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What To Prepare Before An IPO? A Beginner’s Guide

What To Prepare Before An IPO? A Beginner's Guide

Initial Public Offering (IPO) can be a complicated procedure for companies because it affects each and every part of the organization. Proper planning and getting ready earlier before the actual process are of utmost importance when it comes to ensuring a successful IPO. 

 

Professional pre-IPO advisory services help companies in making sure they are ready to go public.  

 

Keep reading to find out what to prepare before an IPO. 

 

What is an IPO?

An IPO is essentially a process in which a private company becomes a public company by getting listed on the public equity index for the first time. A successful IPO means that the company has shifted from being unlisted or private to being listed or public. 

 
business chart reported in tablet and paper

Five Steps to Prepare for an IPO

Professional pre-IPO advisory services and audit firms in Malaysia play an integral role in preparing businesses for a successful IPO. The five major steps involved in the IPO preparation process are:

1. Understanding the Index

Various equity indexes have their own set of rules and requirements. Generally, most of them deal with audited financial statements, but other aspects, such as specific costs, disclosures, and corporate rules for different equity indexes, must also be considered.  

 

Before going public, a company must know everything there is to know about the equity index. This allows company owners and the management team to select the best index and get through the IPO process smoothly.  

 

2. Hire IPO Experts

Taking your company public is a major and transformative decision you can make for your business. It is essential that the entire process be handled carefully by the experts. During the IPO process, you will need the help of professionals like accountants, lawyers, and auditors. 

 

It is highly recommended that you engage the services of a professional audit firm in Malaysia to ensure highly qualified experts are handling the IPO process independently. The first step is to obtain a pre-IPO advisory service to assess if your company is ready for an IPO. 

3. Create a Board of Directors

Creating a reliable board of directors is another important part of the IPO strategy. You will have to consider many different factors during this process, such as the qualifications, experience, and expertise of each board member.  

 

Generally, you should be looking to create a diverse board that consists of members with different experiences and backgrounds, such as finance, management, and business operations. 

 

Focus on the potential board members’ latest accomplishments and carefully discuss your requirements with them to ensure everyone is on the same page. 

 

4. Timing

Timing plays an important role in mergers, acquisitions, and IPOs. Companies that are not ready to go public typically have issues in the auditing or legal aspects.  

 

On the other hand, organizations that rely on pre-IPO advisory services to take every step with due diligence don’t have to worry about obtaining the right timing to go public. Instead, they can fully depend on the advice from experts to make the right decisions at the right time. 

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5. Planning

Comprehensive IPO planning deals with every stage of an IPO, including the measures to take after the company has become public. You should create comprehensive frameworks and policies to ensure your company will appeal to public investors.  

 

Experts such as audit firms in Malaysia can help ensure the company is ready to be scrutinized by public investors and external auditors after it becomes public. 

 

A common mistake companies tend to make is overpromising their growth after going public, which can end up being an issue at a later stage.  

 

Therefore, it is not recommended to overestimate the growth potential of your business. Instead, rely on professional estimates in the form of proper analysis and financial documents to ensure the IPO is successful and the company continues to run smoothly after the IPO.  

 

Final takeaways

Whether your company is a small or a large-scale enterprise, you have to focus on the aspects above to get through the IPO successfully. Professionals like an audit firm in Malaysia can help you every step of the way.  

 

After the IPO is successful, company managers and directors should focus on regular communication among themselves as well as with the investors to ensure there are no ambiguities about how the company is being run. 

 

Ultimately, an IPO completed by experts with proper planning is bound to be successful.  

 
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Why Are Financial Instruments Valuation Important For Your Business?

Why Are Financial Instruments Valuation Important For Your Business?

Both tangible and intangible benefits play an integral role in business valuation in Malaysia

 

Financial instruments are considered a part of the intangible assets that can provide significant future benefits by providing a claim to future cash. 

 

In simpler terms, financial instruments are tradeable assets that also represent a legal agreement or right to the monetary value of an asset or entity. 

 

There are many different aspects of financial instruments valuation considered by audit firms in Malaysia during the business valuation process to make sure a correct value is obtained. 

 

Keep reading to learn about the major types of financial instruments and the significance they hold for businesses. 

 
 

Classification of Financial Instruments

According to financial standards, it is possible to classify financial instruments into two major categories:

1. Cash Instruments

Cash instruments are a form of tradeable financial instrument whose values are directly associated with the financial markets. It is also possible to divide cash instruments into two further types:

sustainability report

2. Equity Instruments

These cash instruments are the ones that represent the ownership of a particular asset, such as:

 

  • Common Shares represent the partial ownership of the company. 
  • Preferred Shares represent an equity interest in a firm and do not provide voting rights to the company owners. In such a situation, the investor is typically entitled to get a certain number of fixed dividends as per the legal agreements. 
  • Private Equity is the companies operating as partnerships or private limited companies. Such organizations do not have publicly traded shares. Private equity funds and venture capital funds typically fund such companies. 
  • Exchange Traded Funds (ETFs) are passive funds that represent the stock market of a country. 
 

