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MASB introduces Exposure Draft on Reduced Disclosure Requirements (30 December 2010)

The Malaysian Accounting Standards Board (the Board) today issued an exposure draft on Amendments to Financial Reporting Standards arising from Reduced Disclosure Requirements – MASB ED 74.


Background

In August 2008, the Board announced its plan to converge with International Financial Reporting Standards (IFRS) in 2012. Compliance with IFRS, besides facilitating comparability and increase transparency of businesses, will aid to give Malaysian companies and our capital market the recognition they deserve as they operate in an increasingly global environment.

Whilst this move is necessary for certain entities other than private entities (herein referred to as non-private entities), e.g. public listed companies, banks, credit unions, insurance companies, securities brokers/dealers, mutual funds and investment banks, some constituents are of the view that non-private entities that do not have public accountability should not be subjected to the same reporting requirements. These constituents also noted that IFRS in the future will be more challenging to apply given the increasing demand for transparency by users of financial statements in the global capital market and as a result may increase the cost of financial reporting in Malaysia. Hence, the Board proposed to introduce an alternative framework for non-private entities that do not have public accountability.


The proposals

The Exposure Draft proposes to introduce a framework known as Financial Reporting Standards – Reduced Disclosure Requirements (FRS-RDR) which would allow entities that meet specified criteria to provide lesser disclosures than those required under the existing FRS framework.

Disclosures under the FRS-RDR are the minimum disclosures required to be included in the financial statements of eligible entities. If an eligible entity in their judgement determines that disclosures in addition to the FRS-RDR are required to meet the objective of financial reporting, the entity should include the additional disclosures using requirements in full FRSs as a guide.

As for the recognition and measurement requirements under the FRS-RDR framework, they would be identical to the FRS framework. The Board does not believe prescribing a different recognition and measurement bases would reduce the cost of financial reporting since FRS 127 Consolidated and Separate Financial Statements requires consolidated financial statements to be prepared using uniform accounting policies.


Who would be affected?

The Exposure Draft is proposed to be applicable to non-publicly accountable subsidiary, associate and jointly-controlled entity, of a non-private entity.


Questionnaire on MASB ED 74

In conjunction with the issuance of MASB ED 74, a survey is carried out to hear the views of constituents on whether this group of entities should be given an option to adopt the FRS-RDR as an alternative to the existing FRS framework.

Interested parties, including the business communities, are encouraged to study the Exposure Draft and provide feedback to MASB.

The deadline to comment on the ED and to respond to the Questionnaire is 31 January 2011. The Exposure Draft and the Questionnaire are available on MASB website at http://www.masb.org.my. The public is encouraged to provide their comments electronically through “Comment Online” on our website. Alternatively, comments may be sent by mail, fax or e-mail to:

Technical Director

Malaysian Accounting Standards Board

Suite 5.2, Level 5 Wisma UOA Pantai

No 11 Jalan Pantai Jaya

59200 Kuala Lumpur

Fax: +603 2240 9300

Email: technical@masb.org.my

To download the documents, click on the following links: