MASB issues amendments to two Standards and guidance on making materiality judgements (30 November 2017)

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

Long-term Interests in Associates and Joint Ventures (Amendments to MFRS 128);

Prepayment Features with Negative Compensation (Amendments to MFRS 9); and

• MFRS Practice Statement 2 Making Materiality Judgements.

These pronouncements are word-for-word the respective pronouncements issued by the International Accounting Standards Board (IASB).



(1) Amendments to MFRSs

The Amendments to MFRS 9 Financial Instruments allows companies to measure prepayable financial assets with negative compensation at amortised cost or at fair value through other comprehensive income if certain conditions are met. 

The Amendments to MFRS 128 Investments in Associates and Joint Ventures clarifies that companies shall apply MFRS 9, including its impairment requirements, to account for long-term interests in an associate or joint venture that, in substance, form part of the net investment in the associate or joint to which the equity method is not applied.

Both the Amendments are effective for annual periods beginning on or after 1 January 2019, with early application permitted. 

(2) MFRS Practice Statement

MFRS Practice Statement 2 provides companies with guidance on how to make materiality judgements when preparing their general purpose financial statements in accordance with MFRS Standards. It is issued in response to feedback from stakeholders that companies experience difficulties making materiality judgements resulting in their financial statements providing too much irrelevant information and not enough relevant information. 

MASB Chairman Encik Mohamed Raslan said, “The Board expects the Practice Statement to help improve companies understanding of the role of materiality and of how judgement should be exercised to assess materiality in preparing financial statements that are ultimately more useful to their existing and potential investors, lenders and other creditors.” 

MASB Executive Director, Ms. Tan Bee Leng clarified, “A Practice Statement is not a Standard. It does not change or add any new requirements and it is only a non-mandatory guidance designed to assist companies in preparing general purpose financial statements in accordance with the MFRS Framework. This MFRS Practice Statement 2 consolidates the materiality requirements in MFRSs and also adds guidance and examples to help companies in deciding whether information is material. Issuing additional guidance and examples as mandatory requirements in a Standard could risk appearing prescriptive, which could undermine the importance on companies applying their judgement in the assessment of materiality.”

Companies are permitted to apply the guidance in MFRS Practice Statement 2 to financial statements prepared any time after its issuance date.

Ms. Tan added, “As the number indicates, Making Materiality Judgements is the second Practice Statement issued by the IASB. The first Practice Statement issued by the IASB is Management Commentary which the Board has in 2013 issued as MASB Statement of Principles 3 (SOP 3).  With the issuance of this second IASB Practice Statement, the Board has decided to align MASB’s nomenclature closely to the IASB’s nomenclature. Consequently SOP 3 is renamed as MFRS Practice Statement 1 Management Commentary.”

The “Notice of Issuance” can be downloaded here.


For enquiries, please contact:

Malaysian Accounting Standards Board

Unit 13A-1, Menara MBMR 

No. 1, Jalan Syed Putra 

58000 Kuala Lumpur 

Tel: 03-2273 3100

Fax: 03-2273 9400

Email: technical@masb.org.my