Upon the implementation of the new Companies Act 2016, I’m worried that we could lose almost 30% of our clientele. If this is indeed the case, what is the back-up plan to cover these losses? Could increasing the audit fee be an option? – From Yahya Bin Zakaria, Audit Department & Cheng & Co’s Talented Staff, Batch 2015.
Before addressing the question, I would like to briefly introduce Yahya, a youngster whom I met a few years ago, when he was doing his audit internship in Kuala Lumpur. With his desire to learn more and improve his knowledge and skills, one day he followed me home and stayed with my family. Yahya occupied the room of my eldest son who was studying in Perth, Australia at that time. I must say that Yahya is a wonderful guy who is always willing to learn and make progress. He is currently a full-time employee in our audit department and in 2015, he graduated as one of our talented staff.
Now I’ll move into answering the question. The new Companies Act 2016 (CA 2016) came into force in stages starting 31 January 2017, primarily intended to increase the ease of doing business in Malaysia. Under CA 2016, various deregulatory measures were introduced to allow companies to operate more efficiently. For example, annual general meetings are no longer required to be held by private companies; instead, resolutions can be made via circulation. For Cheng & Co, changes in the business or regulatory environment always present invaluable opportunities.
On the subject of increasing audit fees, it is imperative to understand that we can’t simply do this at the snap of a finger. The firm cannot increase the fee as it wishes. We really must study the market and then compare and compete ethically. In any case, assuming clients are lost due to the implementation of CA 2016, increasing the audit fee is the wrong way to go. This is where I cannot stress enough the importance of transformation with action.
Cheng & Co – with or without the CA 2016 – will continue to grow and progress towards increasing our professional services in numerous areas. I still remember back in 1993 when we first began, our audit services made up 80% of our total turnover. While it was good for a start, it also reflected over-dependency on one stream of income.
However, as at the end of 2016, the audit revenue accounted for 34% of Cheng & Co’s total group turnover as we steadfastly and successfully pursued revenue source diversification, and this will remain our focus moving into the future. So, it is important that you constantly explore new opportunities for your business to grow and bolster its’s long term income prospects.
At our Transformation Annual Conference a few months ago, the head of one of our partner firms, Indah Group, and specialist in company secretarial matters Mr Samuel Tiew, made a presentation on CA 2016. He concluded that CA 2016 will effectively be a boon for the firm as it opens doors for us to provide more critical services for our clients, particularly the incorporation of the CA 2016 into Memorandum of Articles. From Samuel’s evaluation, our company secretarial service fees are projected to increase by 30% in 2017.
At the end of the day, it all depends on your perspective of challenges – you could see this as a glass half-full or half-empty like situation. It boils down to how prepared you are before the market forces get into action. If you look deep enough within your business, you may just find the trigger that adds a new dimension to your income prospects.
For Cheng & Co, Transformation is key to make the impossible possible and this will continue to drive our vision to become the leading home-grown international accounting firm, with offices in 100 locations, by 2020.