Training of Senior Government Officers

It was really an honour that the Association of Statutory Bodies (Persatuan Badan-Badan Berkanun), Malaysia has selected the Accounting Research Institute (ARI) to conduct statutory visits and training for its senior government officers as part of the association's Continuing Professional Development (CPD) program. After much discussion and deliberation, the visit cum training has been scheduled to take place in New Zealand during the period of 1st to 10th September 2013.  New Zealand has been chosen as the most appropriate destination for the group due to its high performance ranking in public sector administration globally.  In fact, New Zealand is the only country in the world that had reigned the top placing for the renowned Corruption Perception Index (CPI), sixteen times since its inception.  The 10-day program includes site visits/meetings with selected local authorities and top universities in New Zealand; participation in an international conference on Corporate Governance Management & Financial Criminology at University of Waikato and participants undertaking 13 interactive training modules.  Four ARI members - Associate Professor Dr Zuraidah Sanusi, Associate Professor Dr Jamaliah Said, Dr Nor Balkish Zakaria and Dr Ismarani have been entrusted by the Association to plan and coordinate the program.  For ARI and Universiti Teknologi MARA, the visit will include the signing of two Memorandum of Understanding (MOUs) with the University of Waikato dan University of Victoria.

Microcredit Business Transformation

As one of ARI HICoE research cluster projects, researchers from the Islamic microfinance group of the Accounting Research Institute has adopted a village in Sungai Pinang, Tanjong Karang for their "test bed". Through twenty women microcredit recipients of Amanah Ikhtiar Malaysia (AIM), a tailoring business was set up in the village.  To facilitate the development of the business, AIM has built a special-purpose workshop, equipped with sewing machines, cutting benches, display closets, an office and an exhibition room.  Initially, the business focuses on local clients.  Today, through ARI, the business is linked to a reputable hypermarket, Mydin Holding Berhad who acts both as a supplier and marketer for the group.  A memorandum of understanding (MOU) was signed in November 2012 between Universiti Teknologi MARA, Mydin Holding Berhad and AIM.   On a monthly basis, Mydin Holding supplies fabrics for the group to make the baju kurung, a national dress for Malaysia. Once completed, the group will arrange to send the dresses to Mydin Holding.  Through this business model, the group can focus on their tailoring business. ARI researchers help to train the business women on the aspect of financial management.  As business owners, it is indeed very crucial that they are trained to be financially literate.  A coordinator cum manager is appointed from among the group to handle financial matters.  

 A few post graduate students are working on this project and to gather relevant data to measure efficiency and effectiveness of the Islamic
Microfinance business model.  Today, a group of ARI researchers visited Tanjong Karang and to meet up with the ladies. Beside looking at business progress, the visit was also used to conduct interviews with the business owners and to get first-hand feedback of the business model.  Overall, the ladies are very happy with the business model.  In addition to the "contractual" business with Mydin Holding Berhad, they facilitate their income by taking tailoring jobs for corporate and individual clients. 

6th ICFC 2014 in Bangkok Thailand

Rangsit University, Thailand has agreed in principle to host the forthcoming 6th International Conference in Financial Criminology (ICFC 2014).

 Today, Prof Dr Normah Omar, Director of the Accounting Research Institute (ARI) and Prof Dr Rohana Othman, Head of the Asia Pacific Forensic Accounting Research Centre attended the preliminary meeting to discuss the theme, dates, prospective speakers as well as the use of possible conference management tool system for ICFC 2014.  To better organize the call for paper, the meeting agreed that Rangsit University will design a dedicated conference website as well as to place the "call for paper" for the conference on "Conference Alert", an online conference database system.  The meeting has also identified a few journal on "Forensic Accounting" and "Financial Criminology" for possible special issue on the conference.  Congratulations Rangsit University.  We look forward to attend the ICFC 2014 in Bangkok Thailand,

New FATF Recommendations 2012

The New 40 FATF Recommendations, therefore, set an international standard, which countries should implement through measures adapted to their particular circumstances. The FATF Recommendations set out the essential measures that countries should have in place to mitigate money laundering and terrorism financing.  Effectively, the New Recommendations aspire to do the following:

       identify the risks, and develop policies and domestic coordination;

       pursue money laundering, terrorist financing and the financing of proliferation;

       apply preventive measures for the financial sector and other designated sectors;

       establish powers and responsibilities for the competent authorities (e.g., investigative, 

          law enforcement and supervisory authorities) and other institutional measures;

       enhance the transparency and availability of beneficial ownership information of legal 

          persons and arrangements; and

       facilitate international cooperation.

Based on the previous Mutual Evaluation Report by APG in 2007, special attention need to be given on specific standards related to certain items namely: (i) Governance and Reporting of Non Profit Organisations (NPOs), (ii) Roles and Functions of Designated Non Financial Business and Professions (DNFBPs) and (iii) Cash Couriers by the financial service sectors

Mutual Evaluation for Malaysia

Come April 2014, Malaysia as a country will undergo a "Mutual Evaluation" Assessment by the Asia Pacific Group on Money Laundering (or fondly known as APG).  This time around, the assessment will be based on the "New 40 Recommendations", an international standard set by the Financial Action Task Force (FATF). The standard is to replace FATF's "40 Recommendations  + 9 Special Recommendations".  Basically the standard is categorised into seven groups:

1.  AML/CFT POLICIES AND COORDINATION covering:

•      Recommendation 1 (Assessing risks & applying a risk-based approach)
•      Recommendation 2 (National cooperation and coordination)

2.  MONEY LAUNDERING AND CONFISCATION covering:

•      Recommendation 3 (Money laundering offence)
•      Recommendation 4 (Confiscation and provisional measures)

