MASB issues revised MFRS Practice Statement on Management Commentary to enhance narrative reporting

MASB issues revised MFRS Practice Statement on Management Commentary to enhance narrative reporting The Malaysian Accounting Standards Board (MASB) today issued a revised MFRS Practice Statement 1 Management Commentary. 

The MFRS Practice Statement 1 is equivalent to the IFRS Practice Statement 1 Management Commentary as issued and amended by the International Accounting Standards Board (IASB).

ABOUT THE REVISED PRACTICE STATEMENT 

MFRS Practice Statement 1 Management Commentary (revised Practice Statement) sets out requirements and guidance for entities preparing management commentary^[1]. Management commentary shall provide information that enables users to understand the risks of events or circumstances that could disrupt: (a) the entity’s business model; (b) management’s strategy for sustaining or developing that model; or (c) the entity’s resources or relationships. The revised Practice Statement is designed to support the provision of coherent information within management commentary and across management commentary and a company’s other general purpose financial reports. 

The revised Practice Statement supports improvements to and greater global alignment in management commentary and narrative reports accompanying the financial statements. This major overhaul aims to enhance the quality and focus of information provided to investors, making it easier for preparers to meet investors’ information needs, for lawmakers and regulators to enforce the revised Practice Statement, and for auditors to provide assurance on management commentary or to enhance the level of assurance they provide. 

This Practice Statement is not an approved accounting standard. An entity is not required to apply the revised Practice Statement to state compliance with MASB approved accounting standards. The revised Practice Statement is effective for annual reporting periods beginning on or after 3 September 2025, with early application permitted. It supersedes MFRS Practice Statement 1 Management Commentary, which was issued by the MASB in February 2013.

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[1] MFRS Practice Statement 1 defines a Management Commentary as: A particular form of general purpose financial reports that provide information that: (a) enhances users’ understanding of the entity’s financial performance and financial position reported in its financial statements; and (b) provides management’s insight into factors, including sustainability-related factors, that could affect the entity’s ability to create value and generate cash flows across all time horizons, including in the long term.

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