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MASB issues 10 revised accounting standards and new accounting framework (15 Jun 2007)

MASB today announced the issuance of the Framework for the Preparation and Presentation of Financial Statements and 10 revised Financial Reporting Standards (FRSs). The revised FRSs and the framework are virtually identical to the International Financial Reporting Standards (IFRSs) and IASB's accounting framework respectively and will take effect from 1 July 2007.

In a statement issued today, MASB executive director Dr. Nordin Mohd Zain said, "Prior to 2005, MASB made improvements to certain international standards by adding explanation, guidance and examples for clarity before the standards were issued for application in Malaysia. This was done to broaden the content of the standards to cover domestic and regulatory issues and to provide guidance to the local constituents for topics not addressed in the IFRSs. 
 
However in line with the policy of convergence with IFRSs and based on experience in implementing FRSs the Board decided to make FRSs issued prior to 2005 the same as the respective IFRSs. The Board considered this to be necessary in order to enjoy the full benefit of convergence."
 
The revised FRSs are Cash Flow Statements, Construction Contracts, Income Taxes, Revenue, Employee Benefits, Accounting for Government Grants and Disclosure of Government Assistance, Accounting and Reporting by Retirement Benefit Plans, Financial Reporting in Hyperinflationary Economies,Interim Financial Reporting and Provisions, Contingent Liabilities and Contingent Assets. The proposed revisions, contained in MASB ED 55 Proposed Amendments to Financial Reporting Standards, were exposed to the public for comments in March 2007. Generally, the revisions were removal of local guidance and editorial matters.
 
Prior to the finalisation of MASB ED 55, the Board held a dialogue with preparers, accounting firms, professional accountancy bodies, regulators and other interested organisations to solicit views on whether or not the FRSs should be revised. There was general consensus among delegates to align the 10 FRSs with IFRSs, however, the additional guidance removed should be made available to readers in other forms or through professional bodies.
 
Dr. Nordin adds, "Currently, there are only two FRSs which have not been realigned to IFRSs. This is because the Board is in the process of reviewing IFRS 8 Operating Segments and the revised IAS 23 Borrowing Costs which will replace FRS 1142004 and FRS 1232004 once they are finalised. The Board plans to issue these two documents as exposure drafts for public comments in the near future." 
 
In another development, MASB has also issued the Framework for the Preparation and Presentation of Financial Statements. Dr Nordin explains, "The framework sets out the concepts that underlie the preparation and presentation of financial statements for external users. It is not an FRS and does not deal with any accounting measurement or disclosure issue. The purpose of the framework is to provide support to preparers and users of financial statements so as to enhance their understanding of the information presented. The purpose of the framework amongst others is to assist MASB in developing FRSs, facilitate preparers in applying FRSs and in dealing with topics not addressed in FRSs and help users in interpreting information contained in financial statements."
 
The revised FRSs and the framework are available from MASB website (http://www.masb.org.my) or can be purchased in booklet form from MASB office.
 
END

For enquiries, please contact:
Dr Nordin Mohd Zain
Executive Director
Malaysian Accounting Standards Board
Suites 5.01-5.03, 5th Floor, No. 338
Jalan Tuanku Abdul Rahman
50100 Kuala Lumpur
Tel: 03-2715 9199
Fax: 03-2715 9212
Email: nordin@masb.org.my




Notes to the Editor

The 10 revised Financial Reporting Standards (FRSs) are:

(a) FRS 107 Cash Flow Statements
(b) FRS 111 Construction Contracts
(c) FRS 112 Income Taxes
(d) FRS 118 Revenue
(e) FRS 119 Employee Benefits
(f) FRS 120 Accounting for Government Grants and Disclosure of Government Assistance
(g) FRS 126 Accounting and Reporting by Retirement Benefit Plans
(h) FRS 129 Financial Reporting in Hyperinflationary Economies
(i) FRS 134 Interim Financial Reporting
(j) FRS 137 Provisions, Contingent Liabilities and Contingent Assets


FRS 1142004 Segment Reporting and FRS 1232004 Borrowing Costs are not included in the list of amendments as the Board is in the process of reviewing IFRS 8 Operating Segments and the revised IAS 23 Borrowing Costs, which will replace FRS 1142004 and FRS 1232004 respectively once they are finalised. The Board plans to issue IFRS 8 and the revised IAS 23 for public comments in the near future.

