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Malaysia |
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Update for April 2007
Update for February 2007
Update for October 2006
Update for July 2006
Update for April 2006
Update for January 2006
Update for November 2005
Update for April 2005
Update for January 2005
Update for October 2004
Update for July 2004
Update for July 2003
Update for June 2003
Update for October 2002
Update for July 2002
Update for January 2002
Update for October 2001
Update for January 2001
Update for October 2000
Kuala Lumpur:
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April 2007 Update
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1. Limited amendment to FRS 121
On 15 February 2007, the Malaysian Accounting Standards Board (MASB) issued a limited amendment to FRS 121, which will result in exchange differences arising from investment in foreign operations to be recognised in equity. Previously, exchange differences arising from such transactions between companies in a group would be accounted for in the income statement or equity depending on the currency of the monetary item.
The amendment is identical to the provisions of the limited revision to IAS 21 and will apply to annual periods beginning on or after 1 July 2007.
2. Six New Accounting Interpretations
On 15 February 2007, MASB issued six new Interpretations of a number of existing standards:
| Interpretation [Int.] | Title | IFRIC Interpretation [IFRIC Int.] |
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| IC Int. 1 | Changes in Existing Decommissioning, Restoration and Similar Liabilities | IFRIC Int. 1 |
| IC Int. 2 | Members' Shares in c operative Entities and Similar Instruments | IFRIC Int. 2 |
| IC Int. 5 | Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds | IFRIC Int. 5 |
| IC Int. 6 | Liabilities arising from Participating in a Specific Market - Waste Electrical and Electronic Equipment | IFRIC Int. 6 |
| IC Int. 7 | Applying the Restatement Approach under IAS 29 Financial Reporting in Hyperinflationary Economies | IFRIC Int. 7 |
| IC Int. 8 | Scope of FRS 2 | IFRIC Int. 8 |
The above interpretations are identical to the respective IFRIC Interpretations and apply to annual periods beginning on or after 1 July 2007.
3. Exposure draft to amend ten accounting standards
On 15 March 2007, MASB has released Exposure Draft ED 55 Proposed Amendments to Financial Reporting Standards for public comment. The purpose of ED 55 is to remove the remaining differences between ten existing Financial Reporting Standards (FRSs) and International Accounting Standards (IASs), to eventually result in these FRSs being virtually identical to the respective IASs.
The 10 Standards are:
- FRS 107 (2004) Cash Flow Statements;
- FRS 111 (2004) Construction Contracts;
- FRS 112 (2004) Income Taxes;
- FRS 118 (2004) Revenue;
- FRS 119 (2004) Employee Benefits;
- FRS 120 (2004) Accounting for Government Grants and Disclosure of Government Assistance;
- FRS 123 (2004) Borrowing Costs;
- FRS 126 (2004) Accounting and Reporting by Retirement Benefit Plans;
- FRS 134 (2004) Interim Financial Reporting; and
- FRS 137 (2004) Provisions, Contingent Liabilities and Contingent Assets
4. Two draft Accounting Interpretations
On 30 March 2007, MASB has released Draft IC Interpretation 9 Reassessment of Embedded Derivatives and Draft IC Interpretation 10 Interim Financial Reporting and Impairment for public comment. These interpretations are similar to the international interpretations, IFRIC Interpretation 9 and IFRIC Interpretation 10.
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February 2007 Update
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1. MASB Issues Policy Statement on FRS 112(2004) Income Taxes
The Malaysian Accounting Standards Board ('MASB') has issued a Policy Statement on FRS 112(2004) Income Taxes to clarify and re-affirm its position that FRS 112(2004) is clear on the prohibition of the recognition of deferred tax asset relating to unutilised re-investment allowances or investment tax allowances and that the provision in FRS 112(2004) is consistent with IAS 12.
The conclusion is based on the provision of FRS 112(2004) relating to deferred tax asset that arises on initial recognition of an asset or liability. Deferred tax asset/liability is not recognised (initially or subsequently) if it arises on initial recognition of an asset or liability in a transaction that:
- (a) is not a business combination; and
- (b) at the time of the transaction, affects neither accounting profit nor taxable profit (tax loss).
When responding to the arguments that re-investment allowances or investment tax allowances are tax credits accorded to companies by the Government, MASB reconsidered the arguments and concluded that these tax allowances in excess of normal capital allowances are tax deductions in arriving at taxable profit. They are not the same as tax credits. It is of the view that the Government is under no obligation to pay or make good any tax incentives that are not utilised by the companies. The manner in which tax incentives are provided in Malaysia is such that the tax benefits could only be realised when the companies make sufficient profits. The tax incentives of re-investment allowance or investment tax allowance provided by the Government are realised and recognised in the years they are utilised in the form of lower current tax expense as opposed to them being tax credits.
Glossary:
- Policy Statement: A Statement issued by MASB to address a perceived problem in the application of a particular Standard issued by MASB which resulted in differing interpretations as to the intent of the Standard concerned, leading to potentially varying approaches to the accounting treatment. The purpose of a Policy Statement is to clarify and re-affirm MASB's position on the application of a Standard in question in order to ensure consistency of application by reporting entities in Malaysia.
- Re-investment Allowance: An allowance given to qualifying companies in addition to the normal 100% capital allowance ('CA') based on qualifying capital expenditure incurred on qualifying projects located in specific areas for expansion, modernisation or diversification. The allowance is computed as 60% of the qualifying expenditure incurred by the entity and used as a deduction against statutory income. However, the deduction is restricted to 70% of the statutory income for the year. Any unutilised allowances may be carried forward indefinitely to future years to offset against future statutory income of a qualifying entity.