Debt Instruments

As the name suggests, debt instruments are the debt or loans given by an investor to the owner of the company or a specific asset. A wide range of bonds can be issued in the debt capital markets, such as convertible bonds, Eurobonds, and many others. 

 

When you hire an audit firm in Malaysia for financial instruments valuation, it will consider all of these different types of financial instruments to make sure the entire business valuation process is completed efficiently.

business chart reported in tablet and paper

Derivative Instruments

Derivatives are investments that are made on the basis of underlying assets. The purpose of the derivative contracts is to make sure that a company is able to buy or sell the underlying products at a later stage. 

 

The following are the major types of derivative instruments:

  • Forward Contracts provide the holder the obligation to buy or sell an instrument at a certain price at a specific price. 
  • Futures Contracts are also considered forward contracts, but they are traded on organized exchanges. Future contracts involve legal obligations to buy or sell a standard quantity at a predetermined price. 
  • Swaps are legal agreements that involve two parties in which agreements are made related to periodic payments. 
  • Options are also legal contracts in which the option seller provides a right to enter into a transaction with the seller at a later date. 
 

Financial Markets

Financial markets are strongly associated with financial instruments and financial instruments valuation procedures. A financial market is a market in which financial instruments are exchanged or traded. The three important functions of a financial market are:

Price Discovery

Price discovery refers to the transaction between buyers and sellers of financial instruments. The cost of the traded asset is typically decided after thorough negotiation.


These functions of a financial market are important to determine the availability of funds for those who are lending money or investing in a certain company.

Liquidity Function

The purpose of the liquidity function is to facilitate investors in selling a financial instrument.


The liquidity function is also defined as the measure of the ability to sell a particular asset at a fair market value. It is not possible for an investor to hold a financial instrument for a long time without liquidity

Reduction of Transaction

A reduction of transaction costs is required to deal with the changes in the costs of financial instruments.


Changing economic conditions play an integral role in the trading of different types of financial instruments and overall business valuation in Malaysia. Therefore, such functions exist to streamline the procedures as much as possible.

In Closing

Financial instruments valuation is definitely a challenging and complicated procedure that should be handled by experts to ensure accuracy in business valuation procedures. 

 

In this regard, professional audit firms in Malaysia can help companies go through business valuation and financial instruments valuation quickly and smoothly.   

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How to Start a Special Purpose Acquisition Company (SPAC)?

How to Start a Special Purpose Acquisition Company (SPAC)?

In recent years, Special Purpose Acquisition Companies (SPACs) have become very popular because they give companies an alternative to the traditional IPO process. However, there are certain aspects of SPAC that businesses must understand before starting this process.  

 

Generally, relying on professional accounting services and pre-IPO advisory in Malaysia help companies in navigating through this process quickly and smoothly. If you are unsure what exactly a SPAC is and how it works, you are in the perfect place. 

 

In this article, we will discuss the important aspects of a SPAC in detail, so keep reading to learn more.  

 
 
businessman is calling in office

What is a SPAC?

A SPAC is basically a “shell company” that investors set up in order to raise money through an IPO and then acquire another company. In other words, a SPAC does not have any commercial operations. It does not provide any products or services directly. A SPAC’s only assets are the funds raised through an IPO.    

 

Generally, a team of investors is behind the creation or sponsorship of SPAC. Financial experts and a lot of high-profile CEOs use SPACs to acquire companies and make them go public. 

 

However, it is important to note that when a SPAC raises money, the people investing in the SPAC are not familiar with the target company it wishes to acquire.    

 

This is the reason why experienced investors with proven track records usually have a higher chance of convincing the general public to invest in the company. Because of such working procedures, many people refer to a SPAC as a “blank check” company. 

 

The typical price of SPAC IPOs is around $10 per share. Once the IPO raises significant capital, it starts going into the interest-bearing trust account until the management of SPAC has found the perfect private company that wants to go public via acquisition. 

 

Upon the completion of the acquisition, SPAC’s investors have the choice of swapping their shares for shares of the merged company, or they can choose to redeem their SPAC shares and get back their original investment, including the interest earned while the money was in trust. 

 

Dealing with such procedures can be challenging for most businesses, so it is recommended to rely on professional accounting services in Malaysia and obtain guidance from the experts throughout the acquisition process. 

 

In this way, both the investors and the management are able to make reliable decisions. 

 

The exact composition and investment details of SPAC can greatly vary depending on the legal agreements signed between the involved parties.  Generally, SPAC investors get a 20% stake in the merged company. 

