MASB releases exposure drafts on agriculture and insurance contracts (3 January 2006)

The Malaysian Accounting Standards Board (MASB) has released the exposure drafts or proposed standards on agriculture and insurance contracts comments by the professional accounting bodies, regulators, users and other interested parties.

The exposure draft on agriculture, called ED 50 Agriculture, is identical with IAS 41 Agriculture that was issued by the International Accounting Standards Board (IASB) on 22 February 2001. Once issued, this standard is known as FRS 141.

MASB executive director Dr Nordin Mohd Zain says the text of ED 50 Agriculture is similar in all respects with IAS 41.
He says FRS 141 prescribes the accounting treatment, financial statement presentation and disclosures related to agricultural activity, a matter not covered in other standards. Agricultural activity relates to biological transformation of living animals or plants (biological assets) for sale, into agricultural produce, or into additional biological assets.
Among other things, FRS 141 prescribes the accounting treatment for biological assets during the period of growth, degeneration, production and procreation, and for the measurement of agricultural produce at the time of harvest. 
It requires the application of fair value of biological assets up to the point of harvest, where any change in fair value less estimated point-of-sale costs of a biological asset be included in the net profit or loss for the period in which it arises.
On the exposure draft on insurance contracts, or ED 51 Insurance Contracts, Dr Nordin says it is identical with IFRS 4 Insurance Contracts which IASB issued in March 2004. This is an interim guidance issued by the IASB which is the first step in IASB's insurance project to achieve convergence of the widely varying accounting practices in the insurance industry around the world. 
Among the main features of the proposed Malaysian standard on insurance contracts are that it applies to all insurance contracts including reinsurance contracts that an entity issues, and to reinsurance contracts that it holds. 
In addition, it permits an insurer to change its accounting policies for insurance contracts only if the resulting financial statements present more relevant and reliable information. 

Comment period
MASB welcomes interested parties to give comments on the exposure drafts by 31 March 2006. Copies of the exposure drafts are available free of charge at:

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: masb@masb.org.my
Alternatively, the exposure drafts are available on the MASB website (http://www.masb.org.my). The public may also provide their comments electronically through ED Online on the website.

Press enquiries

For enquiries, please contact:
Dr Nordin Mohd Zain
Executive Director
Malaysian Accounting Standards Board
Email: nordin@masb.org.my