- Investment Tax Allowance: An allowance given to qualifying companies in addition to the normal 100% CA based on qualifying capital expenditure incurred in relation to a promoted activity or product for a period of 5 years from the date approval is granted. The allowance is computed as 60% of the qualifying expenditure incurred by the entity and used as a deduction against statutory income. However, deduction is restricted to 70% of statutory income for the year. Any unutilised allowances may be carried forward indefinitely to future years to offset against future statutory income of a qualifying entity.
2. IASB Discussion Paper on Fair Value Measurements
MASB solicited comments from interested parties on IASB's Discussion Paper on Fair Value Measurements in order for it to consider those comments in its response to IASB.
The Discussion Paper seeks to establish a concise definition of fair value and a single source of guidance for all fair value measurements required by IFRSs and uses SFAS 157 Fair Value Measurements, accounting standard issued by Financial Accounting Standards Board, United States as its starting point for deliberation.
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October 2006 Update
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MASB Issues New and Revised Accounting Standards
The Malaysian Accounting Standards Board (MASB) has issued FRS 6 Exploration for and Evaluation of Mineral Resources. It has also issued an amendment to FRS 119 (2004) Employee Benefits. The amendments relate mainly to actuarial gains and losses, group plans, and disclosures. Both the FRS and the amendment made are identical to the related IFRSs and will take effect for annual periods beginning on or after 1 January 2007.
Exposure Draft on Framework for the Preparation and Presentation of Financial Statements
The MASB has released an exposure draft ED 53 Framework for the Preparation and Presentation of Financial Statements for public comment. This proposed Framework was originally issued as a Discussion Paper, A Proposed Framework for the Preparation and Presentation of Financial Statements by MASB. Revisions have been made to the Discussion Paper in view of MASB's policy of convergence with IFRSs.
These revisions are now reflected in ED 53, which provides conceptual framework that will enable entities to report in a coherent frame of reference consistent with the IFRS framework.
Proposed Amendments to FRS 121
MASB has also released an exposure draft on the proposed amendments to FRS 121 The Effects of Changes in Foreign Exchange Rates - Net Investment in a Foreign Operation for public comment. The draft is identical to the recent amendments to IAS 21.
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July 2006 Update
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MASB releases two Technical Releases on accounting for Islamic financial transactions - zakat and ijarah
The Malaysian Accounting Standards Board (MASB) has issued guidance in the form of technical releases for those involved in Islamic products on how to apply MASB accounting standards to Islamic financial transactions in respect of Zakat (one of the Islamic fundamental obligations) and Ijarah (Islamic leasing).
The technical release on Accounting for Zakat on business only deals with financial reporting issues related to zakat, namely that zakat is an expense of the entity whereas the technical release on Ijarah was written on the premise that an asset under Islamic leasing is split between the underlying asset which belongs to the lessor, and the right which belongs to the lessee.
Amendments to FRS 124 and FRS 139
On 3 May 2006, the MASB announced amendments to certain provisions in FRS 124 Related Party Disclosures and FRS 139 Financial Instruments: Recognition and Measurement.
The amendments mainly exempt state-controlled entities from complying with FRS 124 with effect from 3 May 2006 and the effective date of FRS 139 and consequential amendments resulting from FRS 139 is deferred to a date to be announced by the MASB.
Exposure Draft on Simpler Accounting Standards for Private Companies
The MASB has issued Exposure Draft 52 on the proposed new standard known as Private Entity Reporting Standards (PERS) for public comment. PERS is intended to provide guidance on the accounting treatments suitable for private entities and at the same time, reduce their reporting burden with less disclosure requirements.
Three New Draft Interpretations for comments
The MASB released the following draft interpretations for public comment:
- Interpretation 6: Liabilities arising from Participating in a Specific Market - Waste Electrical and Electronic Equipment
- Interpretation 7: Applying the Restatement Approach under FRS 129 Financial Reporting in Hyperinflationary Economics
- Interpretation 8: Scope of FRS 2
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April 2006 Update
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FRSs Now Optional for Private Companies
On 23 February 2006, the Malaysian Accounting Standards Board (MASB) announced that the new/revised Financial Reporting Standards (which are generally consistent with IFRSs) are now optional for 'private entities'. Effective 1 January 2006, private entities may elect to use the former MASB standards instead of the recent FRSs. In effect, there are now two sets of accounting standards in Malaysia:
- Financial Reporting Standards (FRSs), which must be used by companies that are required to prepare or lodge financial statements under any law administered by the Securities Commission or the Bank Negara Malaysia, and by subsidiaries, associates, or companies jointly controlled by them.
- Private Entity Reporting Standards (PERSs), which may be used by all other companies.
Click here for Complete Lists of Outstanding FRSs and PERSs (PDF 46k).
MASB releases exposure drafts on agriculture and insurance contracts
The MASB has released exposure drafts of proposed standards on agriculture and insurance contracts for public comment:
- ED 50 Agriculture is identical with IAS 41 Agriculture. Once issued, this standard will be known as FRS 141.
- ED 51 Insurance Contracts it is identical with IFRS 4 Insurance Contracts which IASB issued in March 2004.
Three draft IC interpretations for comments
The MASB has released the following draft IC interpretations for public comment:
- IC Interpretation 1: Changes in Existing Decommissioning, Restoration & Similar Liabilities
- IC Interpretation 2: Members' Shares in c-operative Entities & Similar Instruments
- IC Interpretation 5: Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds
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January 2006 Update
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In our previous country updates, we reported that the Malaysian Accounting Standards Board (MASB) had approved in principle 21 new or revised MASB approved accounting standards and 11 Interpretation Committee (IC) Interpretations. Of these, 18 standards and the 11 interpretations have been finalised for application in relation to financial statements that are required to be prepared or lodged under any law administered by the Securities Commission, Bank Negara Malaysia, or the Registrar of Companies for annual periods beginning on or after 1 January 2006.
