AI Revolution in Malaysia’s Accounting Sector: A Pathway to Digital Transformation

Contemporary developments in artificial intelligence (AI) continue to reshape industries globally, including profoundly transforming the accountancy profession in Malaysia.

AI has redefined financial data processing, analysis and reporting, thereby cementing an unyielding shift toward digitalisation within the profession, supported by the National AI Roadmap by the government and the Digital Technology Blueprint by the Malaysian Institute of Accountants (MIA). These initiatives position AI as a key tool for enhancing efficiency, accuracy and compliance, ensuring that the profession remains competitive in the digital economy of the Fourth Industrial Revolution (IR4.0) and strategically strengthening the role of accountants in the capital markets.

AI-Driven Automation: Redefining Accounting Practices

AI has broadly transformed accounting practices across different scales of operations by automating core accounting functions such as data entries, processing of invoices and preparation of reconciliations, thereby significantly improving efficiency and reducing human error. Robotic Process Automation (RPA) facilitates accountants to focus on strategic financial planning and critical decisions throughout corporations of all sizes. AI-driven automation also facilitates accounting firms such as BDO in Malaysia to enhance service offerings, including the adoption of efficient middleware solutions for e-invoicing in accordance with applicable tax regulations.

Beyond Automation: Predictive Analytics and Fraud Detection

The impact of AI extends beyond RPA, to enabling data analytics in general and predictive analytics. Data mining and statistical modelling employed by financial statement auditors and forensic accountants facilitate processing of voluminous financial datasets, leading to identification of patterns and anomalies that might have been previously overlooked. These insights transform audit approaches in identifying potential fraudulent transactions or irregularities, which enables practitioners to thoroughly examine specific transactions flagged by AI. Unsurprisingly, International Standards on Auditing (ISAs) adopted by the MIA were revised over the last five years to recognise the value of AI as a risk identification and assessment tool. Both, accounting firms and audit regulators have similarly disclosed in recent years the deployment of and significant investments in data analytics, cementing the relevance of AI within the profession and the growing need to upskill existing practitioners. Impending changes arising from revisions to ISA 240 The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements by the International Auditing and Assurance Standards Board (IAASB) to redefine stakeholders’ expectations in relation to fraud further necessitates integration of AI in the audit process with new exciting opportunities for accountancy graduates soon.

Regulatory Compliance and Environmental, Social and Governance (ESG) Reporting: AI As a Strategic Enabler

Regulatory compliance represents another area that showcases the relevance of AI. Companies incorporated in Malaysia prepare financial statements in accordance to Malaysian Financial Reporting Standards (MFRS) or Malaysian Private Entities Reporting Standard (MPERS) issued by the Malaysian Accounting Standards Board (MASB), which would be routinely lodged with the Companies Commission of Malaysia (CCM). Recent announcements by CCM on the phased implementation of the Malaysian Business Reporting System (MBRS) 2.0 requiring lodgement of digital MFRS or MPERS-compliant financial statements based on extensible Business Reporting Language (XBRL) format consequently leads to enhanced service offerings by accounting firms and facilitates machine-readable analysis of financial information by investors.

Developments in ESG reporting such as the implementation of the Corporate Sustainability Reporting Directive, European Union Taxonomy Regulation and Corporate Sustainability Due Diligence Directive require more than 1,000 data points, which triggered deployment of AI tools among European multinational corporations as a scalable solution. With the issuance of the National Sustainability Reporting Framework by the Advisory Committee on Sustainability Reporting in Malaysia, the impending adoption of International Financial Reporting Standards (IFRS) Sustainability Disclosure Standards issued by the International Sustainability Standards Board (ISSB) could similarly trigger the use of AI-driven data gathering tools.

Evolving Role of Accountants

With the rapid integration of AI throughout various aspects of the accountancy profession, accountants have transformed from traditional bookkeeping and financial reporting to increasingly strategic roles in financial advisory, risk management and data analysis. Accountants would need to adapt and upskill themselves to navigate these transformations and leverage opportunities afforded by this new landscape. Universities, in collaboration and with the support of professional bodies in Malaysia, would excel by integrating AI-related modules into accounting curricula, equipping future accountants with the technical expertise demanded by prospective employers. With increasing investments by accounting firms in AI-related training programs to upskill their workforce, universities could also explore collaborative training programmes with these accounting firms to cultivate a new generation of accountants conversant in both traditional finance and modern technology.

Challenges To AI Adoption in The Profession

Despite numerous benefits, AI adoption in our profession faces challenges including the high cost of implementation. AI-driven accounting solutions require significant investment resources, rendering affordability as a key consideration for SMEs and the ever-increasing needs and outlay for larger corporations. Another pertinent challenge is the shortage of AI expertise within the current pool of accountants based on observations of employers struggling to attract and retain talented personnel capable of integrating and applying AI-driven tools within organisations. Addressing this issue requires concerted collaborative efforts from universities, practitioners, professional bodies and policymakers to develop, integrate and expand AI education for the benefit of all stakeholders within the profession.

In conclusion, AI is transforming our profession, offering unprecedented advantages. While challenges remain, we believe that investments in education, training and supportive policies offer enduring solutions for capital market stakeholders to harness its full potential and enhance Malaysia’s global economic competitiveness

Source: theedgemalaysia.com