Industry-wide Electronic Bank Confirmation Platform Spearheaded by MIA To Go Live in May 2020
The Malaysian Institute of Accountants (MIA) announced today that eConfirm.my, the first Industry-wide Electronic Bank Confirmation Platform in Malaysia, is scheduled to go live on a staggered basis throughout the month of May 2020, beginning on 5 May 2020.
eConfirm.my will help audit firms to eliminate the need for paper-based confirmations, expedite bank confirmations and enhance the efficiency and security of the bank confirmation process, which will in turn support compliance with approved standards on auditing, financial reporting deadlines and practice review requirements.
“We expect the Industry-wide Electronic Bank Confirmation Platform to help resolve delays in receiving bank confirmation replies that seriously delay the timely approval of financial statements by companies’ Board of Directors and hence delay the signing of audit reports,” said MIA CEO Dr. Nurmazilah Dato’ Mahzan. “The use of electronic bank confirmations can also be a solution to such delays in audit processes that occurred during the restrictions imposed under the Movement Control Order (MCO) and even post-MCO.”
First conceptualised in 2016 and spearheaded by the MIA, the multi-stakeholder Electronic Bank Confirmation Platform involves the strategic collaboration of relevant stakeholders such as auditors, bankers, the Association of Banks in Malaysia (ABM) and Bank Negara Malaysia (BNM) within the electronic bank confirmation ecosystem. “MIA would like to accord its appreciation to BNM, ABM, banking institutions, audit firms and many other stakeholders as the Platform would not have materialised without their support,” said Dr. Nurmazilah.
Following an extensive procurement process, local vendor Extol Corporation Sdn Bhd (Extol) was awarded the tender to develop and operate the Electronic Bank Confirmation Platform. Usage fees for the Platform are more economical compared to the current fee charged by a global vendor in the market.
Who Should Use eConfirm.my
“The Institute is strongly advocating that audit firms sign up to use eConfirm.my, as part of our advocacy for the profession’s digital transformation and digitalisation of the audit process to enhance efficiency and effectiveness,” said Dr. Nurmazilah. Currently, more than 100 audit firms have signed up to use the Platform’s services. Seven banks (i.e. Maybank, Hong Leong Bank, RHB Bank, OCBC Bank, Bangkok Bank, MUFG Bank and Deutsche Bank) have also signed up as counterparties in the electronic confirmation process, although the banks will be going live on the Platform according to different schedules during May 2020.
Multiple Benefits of eConfirm.my
Dr. Nurmazilah exhorted audit firms to sign up for eConfirm.my, as they will gain the following benefits:
• Keep up with Global Trends and Local Market Developments – Online confirmations are the preferred method for confirming client information in jurisdictions such as the United States of America, the United Kingdom and Australia. In Malaysia, online confirmations are currently being used in a limited manner for confirmations with some foreign banks, but they are predicted to become the norm once the eConfirm.my is rolled out and becomes the preferred method.
• Be Able to Work Remotely Even During Business Shutdowns – Social distancing and remote working are predicted to become normalised in the post-COVID-19 to reduce infection risks. Audit firms that wish to maintain their business continuity and sustainability are advised to adopt digital tools – e.g. cloud storage to enable round-the-clock access to data, online meeting tools to simulate a virtual office environment and engage with staff and stakeholders, and the upcoming eConfirm.my – to expedite audit processes.
• Improve Efficiency and Security – Manual bank confirmations are inefficient and time consuming, with an average turnaround time of 4 to 8 weeks, whereas using eConfirm.my will be much faster.
Expediting the receipt of electronic bank confirmations could expedite audit work and the timely approval of financial statements by the audit client’s Board of Directors.
The use of electronic bank confirmations could also deter financial fraud arising from compromised manual confirmation processes, e.g. through the creation of false confirmation contact details, signature forgery and clients intercepting the confirmation process, that are difficult for even the most experienced auditors to detect.
By embedding industry-standard authentication and authorisation procedures, eConfirm.my delivers a high standard of security and deters fraudsters. Verification of the organisations and users via the eConfirm.my ensures confirmations are only sent and received by registered and authenticated auditors and banks.
• Boost Productivity by Minimising Human Errors and Optimising Talent – There is a risk of human error as the manual confirmation is labour-intensive, especially during the peak audit period. For example, posting confirmation requests to the wrong address will require re-sending the confirmation and further follow-up. The use of electronic bank confirmations reduces this risk.
Technology adoption via the use of eConfirm.my can also eradicate time-wasting and tedious jobs such as the numerous printing, mailing, follow-up and monitoring tasks that are part-and-parcel of the bank confirmation process. In a year, and depending on the size of the firm, auditors may have to manually send out hundreds or even thousands of such confirmation request letters. These hours and the firm’s talent can be put to better productive use.
• Improve Practice Review Ratings – Failure to obtain bank confirmations is one of the most common reasons for low practice review inspection ratings among audit firms. Electronic confirmations eliminate this risk and help firms comply with one of the practice review requirements. (For more on practice review, visit eConfirm.my)
• Save on Costs – Evidence from other markets where electronic bank confirmations are the norm shows reduced costs. In using eConfirm.my, an economical fee per online submission of confirmation request will be charged upon the successful receipt of the confirmation. Auditors will be billed twice a month on the 1st and 16th of the preceding period and enjoy a credit period of up to 30 days to process and settle the payment.
• Extensive Support and Hand-holding – Drawing on its substantial expertise in professional development, which is still ongoing throughout the MCO and post-MCO, MIA will facilitate the training of auditors and bankers via remote video training sessions. Despite the restrictions of the MCO, MIA has successfully facilitated the training of hundreds of auditors and bankers via remote video training sessions from 6 to 17 April 2020 to prepare them for the transition.
• Expert and Tested Technical Infrastructure and Support – The platform was developed by Extol, a specialist in Information and Communications Technology (ICT) with significant experience in providing ICT services to financial institutions.
“The Institute encourages more firms to sign up in order to expedite bank confirmations and enhance their audit process, which will facilitate compliance with international standards on auditing, practice review requirements and other regulatory requirements,” concluded Dr. Nurmazilah.