 

Nevertheless, it is important to note that SPAC sponsors must comply with certain deadlines to get the best deal within a period of two years after the IPO. Otherwise, the risk of liquidity increases. Failing to acquire a company within two years means the SPAC must return the money to investors.

 
 
Office building Image

What are the requirements for a SPAC?

In order for a SPAC to be successful, it is important to take every step with proper planning. Not every company and investor is ready to go public, so it is recommended that you hire professional pre-IPO advisory services to make sure your company meets all the requirements to go public.     

 

 

In this regard, a company that wants to go public via SPAC must meet the general requirements of the traditional IPO process. A SPAC, on the other hand, doesn’t do any direct business, so the information that is available is limited and not as thorough as it is for an IPO.   

 

 

 

Some of the key areas to identify in SPAC are:

 

  • Criteria and goals of SPAC. 
  • Costs, risks, and limitations associated with SPAC.  
  • The amount of time required by the SPAC management to find the target company. 
  • Liquidity period. 
  • A refund policy for the initial investment. 

How Much Does It Cost to Create a Special Purpose Acquisition Company?

There is no one specific cost associated with the creation of a SPAC. It is dependent on specific legal conditions and the scale of SPAC. Generally, the cost can reach $800,000 USD, with over 5.1% of the IPO proceeds going to sponsor capital. A large portion of the setup charges are paid in the pre-IPO phase, while the remaining amount is covered after the acquisition is complete.  

Conclusion

Overall, navigating the process, challenges, and risks of SPAC can be complicated for most businesses. 

 

In this regard, companies planning to go public should rely on professional accounting services and pre-IPO advisory services in Malaysia to ensure a smooth and productive process. 

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What do You need to Know About Staff Placement Services?

What do You need to Know About Staff Placement Services?

For companies, being able to hire the best job candidates for the right position is a combination of many different factors, especially in this digital era. However, not every business has the right tools and knowledge to hire the best people. 

 

In such a situation, professional staff placement services play an integral role in helping all types of companies to find the best talents. The purpose of a staffing agency is to act as a bridge between employees and employers. 

 

Ultimately, hiring qualified candidates for the job means the company can expect a significant boost in its productivity and efficiency. 

 

In this article, you will learn all of the important aspects of staff placement services, so keep reading.

What is a Staff Placement Agency?

A staff placement agency is a company that hires employees for a business based on their requirements. A reliable staff placement agency is one that offers a wide range of staff placement services, such as temporary hiring, temp-to-hire, and direct hire.  

 

Generally, companies that provide hiring services have a large talent pool, so whenever a business contacts them to fill a particular position, they can provide the best candidate for it. 

 

However, if a recruitment agency does not have an available candidate, it will advertise the position on different job finding platforms. 

 

There are also specialized recruitment agencies. For instance, certain accounting firm in Malaysia do provide professional staff placement services for their clients.

businesswoman working in sofa

Five General Steps of Staff Placement Services

The exact process of staff placement services can greatly vary from agency to agency. The following are the five steps involved in the process in general:

  1. The employer contacts a recruitment agency to discuss their needs, such as job responsibilities, the number of employees required, and salary.
  2. The hiring agency creates a thorough job description to attract the most suitable candidates.
  3. Professional staff placement experts vet the candidates and choose the most suitable individual for the available job. It is also possible that the recruitment agency provides a list of 2-5 candidates so that the employer can make the best choice.
  4. The employer checks all of the information and makes the decision to hire the chosen candidate(s).
  5. Agency handles all of the paperwork and completes the hiring process.

Benefits of Using Staff Placement Services

There are numerous benefits to using professional staff placement services to improve the speed and quality of the hiring process. You can use staff placement services to get the following benefits, whether you’re looking for a full-time worker or a freelancer:

discussion in office

1. Quick Hiring

There have been tremendous changes in the job market in the last few years. Technology is a big part of the hiring process these days, and if you use professional hiring experts, you can make sure that all of the latest tools and methods are used to quickly fill a position.

2. Minimum Workload

A huge benefit of professional staff placement services is that company owners and managers can focus on core business activities instead of lengthy recruitment procedures.

 

As a result, employers don’t have to worry about spending too much time going through resumes and interviewing candidates. Instead, they can rely on staff placement experts to do it.

3. Specialized Hiring

The skills, experience, and overall quality of the employees of a company make a huge impact on its success and productivity. It is important to hire people with experience or qualifications in technical positions.

 

When a company’s own HR department handles the hiring process, they usually don’t know much about the details of a certain field, like accounting. As a result, hiring for specialized positions is either impossible or too expensive using internal hiring procedures.

 

On the other hand, professional staff placement service providers have a huge pool of talents that specialized in different fields. As such, they can ensure that the best individuals are hired for a position such as for accounting.