3.  TERRORIST FINANCING AND FINANCING OF PROLIFERATION covering:

•     Recommendation 5 (Terrorist financing offence)
•     Recommendation 6 (Targeted financial sanctions related to terrorism & terrorist financing)
•     Recommendation 7 (Targeted financial sanctions related to proliferation)
•     Recommendation 8 (Non-profit organisations)

4.   PREVENTIVE MEASURES covering:

•    Recommendation 9 (Financial Institutions secrecy laws) 
•    Recommendation 10 (Customer due diligence)
•    Recommendation 11 (Record keeping)
•    Recommendation 12 (Politically exposed persons)
•    Recommendation 13 (Correspondent banking)
•    Recommendation 14 (Money or value transfer services)
•    Recommendation 15 (New technologies)
•    Recommendation 16 (Wire transfers)
•    Recommendation 17 (Reliance on third parties)
•    Recommendation 18 (Internal controls and foreign branches and subsidiaries)
•    Recommendation 19 (Higher-risk countries)
•    Recommendation 20 (Reporting of suspicious transactions)
•    Recommendation 21 (Tipping-off and confidentiality)
•    Recommendation 22 (DNFBPs: Customer due diligence)
•    Recommendation 23 (DNFBPs: Other measures)

5.   TRANSPARENCY AND BENEFICIAL OWNERSHIP covering:

•   Recommendation 24 (Transparency and beneficial ownership of legal persons)
•   Recommendation 25 (Transparency and beneficial ownership of legal arrangements)

 6.  POWERS AND RESPONSIBILITIES OF COMPETENT AUTHORITIES covering:

•  Recommendation 26 (Regulation and supervision of financial institutions)
•  Recommendation 27 (Powers of supervisors)
•  Recommendation 28 (Regulation and supervision of DNFBPs)
•  Recommendation 29 (Financial intelligence units)
•  Recommendation 30 (Responsibilities of law enforcement and investigative authorities)
•  Recommendation 31 (Powers of law enforcement and investigative authorities)
•  Recommendation 32 (Cash couriers)
•  Recommendation 33 (Statistics)
•  Recommendation 34 (Guidance and feedback)
•  Recommendation 35 (Sanctions)

7.   INTERNATIONAL COOPERATION covering:

•  Recommendation 36 (International instruments)
•  Recommendation 37 (Mutual legal assistance)
•  Recommendation 38 (Mutual legal assistance: freezing and confiscation)
•  Recommendation 39 (Extradition)
•  Recommendation 40 (Other forms of international cooperation)

SOURCE: The FATF Recommendations, February 2013

Benford Analysis as an Investigation Tool

Benford's Law Analysis is a tool that can help alert professionals such as accountants, auditors or fraud investigators when evaluating accounting data sets.  The results of the analysis may highlight possible occurrence of errors, potential fraud, manipulative biases, costly processing inefficiencies or other types of irregularities. Benford's Law, which is also called the First-Digit Law, refers to the frequency distribution of digits in many (but not all) real-life sources of data. In this distribution, the number 1 occurs as the leading digit about 30% of the time, while larger numbers occur in that position less frequently: 9 as the first digit less than 5% of the time. This distribution of first digits is the same as the widths of grid-lines on a logarithmic scale (i.e. a scale which has been mathematically developed). Benford's Law also concerns the expected distribution for digits beyond the first, which approach a uniform distribution.  The Benford analysis can be used to evaluate business transactions involving (but not limited to): Credit card transactions, Purchase orders, Loan data, Customer balances, Journal entries, Stock prices, Accounts payable transactions, Inventory prices and Customer refunds.  (Source: Mark Nigrini, May 1999; Journal of Accountancy)

External Grants for ARI HICoE

The Accounting Research Institute (ARI) congratulates its researchers from the Islamic Finance & Muamalat research cluster for securing various external grants for their projects.  Specifically, congratulations to the following members:
1.  Grant from Bank Negara Malaysia (Islamic Finance) RM60,000.00 for Prof Dr Rashidah Abdul Rahman (Head)  and her team for a project titled "Customers Perceptions and Behaviour towards Investment Accounts Concept in Islamic Banking"
2. Grant from Asian Institute of Finance (AIF) RM30,000.00 for Prof Dr Rashidah Abdul Rahman (Head) and her team for a project titled "Demand for Microcredit as a Determinant of Microfinance Outreach"
3. Grant for Amanah Ikhtiar Malaysia (AIM) RM36,000.00 for Prof Dr Rashidah Abdul Rahman (Head) and her team for a project titled "Portfolios of the Poor in Microfinance Projects".
4. Islamic Research and Training Institute (IRTI), Jeddah, Saudi Arabia USD10,000 for Associate Dr Abdul Halim Mohd Noor (Head) and his team for a project titled "Enhancing Zakat Distribution through Microfinance - Modelling Institutional Collaborative Efforts.

Congratulations all and well done

Enhancing Competency in Forensic Accounting

Researchers from the "Financial Criminology Research Cluster" of the Accounting Research Institute (ARI) completed their three-day training on the use of "Lavastorm Analytics and Lavastorm Fraud Manager", a newly acquired software for ARI's forensic laboratory.  Three principal researchers and their respective team members attended the event.  This powerful software allows the integration of data for effective fraud investigation.  The need to enhance researchers' competency in using latest technology for financial fraud detection is extremely crucial as it allows them  to teach and train others.  In particular, the software will be useful for the Master in Forensic Accounting and Financial Criminology students.  The knowledge can also be used to train financial fraud investigators.