, etc. that are known under different names as per their organizational set-ups.
Section 62: A manager of a business organization has responsibility for reporting appropriately or accurately and completely on operational results, financial position, and cash-flow, as they actually exist, as per the accounting period or the financial year.
For that matter, arrangements shall be made to prepare and issue the financial statements in accordance with the accounting standards and reporting standards prescribed by the Council.
Section 63: In order to ensure that financial reporting is made with reliable good quality financial statements, the respective persons shall take responsibility for doing the following:-
(a) assume responsibility as those who prepare, sign and approve the financial statements of any one of the business organizations and statements of accounts as required business-wise that are prepared only by the professional accountants or accounting technicians;
(b) a manager of a business organization shall take responsibility as one who approves and submits those financial statements;
(c) a Certified Public Accountant (Full-fledged) or the
Government auditor, who acts as an auditor under the provisions of the respective law, shall assume responsibility as one who discloses and presents the audit opinion on the fair view of the said financial statements.
Section 64: A manager of a business organization shall arrange to fulfill the following requirements as befit the nature, size, condition of the business organization in order to present the financial statements of the organization in accordance with the financial reporting standards prescribed by the Council:-
(a) to organize and assign a sufficient strength of accounting
technicians and professional accountants to the task of undertaking accountancy work and preparing the accounts;
(b) to arrange to put internal auditing in place that is
completely independent of the said duties of undertaking accountancy work and preparing the accounts.
Section 65: The Council shall inform the respective organization, which has the administrative authority, of the manager of a business organization who breaches the provisions of Sections 62 to 64 for taking necessary action.
Section 80: A manager of a business organization shall not incorrectly present and issue its financial results, financial position and cash-flow.
Section 81: A manager of a business organization shall not undertake accountancy services and preparation of accounts or interfere with those who take responsibility for carrying out such tasks by exercising undue influence on them so as to affect the true and fair presentation of the accounts.
Section 89: A manager of a business who violates Section 80 or Section 81 shall, on conviction, be punished with imprisonment for a period which may not extend more than 3 years or with a fine which may not extend more than Kyat 100 lakhs or with both.
to be continuted 


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