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MASB extends transitional period for Transitioning Entities (7 August 2013)

The Malaysian Accounting Standards Board (the Board) has decided to allow agriculture and real estate companies, including their parents, significant investors and venturers (Transitioning Entities) to defer the adoption of the MFRS Framework for an additional year. This deferment takes into account the latest status of the IASB’s work plan on the two transitional issues that have yet to be resolved. Transitioning Entities continue to have the option to either apply the MFRS Framework or the FRS Framework for annual periods beginning on or after 1 January 2014.

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. Transitioning Entities have been given the option since then to either apply the MFRS Framework or continue with the FRS Framework in view of the outstanding issues on both MFRS 141 Agriculture2 and IC Interpretation 15 Agreements for the Construction of Real Estate3. Transitioning Entities that had elected the option to apply the FRS Framework were required to comply with the MFRS Framework for annual periods beginning on or after 1 January 2014.

According to the latest IASB’s work plan as of 29 July 2013, the new Revenue Standard which was expected to be issued in the second quarter of 2013 has been delayed to the third quarter of 2013. As to the proposed limited-scope improvements to IAS 41 on bearer plants, the IASB published an Exposure Draft Agriculture: Bearer Plants in June 2013 with a 120-day comment period ending on 28 October 2013. The IASB will start the re-deliberation of the proposal on bearer plants in the first quarter of 2014.

In light of this development and the revisions of the project timelines by the IASB, the Board has decided to extend the transitional period for another year, i.e. the adoption of the MFRS Framework by all entities for annual periods beginning on or after 1 January 2015.

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 at times prolong the projects longer than expected. Hence the Board believes extending the transitional period for another year will provide Transitioning Entities adequate time to implement the new Revenue Standard and to avoid the possibility of repetitive substantial restatements in the financial statements in the event the proposed limited-scope improvements to IAS 41 on bearer plants do finally occur as currently anticipated by the Board.

Explanatory

1  International Financial Reporting Standards

2  the equivalent of IAS 41 Agriculture

3  the equivalent of IFRIC 15 Agreements for the Construction of Real Estate


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The Technical Director

Malaysian Accounting Standards Board

Suite 5.2, Level 5, Wisma UOA Pantai

11 Jalan Pantai Jaya

59200 Kuala Lumpur

Tel: 603-2240 9200

Fax: 603-2240 9300

Email: masb@masb.org.my