Conclusion

Using staff placement services is a smart way to hire the best talents and maximize your company’s success. 

 

Moreover, the kind of benefits offered by professional recruiters is not possible in internal recruitment procedures, especially in small and medium-sized companies. Therefore, by engaging a staff placement service, companies can enjoy all the aforementioned benefits.

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Differences Between Market Value and Intrinsic Value for a Financial Instrument

Differences Between Market Value and Intrinsic Value for a Financial Instrument

Business valuation in Malaysia and around the world is composed of many different factors. A number of financial instruments’ valuation factors must be considered to make sure an organization is valued correctly. 

 

Otherwise, there is always a risk of inaccurate or even fraudulent valuation.  

 

Both market and intrinsic value play an integral role in the financial evaluation of a business. Let’s discuss these types of values, along with their differences, in detail. 

 

What is Intrinsic Value?

The approximated true value of an organization is called the intrinsic value. It is not dependent on the market value. Generally, intrinsic value is one of the most important financial metrics to consider when evaluating the worth of a company.  

 

The basic business work dictates that investments are made in companies with higher intrinsic value instead of businesses that are heavily impacted by the market. As a result, intrinsic value is a significant part of fundamental analysis and business valuation in Malaysia

graph and chart

Estimation of Intrinsic Value

Both tangible and intangible factors have to be considered to estimate the intrinsic value. It also includes various other factors, such as market analysis, financial statements, and evaluating the overall business plan of the company. 

 

It is evident that estimating the intrinsic value is a complicated process. Therefore, it is best to let the accounting experts and audit firms in Malaysia handle it so that an accurate estimate can be obtained. 

 

The inclusion of variables, especially the intangible assets of the company, can make the approximated intrinsic value vary to a large extent.  

 

How the intrinsic value is estimated also depends on the method used by the accountant or auditor to value the business. 

 

Some analysts might use the discounted cash flow analysis to include future earnings in their calculations. On the other hand, some might use only current liquid value or book value to obtain intrinsic value. 

 

Complexities of the balance sheet can also affect the process of evaluating intrinsic value. Since the internal team of a company is responsible for preparing balance sheets, they might not actually represent the assets and liabilities. 

 

As a result, engaging the services of an independent audit firm in Malaysia becomes important to ensure maximum transparency. 

What is Market Value?

As the name suggests, the market value of a company is the value that is represented by the share price of the company. Therefore, the market value of the company can be significantly higher or lower than its intrinsic value. 

 

Generally,  market value is used to represent the capitalization of a listed company. Its business valuation is easier because all you have to do is figure out how much each share is worth now and how many shares are still in circulation. 

 

Accuracy of Market Value

Keep in mind that the market value of an organization is obtained from the current share price, so it might not actually reflect the correct worth of the company. 

 

Hence, the market value of an organization is typically considered to be an estimate of public sentiment towards the business. 

 

Stakeholders and investors also pay special attention to the market value of a company as it represents its demand and supply. Moreover, it shows the interest level of the investors in a company. 

 
doing accounting works at home

Estimating the Market Value

A significant challenge in estimating the market value of a company is considering its liquid account assets such as real estate. It results in the market value being higher than the intrinsic value, especially when there is a strong demand for investments, leading to overvaluation.

 
However, if there is not enough demand for investments, it can cause the company to get severely undervalued as well.

Key Differences Between Intrinsic Value and Market Value

The following are the key differences between intrinsic value and market value:

Intrinsic Value Market Value
Estimated value of a company and does not depend on the share prices
Represented by the current share price
When the intrinsic value is higher, the asset is undervalued and should be bought.
Lower market value shows that the asset is undervalued and should be bought.
Lower intrinsic value shows that the asset is overvalued and should be sold.
Higher market value shows that the asset is overvalued and should be sold.
Business evaluation with intrinsic value is comparatively difficult.
Business evaluation with market value is comparatively easier.

In a Nutshell

Both intrinsic and market value hold great significance in financial instruments’ valuation purposes. It is important for organizations to evaluate accurate intrinsic value and market value to provide complete and transparent information to investors and stakeholders. 

 

Relying on professional audit firms in Malaysia will help you in completing the business valuation procedures accurately. 

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What is the Difference Between PCAOB and GAAP

What is the Difference Between PCAOB and GAAP

Accounting and auditing standards play an integral role in maximizing the efficiency of financial regulations and ensuring maximum safety. 

 

US Public Company Accounting Oversight Board (PCAOB) is one of the world’s many accounting watchdogs that ensure the accounting procedures of a company follow the set standards.   

 

However, it does not mean that PCAOB itself has not been a part of any controversy. In fact, a lot of experts have raised questions about the legitimacy of PCAOB as the standard organization that sets financial reporting regulations. 