An announcement on the effective date of the remaining three revised standards those on Leases (FRS 117), Related Party Disclosures (FRS 124), and the new standard on Financial Instruments: Recognition and Measurement (FRS 139) will be made towards the end of January or early February 2006.
The new MASB approved accounting standards referred to above are:
- FRS 1 First-time Adoption of Financial Reporting Standards
- FRS 2 Share-based Payment
- FRS 138 Intangible Assets
- FRS 140 Investment Property
The revised MASB approved accounting standards referred to above are:
- FRS 3 Business Combinations
- FRS 5 Non-current Assets Held for Sale and Discontinued Operations
- FRS 101 Presentation of Financial Statements
- FRS 102 Inventories
- FRS 108 Accounting Policies, Changes in Accounting Estimates and Errors
- FRS 110 Events after the Balance Sheet Date
- FRS 116 Property, Plant and Equipment
- FRS 121 The Effects of Changes in Foreign Exchange Rates
- FRS 127 Consolidated and Separate Financial Statements
- FRS 128 Investments in Associates
- FRS 131 Interests in Joint Ventures
- FRS 132 Financial Instruments: Disclosure and Presentation
- FRS 133 Earnings Per Share
- FRS 136 Impairment of Assets
The interpretations referred to above are:
- IC Interpretation 107 Introduction of the Euro
- IC Interpretation 110 Government Assistance - No Specific Relation to Operating Activities
- IC Interpretation 112 Consolidation - Special Purpose Entities
- IC Interpretation 113 Jointly Controlled Entities - Non-Monetary Contributions by Venturers
- IC Interpretation 115 Operating Leases - Incentives
- IC Interpretation 121 Income Taxes - Recovery of Revalued Non-Depreciable Assets
- IC Interpretation 125 Income Taxes - Changes in the Tax Status of an Entity or its Shareholders
- IC Interpretation 127 Evaluating the Substance of Transactions Involving the Legal Form of a Lease
- IC Interpretation 129 Disclosure - Service Concession Arrangements
- IC Interpretation 131 Revenue - Barter Transactions Involving Advertising Services
- IC Interpretation 132 Intangible Assets - Web Site Costs
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November 2005 Update
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Standards Approved in Principle
The following standards have been approved in principle by the Malaysian Accounting
Standards Board (MASB) pending their official announcement in major newspapers:
| Standard | Title | Standard Superseded | Formerly Known As |
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| FRS 117 | Leases | FRS 117 2004 | MASB 10 |
| FRS 127 | Consolidated Financial Statements and Investments in Subsidiaries | FRS 127 2004 | MASB 11 |
| FRS 128 | Investments in Associates | FRS 128 2004 | MASB 12 |
| FRS 131 | Financial Reporting of Interests in Joint Ventures | FRS 131 2004 | MASB 16 |
| FRS 132 | Financial Instruments: Disclosure and Presentation | FRS 132 2004 | MASB 24 |
| FRS 133 | Earnings Per Share | FRS 133 2004 | MASB 13 |
| FRS 139 | Financial Instruments: Recognition and Measurement | - | - |
| FRS 1 | First-Time Adoption of Financial Reporting Standards | - | - |
FRS 117, Leases
The revision made to FRS 117 is identical to revision of IAS 17 in December 2003. In addition, FRS 117 has included a transitional provision for an entity that had previously classified a lease of land as finance lease under the existing FRS 117 2004 and accounted such lease of land in accordance with FRS 116 2004, and had recognised a revaluation surplus in respect of such lease of land. The transitional provision prescribes that the unamortized revalued amount of such lease of land is treated as the surrogate carrying amount of prepaid lease payments.
This Standard is applicable to annual periods beginning on or after 1 January 2006. Early application is encouraged.
FRS 127, Consolidated Financial Statements and Investments in Subsidiaries
The revision made to FRS 127 is identical to revision of IAS 27 in December 2003 except for the following:
FRS 127 prescribes that for a wholly-owned parent company to be exempted from presenting consolidated financial statements, it requires among others, that the ultimate or immediate parent company must be incorporated in Malaysia.
The last sentence in paragraphs IN1 and IN10 and paragraph 45 of IAS 27 (Revised 2004) that relate to SIC-33 Consolidation and Equity Method - Potential Voting Rights and Allocation of Ownership Interests are not applicable as MASB has not adopted them for application in Malaysia
This Standard is applicable to annual periods beginning on or after 1 January 2006. Early application is encouraged.
FRS 128, Investments in Associates
The revision made to FRS 108 is identical to revision of IAS 8 in December 2003 except that the last sentence in paragraphs IN1, IN7 and IN14 and paragraph 43 of IAS 28 (Revised 2003) that relate to SIC-3 Elimination of Unrealised Profits and Losses on Transactions with Associates, SIC-20 Equity Accounting Method - Recognition of Losses and SIC-33 Consolidation and Equity Method -Potential Voting Rights and Allocation of Ownership Interests are not applicable as MASB has not adopted them for application in Malaysia
This Standard is applicable to annual periods beginning on or after 1 January 2006. Early application is encouraged.
FRS 131, Financial Reporting of Interests in Joint Ventures
The revision made to FRS 131 is identical to revision of IAS 31 in December 2003.
This Standard is applicable to annual periods beginning on or after 1 January 2006. Early application is encouraged.
FRS 132, Financial Instruments: Disclosure and Presentation
The revision made to FRS 132 is identical to revision of IAS 32 in December 2003 except that Paragraphs 99 and 100 of IAS 32 (Revised 2003) that relate to:
- SIC-5 Classification of Financial Instruments - Contingent Settlement Provisions;
- SIC-16 Share Capital - Reacquired Own Equity Instruments (Treasury Shares);
- SIC-17 Equity - Costs of an Equity Transaction; and
- SIC-D24 Financial Instruments - Instruments or Rights Redeemable by the Holder
are not applicable as MASB has not adopted them for application in Malaysia
An additional paragraph 95A is included in FRS 132 which requires an entity that has availed of the transitional provision when the MASB first issued FRS 132 2004 to disclose that fact. The transitional provision in FRS 132 2004 prescribes that the component part classification of compound instruments into its liability and equity elements need to be applied only to financial instruments that were issued during reporting period beginning on or after 1 January 2003.
This Standard is applicable to annual periods beginning on or after 1 January 2006. Early application is encouraged.
FRS 133, Earnings per Share
The revision made to FRS 133 is identical to revision of IAS 33 in December 2003 except that the last sentence in paragraph IN1 and paragraph 76 of IAS 33 (Revised 2003) that relate to SIC-24 Earnings Per Share - Financial Instruments and Other Contracts that May Be Settled in Shares are not applicable as MASB has not adopted it for application in Malaysia.
This Standard is applicable to annual periods beginning on or after 1 January 2006. Early application is encouraged.
FRS 139, Financial Instruments: Recognition and Measurement
FRS 139 is identical to IAS 39 (revised) and it includes the transitional provision provided in the original IAS 39 to cater for entities adopting FRS 139 for the first time.
This Standard is applicable to annual periods beginning on or after 1 January 2006. Early application is encouraged.
FRS 1, First-Time Adoption of Financial Reporting Standards
The phrase “national requirements” referred to in paragraphs 3 and 4 is replaced by “other accounting requirements”. This is necessary because Malaysia's national requirement is Financial Reporting Standards (FRSs). Hence, there is no necessity for a transition in financial reporting from the national requirements to FRSs
Paragraph IN7 and the last sentence of paragraph 47 of IFRS 1 that relate to SIC-8 First-time Application of IASs as the Primary Basis of Accounting, are not applicable as MASB has not adopted it for application in Malaysia
This Standard is applicable to annual periods beginning on or after 1 January 2006. Early application is encouraged.
Exposure draft on the amendment to employee benefits
MASB issued an exposure draft on the amendment to employee benefits which covers the accounting treatment for actuarial gains and losses, group plans and disclosures regarding such benefits.
The exposure draft, called MASB ED 49 Amendment to FRS 119 Employee Benefits: Actuarial Gains and Losses, Group Plans and Disclosures, is identical to the amendment to IAS 19 on employee benefits that was issued by the International Accounting Standards Board (IASB) in December 2004.
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April 2005 Update
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Two New Exposure Drafts
During the first quarter of 2005, the Malaysian Accounting Standards Board (MASB) issued two Exposure Drafts (EDs) as follows:
- ED 46 Proposed Improvements to Financial Reporting Standards
- ED 47 First-time Adoption of Financial Reporting Standards
Exposure Draft ED 46 is the final batch of the Improvements project proposals and comprises revision to the following four Standards:
- FRS 127 [formerly known as MASB 11], Consolidated Financial Statements and Investments in Subsidiaries
- FRS 128 [formerly known as MASB 12], Investments in Associates
- FRS 131 [formerly known as MASB 16], Financial Reporting of Interests in Joint Ventures
- FRS 133 [formerly known as MASB 13], Earnings per Share.
FRS 127, Consolidated Financial Statements and Investments in Subsidiaries
The proposed revision to FRS 127 is identical to IAS 27 (as revised December 2003) except that FRS 127 would require that, for a wholly-owned parent company to be exempted from presenting consolidated financial statements, the ultimate or immediate parent company must be incorporated in Malaysia. This is consistent with the requirement in the Ninth Schedule of the Malaysian Companies Act, 1965.
FRS 128, Investments in Associates
The proposed revision to FRS 128 is identical to IAS 28 (as revised December 2003) except that FRS 128 would require that, for an investment in associated company to be exempted from equity accounting, the ultimate or immediate parent company must be incorporated in Malaysia. This is consistent with the proposal made in [draft] FRS 127 as highlighted above.
FRS 131, Financial Reporting of Interests in Joint Ventures
Proposed Standard FRS 131 is similar to the IAS 31 Interests in Joint Ventures (as revised December 2003), which allows a venturer to use either the proportionate consolidation method or the equity method to account for its interest in a jointly controlled entity.
This choice of measurement is not found in the existing FRS 131. Under FRS 131, only the equity method is allowed in accounting for the venturer's interest in a jointly controlled entity.
Proposed Standard FRS 131 removes the following provisions in the existing FRS 131 that are not found in IAS 31:
- paragraph 4 of FRS 131, which contains additional explanation with regard to joint control;
- paragraphs 16, 17, and 22 of FRS 131 which provide additional guidance on jointly controlled assets;
- paragraphs 45 to 47 of FRS 131, which incorporate the consensus from SIC-13 Non-Monetary Contributions by Venturers; and
- Paragraphs 54 to 57 of FRS 131, which require that a venturer account for its interest in a joint venture using uniform accounting policies and the same reporting date.
FRS 133, Earnings per Share (EPS)
The existing FRS 133 prescribes that if the number of ordinary shares changes as a result of a capitalisation, bonus issue, or share split / reverse share split occurring after the balance sheet date but before the financial statements are authorised for issue, the EPS calculations should not be adjusted for these changes. However it does require disclosure of pro forma EPS calculations based on those changes.
However, proposed Standard FRS 133 is similar to the revised IAS 33 Earnings per Share, which provides that in such a case, the EPS calculations presented must be based on new number of shares.
Proposed Standard FRS 133 removes the following provisions in the existing FRS 133 not found in the IAS 33 equivalents:
- paragraph 2 of FRS 133 on the meaning of 'the process of issuing shares in public securities market';
- paragraphs 11 and 26 of FRS 133 with regard to the additional explanation on basic EPS and diluted EPS respectively; and
- paragraphs 16, 24, 33 and 36 of FRS 133 with regard to the additional explanation on basic and diluted EPS, including guidance on shares that were bought back.
As MASB has yet to adopt SIC Interpretations, all references to SIC Interpretations are deleted from ED 46.
ED 47 First-time Adoption of Financial Reporting Standards
ED 47 is identical to IFRS 1 First-time Adoption of International Financial Reporting Standards, which was issued by the IASB in June 2003.
Amendments to the Financial Reporting Act, 1997
Amendments to the Financial Reporting Act, 1997 (the Act) were gazetted by Parliament of Malaysia on 31 December 2004 and took effect from 1 January 2005. The amendments, among other thing, allow foreign companies listed on a stock exchange in Malaysia to apply either:
- MASB approved accounting standards; or
- Any acceptable international accounting standards issued by accounting standards issuing bodies recognised by MASB under Section 26A of the Act.
The MASB Board, under its powers pursuant to Section 26A of the Act, approved the accounting standards issued by the following standards issuing bodies as acceptable international accounting standards:
- International Accounting Standards Board.
- Financial Accounting Standards Board, United States of America.
- Accounting Standards Board, United Kingdom.
- Australian Accounting Standards Board, Australia.
The amendments do not affect the required compliance with MASB accounting standards by Malaysian companies.
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January 2005 Update
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MASB Restructures its Accounting Standards
The Financial Reporting Foundation and the Malaysian Accounting Standards Board (MASB) have changed the nomenclature of MASB Standards. Beginning 1 January 2005, existing MASB Standards will be renamed Financial Reporting Standards (FRSs), and the numbers will change to correspond to those of the international standards.
The new names and numbers must be used in financial statements for annual periods beginning on or after 1 January 2005. Companies are encouraged to use them earlier. The table below shows the proposed migration of the names and numbers of MASB Standards beginning 1 January 2005.
| New number | Title | Old number |
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| FRS1 | First-time Adoption of Financial Reporting Standards | |
| FRS2 | Share-based Payment | |
| FRS3 | Business Combinations | |
| FRS4 | Insurance Contracts | |
| FRS5 | Non-Current Assets Held for Sale and Discontinued Operations | |
| FRS101 | Presentation of Financial Statements | MASB1 |
| FRS102 | Inventories | MASB2 |
| FRS104 | Depreciation Accounting | MASB14 |
| FRS107 | Cash Flow Statements | MASB5 |
| FRS108 | Net Profit or Loss for the Period, Fundamental Errors and Changes in Accounting Policies | MASB3 |
| FRS109 | Research and Development Costs | MASB4 |
| FRS110 | Events after the Balance Sheet Date | MASB19 |
| FRS111 | Construction Contracts | MASB7 |
| FRS112 | Income Taxes | MASB25 |
| FRS114 | Segment Reporting | MASB22 |
| FRS116 | Property, Plant and Equipment | MASB15 |
| FRS117 | Leases | MASB10 |
| FRS118 | Revenue | MASB9 |
| FRS119 | Employee Benefits | MASB29 |
| FRS120 | Accounting for Government Grants and Disclosure of Government Assistance | MASB31 |
| FRS121 | The Effects of Changes in Foreign Exchange Rates | MASB6 |
| FRS122 | Business Combinations | MASB21 |
| FRS123 | Borrowing Costs | MASB27 |
| FRS124 | Related Party Disclosures | MASB8 |
| FRS125 | Accounting for Investments | IAS25 |
| FRS126 | Accounting and Reporting by Retirement Benefit Plans | MASB30 |
| FRS127 | Consolidated Financial Statements and Investments in Subsidiaries | MASB11 |
| FRS128 | Investments in Associates | MASB12 |
| FRS129 | Financial Reporting in Hyperinflationary Economies | IAS29 |
| FRS130 | Disclosures in the Financial Statements of Banks and Similar Financial Institutions | |
| FRS131 | Financial Reporting of Interests in Joint Ventures | MASB16 |
| FRS132 | Financial Instruments: Disclosure and Presentation | MASB24 |
| FRS133 | Earnings Per Share | MASB13 |
| FRS134 | Interim Financial Reporting | MASB26 |
| FRS135 | Discontinuing Operations | MASB28 |
| FRS136 | Impairment of Assets | MASB23 |
| FRS137 | Provisions, Contingent Liabilities and Contingent Assets | MASB20 |
| FRS138 | Intangible Assets | |
| FRS139 | Financial Instruments: Recognition and Measurement | |
| FRS140 | Investment Property | |
| FRS141 | Agriculture | |
| FRS201 | Property Development Activities | MASB32 |
| FRS202 | General Insurance Business | MASB17 |
| FRS203 | Life Insurance Business | MASB18 |
| FRS204 | Accounting for Aquaculture | MAS5 |
| FRS i-1 | Presentation of Financial Statements for Islamic Financial Institutions | MASB i-1 |
Legend relating to the table:
- FRS1 to 5 are standards that are newly introduced by the international body and currently being reviewed by MASB. When issued as standards, MASB would carry the same number as those used by the IASB. Hence, IFRS1 to 5 are FRS1 to 5 in Malaysia.
- FRS with 100 prefix corresponds to its equivalent IAS. Hence, FRS112 is equivalent to IAS12. Previously it was MASB25.
- FRS with 200 prefix denotes locally developed standard with no equivalent international standard. Hence FRS201 is a local standard where there is no international standard.
- FRS with i prefix denotes an Islamic financial reporting standard.
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The following three exposure drafts were issued on 31 December 2004:
- ED 44 Share-based Payment. ED 44 is identical to IFRS 2 Share-based Payment, which was issued by IASB in February 2004.
- ED 45 Financial Instruments: Disclosure and Presentation. ED 45 is virtually identical to IAS 32 (revised) Financial Instruments: Disclosure and Presentation, which was issued by IASB in December 2003. When finalised, ED 45 would supersede the existing MASB 24 Financial Instruments: Disclosure and Presentation.
- ED 35 (revised) Financial Instruments: Recognition and Measurement. ED 35 (revised) is virtually identical to IAS 39 (revised) Financial Instruments: Recognition and Measurement, which was issued by IASB in December 2003. It has incorporated the limited revision to IAS 39 (revised) with regard to Fair Value Hedge Accounting for a Portfolio Hedge of Interest Rate Risk and Transition and Initial Recognition of Financial Assets and Financial Liabilities, issued by the IASB in March and December 2004 respectively. It has also incorporated the proposals in two other IASB EDs relating to IAS 39. The original ED 35, which was identical to IAS 39 (revised 2000) was issued in September 2002. Due to the ongoing revisions to IAS 39 (revised 2000), MASB believes that it is timely now to re-expose ED 35 based on all the latest proposals of the IASB with regard to the standard on financial instruments.
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October 2004 Update
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The following exposure drafts have been issued since 1 July 2004:
1. MASB ED 37, Proposed Improvements to MASB Standards
This exposure draft proposes improvements to the following four MASB Standards:
- MASB 2 Inventories
- MASB 8 Related Party Disclosures
- MASB 15 Property, Plant and Equipment
- MASB 19 Events after the Balance Sheet Date
2. MASB ED 38 on Proposed Improvements to MASB Standards
This exposure draft proposes improvements to the following three MASB Standards:
- MASB 1 Presentation of Financial Statements
- MASB 3 Net Profit or Loss for the Period, Fundamental Errors and Changes in Accounting Policies
- MASB 6 The Effects of Changes in Foreign Exchange Rates
3. MASB ED 39 on Non-current Assets Held for Sale and Discontinued Operations
This exposure draft is identical to IFRS 5 Non-current Assets Held for Sale and Discontinued Operations, which was issued by the IASB in March 2004. If adopted, this proposed standard would replace MASB 28 Discontinuing Operations.
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July 2004 Update
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The Financial Reporting Act, 1997 is being amended to permit foreign companies listed on the Malaysian Stock Exchange to use IFRSs in preparing their financial statements. The amendments have been submitted to Parliament. Parliament may consider those proposed amendments in September 2004.
In July 2004, the Malaysian Accounting Standards Board (MASB) issued Exposure Draft ED 37, comprising revision to four MASB Standards. The MASB is currently reviewing 13 of its existing MASB Standards in view of the recent revisions to the International Accounting Standards (IAS) by the IASB. The remaining MASB revisions will be issued in three other batches.
In reviewing the MASB Standards, MASB has stated that its policy is to converge with the IAS. In this regard, MASB policy is to use IASB Standards as the basis for the ED. Further, MASB's policy is that the wordings in IASB standards are maintained strictly and would only be changed if it is absolutely necessary. Additions to IASB standards are clearly identified and are made in a manner that preserves the format and structure of the IASB standards. Changes to IASB standards would be made with the sole objective of enhancing the quality of reporting, without altering the intent or meaning of the original Standard. Areas of potential enhancements would be those that deal with (a) specific issues that are not dealt with in the IASB standards; (b) illustrations or additional clarification for better understanding of the context of the Standard; or (c) compliance with local laws and regulations.
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July 2003 Update
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New Chairman of Financial Reporting Foundation
The Minister of Finance II has appointed Dato' Johan Raslan as the new chairman of the Financial Reporting Foundation (FRF) for a three-year term from 1 July 2003 until 30 June 2006. Dato' Johan, 43, a chartered accountant by profession, is a Partner and Financial Services Leader of PricewaterhouseCoopers (PwC) Malaysia. He succeeds Tan Sri Wan Azmi bin Wan Hamzah.
New Standards
The following new Malaysian Accounting Standards Board standards (their equivalent IFRS is indicated for reference) are effective for accounting periods beginning on or after 1 January 2004:
MASB 31, Accounting for Government Grants and Disclosure of Government Assistance [IAS 20 (reformatted 1994)]
MASB 31 adopts a similar approach to IAS 20 in recognising a government grant as income over the period of the grant to match against the related costs for which the grant is intended to compensate. It is consistent with IAS 20, in all material respects except for the following:
- IAS 20 allows an entity to account for grants of non-monetary assets at nominal amount, whereas MASB 31 prescribes accounting for both grant and asset at fair value.
- Both IAS 20 and MASB 31 allow grants relating to assets to be presented in the balance sheet either as deferred income or as a deduction in measuring the carrying amount of the assets. MASB 31 requires additional disclosure if the asset-deduction approach is used.
- Both IAS 20 and MASB 31 allow grants relating to income to be presented in the income statement either as gross income or as a reduction of expenses. If the expense-reduction approach is adopted, MASB 31 requires additional disclosure including the reason for using this approach.
- MASB 31 addresses revocation of government grants and explains that if a grant is revoked by government, the entity may have to recognise an obligation to transfer resources in various forms.
MASB 32, Property Development Activities [no directly equivalent IAS]
Under MASB 32, property development revenue is recognised on a percentage-of-completion basis, but not before all the following criteria are met: (a) the sale of the development units is effected; (b) development and construction activities have commenced; and (c) the financial outcome of the development activities can be reliably estimated. The attributable portion of property development costs is recognised as an expense in the period in which the related revenue is recognised. Previously recognised revenue and expenses are immediately written back as soon as a rescission or revocation of sale occurs.
