by Emmanuel Samarathisa
PUTRAJAYA has to step in to provide greater wage supplements for small and medium accounting practitioners (SMPs), says the Malaysian Institute of Accountants (MIA), joining the chorus of professional bodies affected by the Covid-19 outbreak.
“The current RM600 is very minimal,” MIA president Huang Shze Jiun told FocusM. “A decent range would be up to 80% like what the Bar Council recently recommended. So that would be a decent range to look at.”
In its latest round of initiatives, Putrajaya unveiled an RM250 bil programme which includes an RM600 wage subsidy of each employee for up to three months provided they are kept on the payroll.
But professionals have flagged the quantum as inadequate as they face severe cash flow problems due to the severity of the pandemic which pushed the government to issue a movement control order (MCO). The government is expected to lift the MCO on April 14.
The Malaysian Bar on Monday (March 30) urged the government to provide more relief for law firms affected by the MCO. Bar president Salim Bashir suggested, among others, for the government to “consider subsidising 50% to 80% of the salaries of the staff of law firms.”
Huang, who is also a managing partner at Baker Tilly Malaysia’s Johor branch, said the effects felt by small and medium enterprises (SMEs) were also shared by SMPs. “And as the bulk of SMPs cost is wages, they can’t be deferred.”
And while the notion of accountancy being recession-proof “in a way is true,” Huang said, “Accountants are usually paid last when it comes to a client’s cash flow. So, practitioners are under pressure where clients can defer payment to them but they (SMPs) can’t defer salaries.”
Huang said during the MCO period, collections had been slow. “Even after MCO, everyone will still be tight for cash. So that’s a challenge we will face.”
Moving forward, Huang said that accountancy firms could implement work-from-home policies and assist clients by, among others, moving into cloud-based accounting. “But not all clients can do these things, especially work from home. They can’t open shops or businesses during MCO.
“So there will be a shrinking of the client base we serve, and if current prospects do not improve many (SMPs) will be calling it a day.”
Huang noted that even the big accountancy firms are already facing challenges. According to MIA, there are almost 1,500 audit firms and about 1,200 non-audit firms.
“So how many (SMPs) would be able to survive is a challenge. In terms of cash flow, without revenue and having to pay salaries, not many businesses can survive that since cash flow is rolling,” he said. – April 1, 2020