 

Importance of Reliability

A critical question that is raised about PCAOB and Generally Accepted Accounting Principles, or GAAP, is their ability to ensure maximum reliability of the financial statements. 

 

PCAOB auditors are responsible for checking whether the financial statements comply with the US GAAP. Even though PCAOB and GAAP are formulated in the USA, they also set international accounting standards and principles. 

 

This is the primary reason why a lot of professional accounting services in Malaysia also pay attention to making sure these principles are followed while performing accounting and auditing functions.  

Concerns

A major concern associated with PCAOB auditors and any auditor, in general, is the fact that auditors are typically paid by the companies, due to which managers and supervisors tend to have a lot of influence in the auditing process. 

 

US GAAP highlights the significance of an independent and transparent audit, but PCAOB does not ensure that any concrete steps are taken to keep the auditors unbiased. 

 

If the PCAOB auditors are influenced by a company either directly or indirectly, it can severely impact the quality of the auditing process. 

transfer pricing in Malaysia

Transparency

Both US GAAP and PCAOB standards are similar in the way that they focus on bringing transparency and reliability. 

 

However, GAAP is more of a generalized accounting framework that can be used by anyone, such as accounting services in Malaysia, to cater to their own specific accounting requirements. 

 

It is the responsibility of the PCAOB to implement such accounting standards. Since investors don’t know about the time and resources an auditor puts into auditing a company’s financial statements or compliance with GAAP, it creates the issue of a lack of transparency.  

 

Generally, most of the auditor’s reports only provide investors with the minimum information related to the company’s compliance with GAAP. This kind of information is not enough for investors to make critical business decisions. 

 

People who support the presence of PCAOB as a watchdog accounting body say that having a public regulator is enough to increase the transparency of an audit. A public regulator will ensure auditors are working as per the set standards. 

 

On the other hand, critics of PCAOB say that PCAOB auditors do not have enough expertise and incentives to determine the quality of the auditor’s work, so it is not possible to achieve maximum transparency. 

 
sustainability report

Statistics

Different academic studies and statistics show that PCAOB audits are good for both companies and investors. Organizations in which PCAOB auditors did not find any significant errors or mistakes are able to raise more external capital. 

 

On the other hand, companies that do not pass the PCAOB audits and do not comply with US GAAP are more likely to suffer from accounting fraud and financial scandals. 

 

As a result, the significance of relying on professional accounting services in Malaysia cannot be understated to prevent such issues. 

 

Key Differences Between PCAOB and US GAAP

The following are the major differences between PCAOB and US GAAP:

Difference US GAAP PCAOB
Documentation
Provides a general framework that can be adopted by different organizations around the world
Has strict rules
Concern Period
At least one year
One year from the date of the accounting year being audited
Accounting Function
Mainly deal with external audits to bring transparency and reliability to financial documentation
Flexible since they also deal with the internal accounting functions of a company.
Types of Risks
Deals with a wide range of risks, including operational and strategic risks
Mainly limited to auditing and accounting risks

All in all

The bottom line is that both PCAOB and US GAAP are vital for financial transparency and reliability. Professional accounting services in Malaysia consider all of such international standards to provide the best possible accounting and auditing services. 

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The Future of SPACs and How They Are Creating Value in Capitalism

The Future of SPACs and How They Are Creating Value in Capitalism

Special Purpose Acquisition Companies (SPACs) have managed to attract a significant amount of attention in the last few years. 

 

Business experts, multinational organizations, and even small-scale companies are paying special attention to SPACs because they have emerged as a reliable alternative to traditional IPOs.  

 

A major reason why SPACs have become so popular is that they address the issues involved in IPOs, such as excessive delays and too much scrutiny. 

 

Experts such as accounting firms in Malaysia can facilitate companies in the entire process of going public with the help of SPACs. Keep reading to learn all about SPACs and how they are contributing towards capitalism. 

 

Major Advantages of SPACs

SPACs offer a number of benefits to companies that want to go public. A traditional IPO process can take anywhere from six months to over a year. On the other hand, if you choose to go public through a SPAC, you can cut down the time to a few months. 

 

Moreover, SPACs provide a great opportunity for the owners of the target company to negotiate a suitable price and conditions for selling to a SPAC within a limited time window. It makes the overall deal highly beneficial for the company. 

 

There are many challenges that a business can face, even after going public. Therefore, being acquired or merged with a SPAC is useful because most of the SPACs are sponsored by experienced financial investors and business executives. 

 

As a result, the target company is able to get access to the vast experience, expertise, and skillset of these experienced executives.  

