The Malaysian Accounting Standards Board (MASB) today issued a new MASB approved accounting framework, the Malaysian Financial Reporting Standards (MFRS Framework).
The issuance finalises MASB Exposure Draft 75 IFRS-compliant Financial Reporting Standards exposed in June 2011 and is made in conjunction with the Board’s plan to converge with International Financial Reporting Standards (IFRSs) in 2012. Convergence with IFRS needs no further introduction as after the convergence announcement was made back in 2008, various initiatives have been done to instill awareness amongst numerous stakeholders and other affected parties.
The MFRS Framework
The MFRS Framework comprises Standards as issued by the International Accounting Standards Board (IASB) that are effective on 1 January 2012. It also comprises new/revised Standards recently issued by the IASB that will be effective after 1 January 2012 such as Standards on financial instruments, consolidation, joint arrangements, fair value measurement and employee benefits, amongst others.
The adoption of the MFRS Framework is a significant milestone for the capital market as entities will be able to assert that their financial statements are in full compliance with IFRSs. This is because it is a fully IFRS-compliant framework and equivalent to IFRSs.
The Chairman of the oversight body of the MASB, the Financial Reporting Foundation, Datuk Ali Tan Sri Abdul Kadir, said, “This is a landmark achievement after a long haul and countless endeavors. Now comes the time when we must equip ourselves with adequate IFRS knowledge so as to position ourselves in the global market environment.”
The MFRS Framework is to be applied by all Entities Other Than Private Entities for annual periods beginning on or after 1 January 2012, with the exception of entities that are within the scope of MFRS 141 Agriculture (MFRS 141) and IC Interpretation 15 Agreements for Construction of Real Estate (IC 15), including its parent, significant investor and venturer (herein called ‘Transitioning Entities’).
Transitioning Entities will be allowed to defer adoption of the new MFRS Framework for an additional one year. Consequently, adoption of the MFRS Framework by Transitioning Entities will be mandatory for annual periods beginning on or after 1 January 2013.
MASB's chairman, Mohammad Faiz Azmi said, “The rationale to provide the transitional period for both the agriculture and real estate industries is that, while the Board is seeking full convergence, we need to be mindful of potential changes on the horizon that may change current accounting treatments. As the IASB is planning to issue a new standard on revenue recognition next year that will subsume IC 15 and may likely amend IAS 41 Agriculture (the equivalent of MFRS 141) requirements for bearer biological assets, we believe that to accommodate those affected by imminent accounting standard changes, a transitional arrangement should be given. Given this uncertainty, the Board felt we should allow the status quo until the IASB direction is clearer. On balance, we believe this will not affect our convergence objective as the MFRS Framework is fully IFRS compliant and the transitional period given is only for a limited period and based on the IASB’s own programme for standard changes.”
The FRS Framework
For the FRS Framework, the Board has issued new/revised FRSs, namely FRS 9 Financial Instruments, FRS 10 Consolidated Financial Statements, FRS 11 Joint Arrangements, FRS 12 Disclosure of Interests in Other Entities, FRS 13 Fair Value Measurement, FRS 119 Employee Benefits, FRS 127 Separate Financial Statements, and FRS 128 Investments in Associates and Joint Ventures, four limited amendments to FRSs and a new Interpretation. Some of these pronouncements are effective on 1 January 2012 whilst others are later.
In addition, the Board has withdrawn IC 15 from the FRS Framework in light of its decision for the Transitioning Entities.
The key differences between the FRS Framework and MFRS Framework are that in the former, (a) FRS 2012004Property Development Activities will continue to be the extant standard for accounting for property development activities and not IC 15, and (b) there is no equivalent standard to IAS 41.
Click here to access the MFRS.
For enquiries, please contact:
Malaysian Accounting Standards Board
Suite 5.02 Level 5
Wisma UOA Pantai
No 11 Jalan Pantai Jaya
59200 Kuala Lumpur
Tel: +603 2240 9200
Fax: +603 2240 9300