FRS 1292004 Financial Reporting in Hyperinflationary Economies is not included in the list of amendments as that Standard is already identical to IAS 29 Financial Reporting in Hyperinflationary Economies.

Background

When the MASB was set up in 1997, the Board subscribed to the policy of "harmonisation with International Accounting Standards (IASs)". Harmonisation involved using IASs as a basis in the development of accounting standards for Malaysia. The Board would carry out detailed examination of accounting standards and practices in other jurisdictions but recognised the IASs were the most appropriate basis for all MASB Standards. Up until 31 December 2004, all MASB Standards, apart from locally developed standards are consistent in all material respect with IASs. For locally developed standards, the principles underlying the recognition, measurement and disclosure requirements of those standards are consistent, with other relevant standards issued by the International Accounting Standards Committee (IASC).

IASC was reconstituted on 1 April 2001 with the birth of the International Accounting Standards Board (IASB), which took over the standard-setting responsibilities. The IASB has since committed to developing, in the public interest, a single set of high quality, understandable and enforceable global accounting standards that require transparent and comparable information in general purpose financial statements. In addition, the IASB co-operates with national accounting standard-setters to achieve convergence in accounting standards around the world.

To move closer to world convergence of accounting standards, the MASB recognises the need to converge with International Financial Reporting Standards (IFRSs). As a first step, it has renamed MASB Standards to FRSs with effect 1 January 2005. In addition to the name change, MASB also renumbered the Standards to correspond to those of the IASs.

Purpose of revising the 10 FRSs

Prior to 2005, the MASB made improvements to a number of international standards by adding explanation, guidance and examples or by amending certain provisions to suit local circumstances. The MASB considered this to be necessary to broaden the content of the Standards to cover domestic, regulatory or other issues as well as to provide guidance for the local constituents on topics not addressed in the IASs.

In line with the policy of convergence with IFRSs and based on experience in implementing FRSs equivalent to IFRSs, the MASB has decided to align its accounting standards issued prior to 2005 (FRSs with a subscript '2004') with the respective IASs, both in terms of form and contents. In order to achieve this objective, the MASB removed all the remaining differences between FRSs and IASs to eventually result in FRSs being virtually identical to IASs / IFRSs.

The subscript '2004' has been removed from the 10 revised Standards.

Framework for the Preparation and Presentation of Financial Statements


The Framework sets out the concepts that underlie the preparation and presentation of financial statements for external users. The purpose of the Framework is to:

  1. assist the MASB in the development of future MASB approved accounting standards and in its review of existing MASB approved accounting standards;
  2. assist preparers of financial statements in applying MASB approved accounting standards and in dealing with topics that have yet to form the subject of an MASB approved accounting standard;
  3. assist auditors in forming an opinion as to whether financial statements conform with MASB approved accounting standards;
  4. assist users of financial statements in interpreting the information contained in financial statements prepared in conformity with MASB approved accounting standards; and
  5. provide those who are interested in the work of MASB with information about its approach to the formulation of MASB approved accounting standards.

The Framework is not an MASB approved accounting standard and hence does not define standards for any particular measurement or disclosure issue. Nothing in the Framework overrides any specific MASB approved accounting standard.

The Framework is concerned with general purpose financial statements including consolidated financial statements. Such financial statements are prepared and presented at least annually and are directed toward the common information needs of a wide range of users. Some of these users may require, and have the power to obtain, information in addition to that contained in the financial statements. Many users, however, have to rely on the financial statements as their major source of financial information and such financial statements should, therefore, be prepared and presented with their needs in view. Special purpose financial reports, for example, prospectuses and computations prepared for taxation purposes, are outside the scope of the Framework. Nevertheless, the Framework may be applied in the preparation of such special purpose reports where their requirements permit.

The Framework applies to the financial statements of all commercial, industrial and business reporting entities as specified in the Financial Reporting Act 1997. A reporting entity is an entity for which there are users who rely on the financial statements as their major source of financial information about the entity.