 

It is also important to note that the global pandemic has contributed a lot to the massive popularity of SPACs. Statistics also corroborate the fact that the popularity of SPACs has continued to rise since 2020. 

 
cash flow vs profit

Concerns About SPACs

While there is a long list of benefits of going public through SPACs, there are some concerns about SPACs as well. A lot of financial experts have concerns about the long-term feasibility and evolution of SPACs as an investment vehicle.

 

A major concern is that the SPACs are not efficient enough to provide significant returns to the stakeholders. Moreover, there is still a great room for further development of the SPAC infrastructure related to dealing with institutional and retail investors. 

 

There also needs to be clear guidelines about the consequences if a SPAC does not merge. Generally, SPACs have a specific time frame to merge with another organization within 18 to 24 months and close the deal. 

 

However, if a SPAC is unable to merge during this time, it can liquidate, and all of the funds can be returned to the investors. To make sure that SPACs merge during the right time frame, these rules need to be put into place more strictly. 

 

Maximizing the Benefits of SPACs

A number of policies, suggestions, and recommendations from experts are being discussed around the world to maximize the benefits of SPACs. 

 

Some experts have indicated that lockup rules for sponsors should be in place for the entire lifecycle of an SPAC to make it safer. It will encourage the sponsors to put more money towards SPACs. 

 

Moreover, it has been suggested that sponsors should invest bigger stakes in their SPACs. It will play an integral role in offering better incentives through diligence and research conducted by the sponsors. 

 

The market is also adapting to such policies, due to which some sponsors have already agreed to longer lockup periods. 

 

Individual Investment in SPACs

Generally, it is not possible for the majority of retail investors to invest in privately held companies. Nevertheless, SPACs allow public investors to partner with investment professionals and accounting firms in Malaysia to invest in a wide range of companies. 

 

Exchange-traded funds (ETFs) investment in SPACs has increased in recent times. Such funds are a combination of companies that want to go public by merging with a SPAC. It also facilitates the SPACs that are searching for a particular target to go public. 

 

However, just like with all types of investments, there are varying levels of risk involved in SPAC investments as well.

 

Conclusion

Overall, there are certainly some risks involved in SPACs, but these risks outweigh the various benefits you get from SPACs. 

 

A professional accounting firm in Malaysia can help you throughout the process of forming a SPAC and taking your company public via SPAC instead of the traditional IPO. It will help you save a significant amount of money and time. 

 

Moreover, experts will give you the best advice to complete the process efficiently to maximize the benefits of SPAC.  

 
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Most Common Accounting Frauds and How To Prevent It

Most Common Accounting Frauds and How To Prevent It

Accounting fraud is much more common than people might think. The scale, type, and complexity of accounting fraud can greatly vary, which is why it is important to be familiar with their different types and use suitable solutions to prevent them. 

 

Some of the most common accounting frauds involve manipulating financial statements to give a false impression of the financial health of an organization. Moreover, employees or accountants can also provide wrong figures to mislead investors or shareholders. 

 

Professional accounting firms in Malaysia make sure that such accounting frauds are eliminated through reliable accounting services. 

 

Keep reading to learn all about the different types of accounting fraud. 

 
 

1. Overstating Revenue

A lot of companies make the ‘mistake’ of overstating their revenue. However, it is a significant fraud that can lead to a massive scandal when the stakeholders find out the actual worth of the company. 

 

Companies tend to overstate their revenue to hide the fact that they are actually operating at a loss. The company’s profits are inflated on the financial statements to create a fake public image. 

 

2. Lack of Records

Relying on professional accounting services is important as professionals will take care of every aspect of your finances. Otherwise, some companies can end up not adding significant expenses, either intentionally or unintentionally, to the financial statements. 

 

It causes the company’s profits to be overstated and its expenses to be understated. This is an accounting fraud as it creates a fake image of the company’s profits while, in reality, it might be operating at a loss. 

 
checking accounting mistake

3. Misstating Assets and Liabilities

Another popular form of accounting fraud occurs when organizations misstate their assets and liabilities. 

 

Most of the time, this type of fraud happens when the current assets are overstated and the current liabilities are understated. As a result, it causes misrepresentation of the short-term liquidity of the company. 

 

4. Accounts Receivable Funds

The purpose of the accounts receivable balance present on the balance sheet is to show an estimate of what accounts are collectible. Typically, it is less than the actual balance that will be collected by a company. 

 

However, without proper audit and accounting functions, the valuation of accounts receivable can get extremely out of range. A company led by corrupt management can also make fraudulent sales by creating fake records.

 

5. Accounts Payable Funds

Understating the payables means understating the expenses and overstating the net income. But the amount payable can only be understated by a small amount, so this type of accounting fraud is easy to detect.  

Prevention

Large-scale companies and multinational enterprises have separate teams for accounting and auditing. However, small and medium-scale companies that don’t have enough resources to implement efficient accounting standards often suffer the consequences of accounting fraud.

