MASB extends transitional period for agriculture and real estate companies (30 June 2012)

In November 2011, the Board published the MFRS Framework, an 1IFRS-compliant set of accounting standards applicable to all non-private entities with effect from 1 January 2012. However, the Board decided to give Transitioning Entities the option in 2012 to either apply the MFRS Framework or continue with the Financial Reporting Standards (FRS Framework) in view of the outstanding issues of both MFRS 141 and IC 15. The option was announced to be available to Transitioning Entities for one year and entities that elected for this option were required to apply the MFRS Framework for annual periods beginning on or after 1 January 2013. Transitioning Entities are entities that are within the scope of MFRS 141 Agriculture (MFRS 141) and / or IC Interpretation 15 Agreements for the Construction of Real Estate (IC 15), including a parent, significant investor and venturer of such Transitioning Entity.

When the Board made the decision for the Transitioning Entities, it was based on the International Accounting Standards Board’s (IASB) October 2011 work plan. At that time, the IASB planned that by second half of 2012, it would issue the new Revenue standard, following which IFRIC 152 would be withdrawn. They were also to finalise their decision on the Agenda Consultation of which a limited amendment to IAS 413 was listed as one of the project suggestions.

However, according to a recent IASB report4, the new Revenue standard is now expected to be issued by mid-2013. In the report, the IASB noted the delays in completing the new Revenue standard are unfortunate but necessary to ensure that any changes are implementable.

As to the next step on the Agenda Consultation, the IASB in its May 2012 meeting supported giving priority to developing proposals for potential amendments to IAS 41 in relation to bearer crops. However, the Board notes that it is unlikely the potential amendments will be finalised prior to 2013.

In light of these developments and the revision of the project timeline at the IASB, the Board has decided that Transitioning Entities will be given an option of another one year to continue with the existing FRS Framework. In other words, Transitioning Entities will continue to have the option to either apply the MFRS Framework or the FRS Framework for annual periods beginning on or after 1 January 2013 and the adoption of the MFRS Framework will become mandatory for all companies for annual periods beginning on or after 1 January 2014.

Conclusion

While the Board remains committed to maintaining a single set of globally accepted accounting standards for the capital market, it is cognisant of the fact that the IASB’s vigorous due process may prolong the project longer than expected. Hence the Board believes extending the transitional period for another year will avoid the possibility of repetitive substantial restatement in the financial statements in the event the revisions to the new Revenue standard or the potential amendments to IAS 41 do finally occur as currently anticipated by the Board.

Explanatory

1

International Financial Reporting Standards

2

the equivalent of IC 15

3

the equivalent of MFRS 141

4

Joint Update Note from the IASB and FASB on Accounting Convergence, Note from IASB on Governance Enhancements, April 2012

 

For Press Enquiries, please contact:

The Technical Director
Malaysian Accounting Standards Board
Suite 5.02, Level 5, Wisma UOA Pantai
11 Jalan Pantai Jaya
59200 Kuala Lumpur
Tel: 603-2240 9200
Fax: 603-2240 9300
Email: This email address is being protected from spambots. You need JavaScript enabled to view it.

Contact Us     |     Career     |     Disclaimer     |     FAQ

This site is best viewed with a resolution of 1024x768 (or higher) and supports Mozilla Firefox, Google Chrome and Safari. From the feedback we received, IE users may experience some interruptions when browsing this site.