Everyone needs the best post-pandemic accountant!
ALMOST every working adult is trying to ‘fit-in’ into what I refer as the ‘post-pandemic life balance’. To what extent does Covid-19 impact our accounting now?
In the next few months, we will see businesses scrambling to finalise their management accounts, auditors on-thefield completing their audit findings, tax agents helping clients assessing their final tax exposures and company secretaries planning for the lodgement of accounts. Companies whose yearend falls on Dec 31 will find themselves in dire situation coordinating with auditors and other service providers during their busiest peak time.
Many are in hope that both Companies Commission of Malaysia (SSM) and the Inland Revenue Board (IRB) would continue to support businesses and granting them a third-year of 90-day ‘Extension of Time’ (EOT). They need as much support as possible from the authorities as it alleviates them from further stress of deadlineprone tasks.
During the lockdown, two things mattered the most to business survival: cashflow (financial) and talent management. Businesses with good accountants managed to stay resilient whilst companies with solid internal processes (such as good management, training, and cloud infrastructures) survived the ‘great resignation period’.
On the other hand, good accountants evolved when many decided to implement cloud accounting to help minimise work disruption. One thing is for sure – although technology helps to get us through the pandemic, it is still impossible for technology to replace accountants or financial managers.
Many are in the view that accounting is all about bookkeeping. The truth of the matter is book-keeping is just an initial part of the whole accounting process. Those who are familiar with bookkeeping will know that much time is spent on reconciling the bank accounts. It will be more efficient when businesses use online banking to settle financial dues as bank statements show relevant details. Those who are still receiving cash or cheque payments will find themselves spending more time at workplace reconciling their bank accounts.
Accounting is not merely book-keeping. Yes, it is far more than that. Artificial intelligence (AI) is predicted to eventually replace book-keeping in the future, but it cannot replace accounting.
Precipitated by the recent changes in the accounting standards and tax rules, accountants are in higher demand than before. Forbes reports that financial management is the fourth of the top five growing career fields in 2022, with healthcare taking the top spot, followed by information technology (IT), supply chain management, actuarial and statisticians as career paths.
Many are still unaware of the tedious applications of the accounting standards and its impact to financial statements. Hence, this article further highlights the fact that businesses need more qualified accountants to manage the complexity of financial matters. I will highlight two areas whereby businesses may be familiar with.
Every business needs creative marketing strategies to survive, and product bundling is one of many.
How will accounting relevant here?
• Survival Ltd sells vans and provides a roadside service plan. The van and the roadside service plan can be sold for RM80,000 and RM2,000 per year, respectively. As part of the marketing strategy, each van will be bundled with one year of roadside service for a total price of RM75,000. Applying the fivestep revenue recognition model of the Malaysian Financial Reporting Standard (MFRS) 15, there are two separate performance obligations (PO) in this example – the sale of van and the provision of roadside service. How do we then measure sales?
Malaysian Private Entities
Reporting Standard (MPERS) Section 23, similar to MFRS
15, recognises revenue at the fair value of consideration receivable. Hence, a revenue of RM73,171 (RM80K – [80/82 X RM7K]) is recognised as and when the van is sold. The revenue recognition for the roadside service (RM1,829) will be deferred until the service is rendered. However, in tax’s point of view, Survival Ltd would have to pay tax first on cash actually received from its customers regardless of the revenue recognition deferment.
Not only do businesses need to survive, but they also need to eventually expand. It is common where we see new company setups being provided with initial soft loans – a simple case using MPERS Section 11 or MFRS 9.
• Company A provides Company B an interest-free loan of RM100,000, which is payable in two years’ time. The market interest rate for similar loans equals eight per cent. As most accountants know, this loan would be initially recorded at fair value as the present value of future cashflows discounted by eight per cent i.e., RM85,730. The initial difference of RM14,270 is treated as one lump sum expense at inception.
Implications? The world needs great accountants. For budding accountants, master your accounting skills, be it technical or entrepreneurship skills – it would be long-lasting enriching career, especially in the postpandemic era.
The best accountants need all the above, a love of mathematics, and an inherent desire to solve financial conundrums.
At Swinburne, you have a chance to learn these skills and apply your skills learnt by taking up a three-month Work Integrated Learning Placement (WIL) Units on business, design, science and information and communication technology (ICT). An opportunity to do both at a newly-renovated and future-ready campus, both in Sarawak and in Australia.