 

The good thing is that all types of businesses can rely on accounting firms in Malaysia to ensure the experts will handle the accounting functions and prevent a wide range of fraud. 

 

Some of the other useful tips to prevent accounting fraud are:

1. Examine the Bank Statement

Every business owner will receive an open bank statement at the end of the financial year. They should examine the bank statement and also look over other features, such as approving electronic payments and signing cheques.

2. Rely on Experts

If you have an in-house accountant, you should not let that same person handle all of your financial matters, such as creating financial statements.


Instead, you should consider outsourcing the accounting services to an accounting firm in Malaysia through which the experts can handle all of your accounting procedures.

3. Close the Accounting Period

Once a financial statement for a particular accounting year or period has been generated, you should close the period. It means not adding or minimizing any new financial items to it. It will significantly reduce the risk of accounting fraud.

4. Produce Relevant Records

Attaching scanned images to each transaction in the financial reports is a quick and smart way to get all the financial records you need. It will help you prevent a wide range of accounting fraud, as no one will be able to manipulate the amount entered in the statement.

5. Restrict Access

There should be a clear separation of duties between individuals who handle payment authorization, record keeping, auditing, and other accounting functions. Restrict the access of unauthorized individuals to financial records to ensure maximum safety.

Final takeaways

Many different types of accounting fraud can happen in a company. As a result, following the aforementioned tips become critical to prevent such fraud. 

 

Ultimately, relying on experts from accounting firms in Malaysia will help you prevent such accounting fraud from taking place in your company. 

 

Last but not least, companies can benefit from the professional advice provided by the accountants to streamline their accounting functions. 

 
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PCAOB Audit vs. AICPA Audit: What’s the Difference?

PCAOB Audit vs. AICPA Audit: What's the Difference?

Before the introduction and implementation of a strong global audit standard, there were a lot of auditing controversies and scandals associated with multinational companies. 

 

Investors often accused companies of losing their money. Due to a lack of financial records and proper auditing standards, such cases often remained unresolved. 

 

Moreover, a lack of accounting standards can be highly dangerous for companies as it can result in a wide range of corporate failures. It is the job of professionals like an audit firm in Malaysia to implement the best audit practices and accounting standards to increase financial transparency. 

 

In this regard, there are two major audit standards that make audits easier and streamlined. 

 
Company Taxes In Malaysia-2

AICPA Audits

The American Institute of CPAs (AICPA) was first introduced in 1940. It is a professional organization for certified public accountants (CPAs). 

It deals with a wide range of audit and accounting functions, such as preparing uniform CPA standards and developing financial literacy programs and introducing them all over the world. 

 

Many organizations all over the world use the standards set by the AICPA to audit companies of different types and sizes. Moreover, the AICPA audits also cover government agencies and nonprofit organizations.

 

The purpose of AICPA standards is to assist auditors in enhancing their professional performance by focusing on critical aspects of a business during an audit. 

 

The quality of the AICPA audits significantly increases when the auditors are experienced and trained to work in the best interest of the public. 

 

However, there are significant issues with AICPA auditing standards. First of all, there are no consequences if an audit firm or a company refuses to comply with AICPA standards. 

 

The lack of enforcement mechanism in AICPA stands as a major reason their wide-scale adoption was greatly hindered.

 
cash flow vs profit-1

PCAOB Audits

The Public Company Accounting Oversight Board (PCAOB) is a more intense and scrutinizing version of the AICPA. It was founded in 2002 to deal with the rising number of auditing and accounting standards in the early 2000s. 

 

 

The primary motivation behind its formation was to restore investor confidence and standardize auditing and accounting practices, starting with the United States.  

 

 

With time, the standards set by PCAOB have become popular all over the world. A wide range of companies and audit firms in Malaysia also rely on PCAOB to ensure efficient auditing and accounting procedures. PCAOB auditors follow the guidelines set by the organization and US GAAP to streamline the audit and accounting procedures.  

 

 

Moreover, the PCAOB auditors are trained in such a way that they will keep up with the changing accounting and auditing requirements to maximize transparency in a financial environment and provide maximum security to investors. 

 

 

A major difference between PCAOB and AICPA audits is that PCAOB is more focused on protecting a company’s stakeholders and making sure the investors and potential investors have complete financial information with maximum clarity, accuracy, and accountability. 

 

 

The implementation of US GAAP guidelines along with PCAOB standards ensures that PCAOB auditors are able to create a controlled and secure financial environment. 

 

 

The PCAOB audit standards are not limited to the United States because they are quite flexible according to different situations. You can also think of the PCAOB Standards as a general auditing framework that can be used by various auditors to suit their specific requirements. 

 

 

However, a thorough comparison of PCAOB and AICPA audits shows that they are almost similar. The core guiding principles of both these auditing and accounting standards are the same.

