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MASB issues amendments to consolidation standard & Statement of Principles on Management Commentary (28 February 2013)

The Malaysian Accounting Standards Board (MASB) today issued the following pronouncements:

(1) Malaysian Financial Reporting Standards (MFRS)

  • Investment Entities (Amendments to MFRS 10, MFRS 12 and MFRS 127)

(2) Financial Reporting Standards (FRS)

  • Investment Entities (Amendments to FRS 10, FRS 12 and FRS 127)

 (3) Statement of Principles (SOP)

  • Statement of Principles 3 Management Commentary

 

ABOUT THE PRONOUNCEMENTS

Investment Entities (Amendments to MFRS 10, MFRS 12 and MFRS 127)

The amendments are equivalent to the Investment Entities(Amendments to IFRS 10, IFRS 12 and IAS 27) issued by the International Accounting Standards Board (IASB). It introduces an exception to consolidation for investment entities.

Investment entities are entities whose business purpose is to invest funds solely for returns from capital appreciation, investment income or both. Investment entities must also evaluate the performance of its investments on a fair value basis. Such entities may include private equity organisations, venture capital organisations, pension funds, sovereign wealth funds and other investment funds.

The amendments require investment entities to measure particular subsidiaries at fair value through profit or loss instead of consolidating them. The amendments are in response to comments by users of financial statements of investment entities that fair value information is the most relevant information for all investment entities. The amendments also introduce new disclosure requirements for investment entities in MFRS 12 Disclosure on Interests in Other Entities and MFRS 127 Separate Financial Statements.

The amendments are effective for annual periods beginning on or after 1 January 2014. However, the amendments can be applied early, and accordingly entities can elect to apply them when they first apply MFRS 10 Consolidated Financial Statements which is applicable to annual periods beginning on or after 1 January 2013.

Similar amendments are also made to FRS 10 Consolidated Financial Statements , FRS 12 Disclosure on Interests in Other Entities  and FRS 127 Separate Financial Statements  and the effective date is on or after 1 January 2014 with early application permitted.

The Amendments to MFRS 10, MFRS 12 and MFRS 127 are applicable to all Entities Other Than Private Entities while the Amendments to FRS 10, FRS 12 and FRS 127 are applicable to Transitioning Entities (TE) that have elected to continue applying the FRS Framework in 2012 and 2013. TE are entities that are within the scope of MFRS 141 Agriculture and/or IC Interpretation 15 Agreements for the Construction of Real Estate, including the parent, significant investor and venturer of such TE.

 Statement of Principles 3 Management Commentary (SOP 3)

SOP 3, which is equivalent to IASB’s IFRS Practice Statement Management Commentary, sets out the principles, qualitative characteristics and elements of management commentary that aims to provide users of financial reports with useful information. It provides non-mandatory guidance to entities that have opted to present management commentary to accompany financial statements prepared in accordance with MFRS or FRS. It encourages entities to provide users of financial statements with integrated information that provides a context for the financial statements prepared in accordance with MFRS or FRS, for example, about what has happened, why it has happened and what the implications are for the entity’s future.

SOP 3, though not part of the MFRS Framework or FRS Framework, complements these Frameworks. Therefore, an entity is encouraged to comply with the requirements in this SOP.

These pronouncements can be downloaded via MASB website. Copies of the amendments to MFRS/FRS are available free of charge and copies of the SOP 3 are available for sale at MASB office.

The “Notice of Issuance” can be downloaded here.

END


For enquiries, please contact:

Malaysian Accounting Standards Board
Suites 5.2, Level 5

Wisma UOA Pantai
No. 11, Jalan Pantai Jaya
59200 Kuala Lumpur

Tel: 03-2240 9200

Fax: 03-2240 9300

Email: technical@masb.org.my