30 August 2010
The MASB Board has published a notice of deferment of IC Interpretation 15 Agreements for the Construction of Real Estate (IC 15) from 1 July 2010 to 1 January 2012.
IC 15 is a word-for-word reproduction of IFRIC 15 except for the effective date. IFRIC 15 was issued by the International Accounting Standards Board (IASB) in July 2008 with an effective date of 1 January 2009.
The reason for the deferment is to allow stakeholders in Malaysia, to continue to deliberate its implementation and to provide opportunity to give feedback via MASB on a proposed new Standard on Revenue from Contracts with Customers, that is anticipated to subsume the requirements of IFRIC 15 upon issuance, expected to be in mid 2011.
In July 2008, IASB issued IFRIC 15. MASB commenced the due process for adoption in Malaysia in August 2008, leading to a release of the exposure draft in June 2009 and, on 8 January 2010, the MASB Board announced, after the requisite period of exposure, the issuance of IC 15 for application in Malaysia with effect from 1 July 2010. In April 2010, the Real Estate and Housing Developers’ Association Malaysia (REHDA) had written to MASB to seek clarification on the implementation of IFRIC 15, given the current legal framework and practices in Malaysia.
Meanwhile, the IASB’s recently issued exposure draft on Revenue from Contracts with Customers which, when adopted, will subsume the requirements of IFRIC 15. At a special forum hosted by MASB on 16 August 2010, it was noted that the primary business model of the Real Estate industry in Asia, the ‘sell and build’ concept where both the seller and buyer sharing certain elements of risk over the real estate-in-progress, may be different from real estate business models employed in other jurisdictions. Therefore, it would be timely and more productive for stakeholders to analyse and provide timely input to the IASB for consideration before they finalise the standard on Revenue from Contracts with Customers.
In view of these developments and in light of the importance of the Real Estate sector to the Malaysian economy, the MASB Board in its deliberations on 23 August 2010 felt it would be prudent to temporarily defer the application of IC 15 to 1 January 2012. This is to allow for deliberations on the implementation of IC 15 to continue and to enable the examination of the proposed standard on Revenue from Contracts with Customers with stakeholders both locally and within the region, using its participation in the Asian-Oceanian Standard-Setters Group (AOSSG). As a result of this deferment, the current accounting treatment under MASB FRS 201 will continue to apply. Nonetheless, entities who wish to early apply IC 15 can do so if they wish.
For enquiries, please contact:
Malaysian Accounting Standards Board
Wisma UOA Pantai
Suites 5.02, Level 5
No. 11, Jalan Pantai Jaya
59200 Kuala Lumpur
Tel: 03-2240 9200
Fax: 03-2240 9300