 

 

The most significant difference is that PCAOB provides more details about how to deal with fraud risks and emphasizes the significance of regular auditing to get control of potential financial discrepancies. 

 

 

On the other hand, the AICPA does not provide much information about the frequency of audits and control reliance procedures. 

 

 

PCAOB auditors are also encouraged to pay special attention to thorough reviews and deal with inconsistencies early in the process. Such specific guidelines are absent from AICPA auditing standards. 

 

 

Therefore, it can be said that PCAOB audit standards are much more comprehensive and meticulous than the AICPA auditing procedures. As a result, the quality of audits performed by PCAOB auditors is also higher than that of AICPA auditors. 

 

In Closing

Following auditing and accounting standards such as PCAOB is of utmost importance for bringing financial transparency to an organization. 

 

In this regard, using the services of professional PCAOB auditors and audit firms in Malaysia allows businesses to avoid financial scandals and controversies.  

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Types of Financial Instruments and Their Uses

Types of Financial Instruments and Their Uses

Financial instruments are contracts or any document that acts as financial assets. For example, bonds, cash deposits, bank balances, swaps, caps, bills of exchange, and forward rate agreements are considered financial instruments. 

 

It is important for businesses to be familiar with different types of financial instruments and their uses for financial instrument valuation. Keep reading to learn all about financial instruments and the critical role they play in business valuation in Malaysia

Two Major Types of Financial Instruments

There are many different types of financial instruments, but most of them can be classified into two categories. 

1. Derivative Instruments

It means deriving the value of instruments from the attributes and values of the assets they represent. In simpler words, derivative instruments are securities that are associated with other securities. 

 

Assets like interest rates and shares are typically considered derivative instruments. Some of the most prominent derivative instruments are futures and options contracts. Moreover, these instruments can either be exchange-traded or over-the-counter (OTC) derivatives

 

2. Cash Instruments

The instruments whose market value is readily available are called cash instruments. There is a direct impact of market forces and conditions on these instruments. It is easy to transfer cash instruments. 

 

Some of the most popular cash instruments are cheques, shares, and bonds. Loans and deposits are also considered cash instruments if both the lender and borrower have an agreement about the transferability of the instrument. 

 
Connecting last jigsaw puzzle piece.

Other Classifications of Financial Instruments

Some experts and businesses classify financial instruments on the basis of the asset class as well. These are equity-based and debt-based financial instruments.

 

Equity-based financial instruments include a wide range of instruments such as securities, shares, stocks, equity futures, and other exchange-traded instruments. 

 

On the other hand, debt-based financial instruments mainly include short-term securities such as commercial paper and treasury bills that have a maturity period of one year or even shorter. Some of the exchange-traded derivatives, such as short-term interest rates, also fall into this category. 

 

Why Are There So Many Financial Instruments?

People who are not familiar with business valuation methods often get confused by the different types of financial instruments. However, each and every type of financial instrument is important in one way or another. 

 

Each financial instrument serves a unique purpose to fulfill the specific needs of an investor. Moreover, financial instrument valuation plays a significant role in business valuation in Malaysia.  

 

Whenever an experienced investor is thinking of investing in a company, he or she is likely to consider a lot of factors, including these different types of financial instruments, to make a smart decision. 

 

Benefits of Financial Instruments

There are many benefits to financial instruments and financial instrument valuation. Professional audit firms in Malaysia use different types of financial instruments for reliable business valuation procedures. 

 

Following are some of the most important benefits of financial instruments:

  • Liquid assets like cash are critical for the company to make quick payments and deal with other financial requirements of operating a business. 
  • Stakeholders often feel secure in a company that has significant capital in its liquid assets. 
  • Financial instruments are vital for the funding of tangible assets. It is made possible by fund transfers from tangible assets that are in surplus to assets that are in deficit. 
  • Financial instruments minimize the risk associated with risk-bearing capacities, especially when investment in intangible assets is involved. 
  • Companies that focus on investing in real assets are able to yield higher revenue through a diversified portfolio of hedged inflation. Moreover, they can also hedge against the uncertainties caused by political or economic factors.  
  • Some of the financial instruments, such as equity, are useful in acting as a permanent source of funds for a business. Equity shares are also important to facilitate a business in open borrowing and getting retained earnings. 
choosing the right accounting firm

Final Takeaways

Financial instruments and financial instrument valuation are critical parts of an organization. It is common for people to just assume that financial instruments are nothing but documents that represent the financial assets of a business.  

 

However, the truth is they hold great significance to the stakeholders and in other important procedures like business valuation in Malaysia. Knowing every single detail of different types of financial instruments is indeed challenging. 

 

Therefore, if an organization is facing issues with financial instrument valuation, it should engage the service of an audit firm in Malaysia to ensure the best results.