Property development project costs recognised as an asset are carried at the lower of cost and net realisable value. Inventories of unsold completed development units are stated at lower of cost and net realisable value. Land held for future property development (sometimes called a "land bank") is classified as a non-current asset and carried at cost less any impairment losses. Prior to MAS 32, MAS 7 had allowed land held for future development to be reported optionally at cost or revalued amounts. A company that had previously carried the land bank at revalued amount will use the revalued amount as its surrogate cost.
Deferral of Exposure Drafts
The implementation date of both ED 35, Financial Instruments: Recognition and Measurement, and ED 26, Financial Reporting by Unit Trusts, has been deferred from earlier intended date of 1 July 2003 to the third quarter of 2004. The MASB concluded that the deferral is necessary because the IASB is currently revising IAS 32 and IAS 39. Those revisions may require consequential changes to ED 35 and ED 26 before they are finally adopted.
Presented below is a summary as of 1 July 2003 of the Malaysian Accounting Standards that have been adopted or proposed for adoption by the Malaysian Accounting Standards Board:
Approved Accounting Standards
The Malaysian Accounting Standards Board has issued the following accounting standards as approved accounting standards for application by enterprises in Malaysia.
- MASB 1 Presentation of Financial Statements
- MASB 2 Inventories
- MASB 3 Net Profit or Loss for the Period, Fundamental Errors and Changes in Accounting Policies
- MASB 4 Research and Development Costs
- MASB 5 Cash Flow Statements
- MASB 6 The Effect of Changes in Exchange Rates
- MASB 7 Construction Contracts
- MASB 8 Related Party Disclosures
- MASB 9 Revenue
- MASB 10 Leases
- MASB 11 Consolidated Financial Statements and Investments in Subsidiaries
- MASB 12 Investments in Associates
- MASB 13 Earnings Per Share
- MASB 14 Depreciation Accounting
- MASB 15 Property, Plant and Equipment
- MASB 16 Financial Reporting of Interests in Joint Ventures
- MASB 17 General Insurance Business
- MASB 18 Life Insurance Business
- MASB 19 Events After the Balance Sheet Date
- MASB 20 Provisions, Contingent Liabilities and Contingent Assets
- MASB 21 Business Combinations
- MASB 22 Segment Reporting
- MASB 23 Impairment of Assets
- MASB 24 Financial Instruments: Disclosure & Presentation
- MASB 25 Income Taxes
- MASB 26 Interim Financial Reporting
- MASB 27 Borrowing Costs
- MASB 28 Discontinuing Operations
- MASB 29 Employee Benefits
- MASB 30 Accounting and Reporting by Retirement Benefit Plans
- MASB i-1 Presentation of Financial Statements of Islamic Financial Institutions
Approved Addenda to MASB Standards:
- Addendum to MASB 1 Presentation of Financial Statements
- Addendum to MASB 2 Inventories
- Addendum to MASB 5 Cash Flow Statement
- Addendum to MASB 7 Construction Contracts
- Addendum to MASB 24 Financial Instruments: Disclosure and Presentation
Extant Accounting Standards Adopted
Before the MASB was established, the accounting standards applicable in Malaysia were promulgated by the two accounting professional bodies, namely the Malaysian Institute of Accountants (MIA) and the Malaysian Institute of Certified Public Accountants (MICPA).
At the time when the MASB assumed the role of the sole standard setter in Malaysia, the two professional bodies had issued a total of 32 accounting standards. For a start, the MASB adopted 24 of the 32 accounting standards issued. Its adoption gave these 24 extant standards the status of approved accounting standards. The adoption was necessary as an interim measure while the MASB embarked on its program to review each of these 24 standards and more.
As at to-date, the MASB has reviewed and replaced most of these extant accounting standards with new MASB Standards (see list above) except for the following:
- IAS 25 Accounting for Investment
- IAS 29 Financial Reporting in Hyperinflationary Economies
- MAS 5 Accounting for Aquaculture
Extant Accounting Standards Not Adopted
The Malaysian Accounting Standards Board has not adopted the following accounting standards as approved accounting standards for application by enterprises in Malaysia.
- MAS 6 Accounting for Goodwill
- MAS 8 Accounting for Pre-Cropping Costs
Outstanding Exposure Drafts
| Name | Title | Issued | Comments Due Date |
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| ED 26 | Financial Reporting by Unit Trusts | June 1, 2000 | September 5, 2000 |
| ED 28 | Goodwill | November 01, 2000 | February 20, 2001 |
| ED 31 | Investment Property | June 28, 2001 | September 28, 2001 |
| ED 35 | Financial Instruments: Recognition and Measurement | March 21, 2002 | September 20, 2002 |
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June 2003 Update
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Dato' Zainal Abidin bin Putih, Joint Chairman of Ernst & Young Malaysia, has been appointed as Chairman of the Malaysian Accounting Standards Board (MASB). Dato' Zainal takes over from Raja Datuk Arshad Raja Tun Uda, whose term expired on 30 April 2003.
The appointment, which is for a three-year term until 30 April 2006, was made by the Minister of Finance in accordance with the provisions of the Financial Reporting Act 1997.
Dato' Zainal is a Chartered Accountant of the England and Wales Institute (ICAEW). He joined Hanafiah Raslan & Mohamad in 1972 and was appointed as Managing Partner of Arthur Andersen in 1990 and later as Joint Chairman of Ernst & Young in July 2002.
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October 2002 Update
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The following new MASB standard (the equivalent IAS is indicated for reference) is effective for periods beginning on or after January 1, 2003:
- MASB 30, Accounting and Reporting by Retirement Benefit Plans [IAS 26 (Reformatted 1994)].
