MASB issues minor amendments to financial instrument standards (1 March 2012)

MASB issues minor amendments to financial instrument standards (1 March 2012)

The Malaysian Accounting Standards Board (MASB) today issued minor amendments to its financial instrument standards. These pronouncements are word-for-word the International Financial Reporting Standards (IFRS) and will be affecting the related standards in both the MFRS Framework and FRS Framework. The amendments are:

Amendments to Malaysian Financial Reporting Standards (MFRSs)

•     Mandatory Effective Date of MFRS 9 and Transition Disclosures (Amendments to MFRS 9 (IFRS 9 issued by IASB† in November 2009), MFRS 9 (IFRS 9 issued by IASB in October 2010) and MFRS 7)

•     Disclosures—Offsetting Financial Assets and Financial Liabilities (Amendments to MFRS 7)

•     Offsetting Financial Assets and Financial Liabilities (Amendments to MFRS 132)

Amendments to Financial Reporting Standards (FRSs)

•     Mandatory Effective Date of FRS 9 and Transition Disclosures (Amendments to FRS 9 (IFRS 9 issued by IASB in November 2009), FRS 9 (IFRS 9 issued by IASB in October 2010) and FRS 7)

•     Disclosures—Offsetting Financial Assets and Financial Liabilities (Amendments to FRS 7)

•     Offsetting Financial Assets and Financial Liabilities (Amendments to FRS 132)

International Accounting Standards Board

ABOUT THE PRONOUNCEMENTS

Mandatory Effective Date of MFRS 9 / FRS 9 and Transition Disclosures

The mandatory effective date is changed from 1 January 2013 to 1 January 2015.  The deferral will make it possible for all phases of the International Accounting Standard Board’s (IASB) financial instruments project to have the same mandatory effective date.

On top of that, the amendments also provided relief from the requirement to restate comparative financial statements for the effect of applying MFRS 9 / FRS 9. This relief was originally only available to companies that chose to apply MFRS 9 / FRS 9 prior to 2012. Additional transition disclosures will be required to help investors understand the effect that the initial application of MFRS 9 / FRS 9 has on the classification and measurement of financial instruments.

Early application of MFRS 9 / FRS 9 is still permitted. This amendment will be effective immediately on its issuance date.

In brief, the IASB has undertaken the project to replace IAS 39 Financial Instruments: Recognition and Measurement (equivalent to MFRS 139 or FRS 139) in three phases: -

  • Phase 1: Classification and measurement (published as IFRS 9 in November 2009; and revised in October 2010)
  • Phase 2: Impairment methodology (published as an exposure draft in 2009)
  • Phase 3: Hedge accounting (published as an exposure draft in 2010)

The IASB is still deliberating Phase 2 and Phase 3 of the project.

Disclosures—Offsetting Financial Assets and Financial Liabilities (Amendments to MFRS 7 / FRS 7)

The disclosure requirements are intended to help investors and other financial statement users to better assess the effect or potential effect of offsetting arrangements on a company’s financial position. It also aims to improve transparency in the reporting of how companies mitigate credit risk, including disclosure of related collateral pledged or received.

Amendments to MFRS 7 / FRS 7 is effective for annual periods on or after 1 January 2013.

Offsetting Financial Assets and Financial Liabilities (Amendments to MFRS 132 / FRS 132)

The amendments to MFRS 132 / FRS 132 clarify the following requirements for offsetting financial instruments:

(i)   the meaning of ‘currently has a legally enforceable right of set-off’; and

(ii)   that some gross settlement systems may be considered equivalent to net settlement.

The amendments are effective for annual periods beginning on or after 1 January 2014 and are required to be applied retrospectively.

These new amendments to financial instrument standards represent the first batch of issuance subsequent to MASB’s announcement on its new Malaysian Financial Reporting Standards (MFRS Framework) on 19 November 2011. The due process of the MFRS Framework aligns the MASB's due process timeline to that of the IASB with the aim of putting the new or amended standards in place for adoption and application within a timely manner. This is to ensure that the effective date of the new or amended standards will be the same as that of IFRSs.

Electronic copies of the new pronouncements are available from MASB website (http://www.masb.org.my). Printed copies will be available after 16 March 2012 at MASB office.

The “Notice of Issuance” can be downloaded here.

END

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

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