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Disclaimer

The MASB's primary role is to develop accounting and financial reporting standards. It is the MASB's operating policy that generally precludes the MASB or its staff from giving advice to any individuals or corporations on specific cases and from acting as an arbitrator. Entities should address matters concerning the application of the accounting standards with their respective accountants or auditors.

The MASB's limited resources also prevent it from responding to students' individual requests for help in completing their assignments. 

The answers to the following questions have been prepared by the MASB staff and are intended to support the consistent application of requirements in the MASB Standards, and do not necessarily reflect the Board’s view.

1. What are approved accounting standards?
  Approved accounting standards are defined in the Financial Reporting Act 1997 as (a) accounting standards which are issued or adopted by the Malaysian Accounting Standards Board (MASB); and (b) in relation to foreign companies listed on a stock exchange in Malaysia, acceptable internationally recognised accounting standards.
2. What are the acceptable internationally recognised accounting standards?
  The acceptable internationally recognised accounting standards are accounting standards issued by the following bodies:
1. International Accounting Standards Board
2. Financial Accounting Standards Board, United States of America
3. Accounting Standards Board, United Kingdom
4. Australian Accounting Standards Board, Australia
3. Who can comply with acceptable internationally recognised accounting standards?
  Foreign companies listed on the stock exchange in Malaysia. However, they have the option to comply in their entirety with either:
1. any acceptable internationally recognised accounting standards; or
2. MASB approved accounting standards.
4. Does MASB issue auditing standards?
  No, MASB is responsible for setting accounting standards only. Auditing standards are issued by the Malaysian Institute of Accountants.
5. Do all companies need to comply with approved accounting standards?
  The Financial Reporting Act 1997 prescribes that all financial statements that are prepared or lodged under any law administered by the Securities Commission Malaysia, Bank Negara Malaysia or the Registrar of Companies shall comply with the MASB approved accounting standards.

In addition, section 244 of the Companies Act 2016 states that the directors of a company shall ensure that the financial statements of the company and, if the company is a holding company for which consolidated financial statements are required, the consolidated financial statements of the company are made out in accordance with the applicable approved accounting standards.
6. What is the relationship between MASB approved accounting standards and the Companies Act 2016?
  The Companies Act 2016 mandates companies to comply with approved accounting standards. Section 244(2) of the Companies Act 2016 requires the directors of a company to ensure that the financial statements of the company are prepared in accordance with the applicable approved accounting standards.
7. What happens when there is a conflict between approved accounting standards and a provision in the Companies Act 2016?
  Section 244(7) of the Companies Act 2016 prescribes that if a conflict or inconsistency arises between the provisions of an applicable approved accounting standard and the Companies Act 2016, the provisions of the applicable approved accounting standard shall prevail.
8. What does effective date mean?
  The effective date is the date when an approved accounting standard becomes operative. For example, an approved accounting standard with an effective date of “annual periods beginning on or after 1 July 2002” would mean that the first set of financial statements that must comply with the standard shall be those financial statements with annual periods ending on or after 30 June 2003.
9. What if dispute arises between the management and the auditor regarding a requirement on accounting treatment prescribed by an approved accounting standard?
  Any dispute of this nature should be resolved by the respective parties. MASB is not in a position to act as an arbitrator regarding any company-specific dispute nor is it within its scope of establishment to act as one.
10. Two-tier reporting structure

What are the approved accounting standards issued by the MASB?
  1. For entities other than private entities, please refer here, and
2. For private entities, please refer here.
11. Definition of Approved Accounting Standards

Is the definition of approved accounting standards applicable in Malaysia changed due to the change in 2-tier reporting?
  No. Approved accounting standards definition remains unchanged under the Financial Reporting Act 1997 (FRA), and continue to refer to MFRSs and MPERS which are issued pursuant to section 7 of the FRA.
12. Change in Status

Which set of MASB approved accounting standards shall my company comply when my company changes its status from non-private entity to private entity during the financial year? Prior to the change in status, my company was applying MFRSs.
  MFRSs. This is because an entity may only be treated as a private entity in relation to such annual periods or interim periods throughout which it is a private entity.
13. Compliance with Standards

My company is a private company as defined in section 2 of the Companies Act 2016. In addition:

(a) my company is not required to lodge financial statements to the SC or BNM and is not a subsidiary / an associate / jointly controlled by a company that is required to lodge any financial statements to the SC or BNM. Which set of MASB approved accounting standards shall be applicable to my company?
  Your company has the option to apply the following accounting standards in its entirety:
(i)   MPERS.
(ii)  MFRSs.
  (b) my company is not required to lodge financial statements to the SC or BNM. However, it is a subsidiary / an associate / jointly controlled by a company that is required to lodge any financial statements to the SC or BNM. Which set of MASB approved accounting standards shall be applicable to my company? 
  MFRSs
  (c) my company is required to lodge financial statements to the SC or BNM. However, it is not a subsidiary / an associate / jointly controlled by a company that is required to lodge any financial statements to the SC or BNM. Which set of MASB approved accounting standards shall be applicable to my company?
  MFRSs
  (d) my company is required to lodge financial statements to the SC or BNM and is also a subsidiary / an associate / jointly controlled by a company that is required to lodge any financial statements to the SC or BNM. Which set of MASB approved accounting standards shall be applicable to my company?
  MFRSs
14. My company is a private company as defined in the Companies Act 2016 and has an investment in a public listed company. Which set of MASB approved accounting standards shall be applicable to my company?
  MPERS. However, your company is allowed to comply with MFRSs if it chooses to. Nonetheless, your company must comply with either MPERS in its entirety or MFRSs in their entirety.
15. My company is a private company as defined in the Companies Act 2016. My company is the parent company of a public listed company. Which set of MASB approved accounting standards shall be applicable to my company?
  MPERS. However, your company may wish to comply with MFRSs to facilitate the preparation of the consolidated financial statements since your subsidiary company is required to comply with MFRSs.

MPERS Section 9 Consolidated and Separate Financial Statements prescribes that consolidated financial statements shall be prepared using uniform accounting policies for like transactions and other events and conditions in similar circumstances. If a member of the group uses accounting policies other than those adopted in the consolidated financial statements for like transactions and events in similar circumstances, appropriate adjustments are made to its financial statements in preparing the consolidated financial statements.
16. My company is a private company as defined in the Companies Act 2016. My company is an investor company of an associate which is a public listed company. Which set of MASB approved accounting standards shall be applicable to my company?
  MPERS. However, your company may wish to comply with MFRSs since your associate company is required to comply with MFRSs.

MPERS Section 14 Investments in Associates prescribes that if the associate uses accounting policies that differ from those of the investor, the investor shall adjust the associate’s financial statements to reflect the investor’s accounting policies for the purpose of applying the equity method unless it is impracticable to do so.
17. MFRS 10 Consolidated Financial Statements

According to MFRS 10 paragraph 4(a), a parent need not present consolidated financial statements if certain conditions are met, one of which is that the ultimate or any intermediate parent produces consolidated financial statements available for public use that comply with IFRSs. What does “public use” mean?
  The “public use” criteria would generally be satisfied as long as the consolidated financial statements of the parent will be made available to a third party upon request. The request may be made either directly from the parent or by other means, such as by way of a company search.
18.

MFRS 19 Subsidiaries without Public Accountability: Disclosure

MFRS 19 Subsidiaries without Public Accountability: Disclosures (issued by the MASB in July 2024) is a voluntary Standard that permits eligible subsidiaries to apply MFRS Accounting Standards with reduced disclosures. 

As set out in paragraphs 7(b)-(c) of MFRS 19, a subsidiary is eligible to apply MFRS 19 if and only if: 

  • it does not have public accountability; and
  • it has an ultimate or intermediate parent that produces consolidated financial statements available for public use that comply with IFRS Accounting Standards.

What is public accountability?
 

An entity has public accountability if: 

(a) Its debt or equity instruments are traded in a public market or it is in the process of issuing such instruments for trading in a public market (a domestic or foreign stock exchange or an over-the-counter market, including local and regional markets); or 

(b) it holds assets in a fiduciary capacity for a broad group of outsiders as one of its primary businesses (most banks, credit unions, insurance companies, securities brokers/dealers, mutual funds and investment banks would meet this second criterion).

The notion of public accountability used in MFRS 19 is similar to the one used by the IASB in developing the IFRS for SMEs Accounting Standard. 

Education material on “public accountability”, can be found in IFRS Foundation’s Module 1—Small and Medium-sized Entities which provides detailed guidance and examples on “public accountability”.