The following new exposure draft was issued for comment:
- ED 36, Accounting for Government Aid.
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July 2002 Update
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The following new standards issued by the Malaysian Accounting Standards Board (their equivalent IAS is indicated for reference) are effective for accounting periods beginning on or after January 1, 2003:
- MASB 28, Discontinuing Operations [IAS 35 (1998)]
- MASB 29, Employee Benefits [IAS 19 (revised 2000)]
A new exposure draft was issued for comments as follows:
- ED 35 Financial Instruments: Recognition and Measurement
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January 2002 Update
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The following new Malaysian Accounting Standards Board standards (their equivalent IAS is indicated for reference) are effective for accounting periods beginning on or after 1 July 2002:
- MASB 25, Incomes Taxes [IAS 12 (revised)]
- MASB 26, Interim Financial Reporting [IAS 34]
- MASB 27, Borrowing Costs [IAS 23 (revised)]
The following is the first Islamic accounting standard issued by the MASB and is effective for accounting period beginning on or after 1 July 2003:
- MASB i-1, Presentation of Financial Statements of Islamic Banks
New exposure drafts issued for comments are as follows:
- ED 27 (revised), Property Development Activities
- ED 34, Accounting and Reporting by Retirement Benefit Plans
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October 2001 Update
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The following new MASB standards (their equivalent IAS is indicated for reference) are effective for accounting periods beginning on or after 1 January 2002:
- MASB 22, Segment Reporting [IAS 14 (revised)]
- MASB 23, Impairment of Assets [IAS 36 ]
- MASB 24, Financial Instruments: Disclosure and Presentation [IAS 32 (revised 1998)]
New exposure drafts issued for comments:
- ED 19(revised), Borrowing Costs
- ED 29, Income Taxes
- ED 30, Interim Financial Reporting
- ED 31, Investment Property
- ED 32, Discontinuing Operations
- ED 33, Employee Benefits
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January 2001 Update
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The following new MASB standards (their equivalent IAS is indicated) are effective for accounting periods beginning on or after July 1, 2001:
- MASB 17, General Insurance Business
- MASB 18, Life Insurance Business
- MASB 19, Events After The Balance Sheet Date [IAS 10(revised)]
- MASB 20, Provisions, Contingent Liabilities and Contingent Assets [IAS 37]
- MASB 21, Business Combinations [IAS 22(revised)]
New exposure draft issued for comments:
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October 2000 Update
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The Malaysian Accounting Standards Board (MASB) is the sole authority established under the Financial Reporting Act, 1997 to set legally binding accounting standards for financial reporting in Malaysia. One of MASB's aims is to pursue a policy of internationalisation and harmonisation of MASB standards to be compatible, in all significant respects, with standards and concepts of other national and international standard setters, primarily the IASC. In developing its own standards, MASB reviews the standards previously issued by the Malaysian accountancy profession and the IASC and also the current practices in Malaysia. It will modify IASC standards, when necessary, or develop other technical pronouncements to address issues or matters to suit the Malaysian environment.
As a transitional arrangement towards a new financial reporting regime, in 1998 the MASB adopted 24 of the then-extant accounting standards issued by the Malaysian accounting profession (MAS) as approved accounting standards, including several IASs. Those standards are being reviewed and revised or replaced by new MASB standards. The following are the transitional MAS and IAS that remain in effect at 1 October 2000:
- IAS 10, Contingencies and Events Occurring after the Balance Sheet Date
- IAS 12, Accounting for Taxes on Income
- IAS 14, Reporting Financial Information by Segment
- IAS 19, Accounting for Retirement Benefits in the Financial Statements of Employers
- IAS 25, Accounting for Investments
- IAS 26, Accounting and Reporting by Retirement Benefit Plans
- MAS 3, Accounting for General Insurance Business
- MAS 4, Accounting for Life Insurance Business
- MAS 5, Accounting for Aquaculture
- MAS 7, Accounting for Property Development Activities
The following MASB standards (their equivalent IAS is indicated for reference) are effective for accounting periods beginning on or after 1 January 2000 (MASB 1 to 7 were effective prior to 2000):
- MASB 1, Presentation of Financial Statements [IAS 1 (revised)]
- MASB 2, Inventories [IAS 2(revised)]
- MASB 3, Net Profit or Loss for the Period, Fundamental Errors and Changes in Accounting Policies [IAS 8 (revised)]
- MASB 4, Research & Development Costs [IAS 9 (revised)]
- MASB 5, Cash Flow Statement [IAS 7 (revised)]
- MASB 6, The Effects of Changes in Foreign Exchange Rates [IAS 21 (revised)]
- MASB 7, Construction Contracts [IAS 11 (revised)]
- MASB 8, Related Party Disclosures [IAS 24]
- MASB 9, Revenue [IAS 18 (revised)]
- MASB 10, Leases [IAS 17 (revised)]
- MASB 11, Consolidated Financial Statements and Investments in Subsidiaries [IAS 27]
- MASB 12, Investments in Associates [IAS 28]
- MASB 13, Earnings Per Share [IAS 33]
The following three MASB standards have also been issued and are effective for accounting periods beginning 1 July 2000:
- MASB 14, Depreciation Accounting [IAS 4]
- MASB 15, Property, Plant and Equipment [IAS 16 (revised)]
- MASB 16, Financial Reporting of Interests in Joint Ventures [IAS 31]
At 1 October 2000, the MASB has issued the following exposure drafts for comments:
- ED 17, General Insurance Business
- ED 18, Life Insurance Business
- ED 19, Borrowing Costs [IAS 23 (revised)]
- ED 20, Events After the Balance Sheet Date [IAS 10 (revised)]
- ED 21, Provisions, Contingent Liabilities and Contingent Assets [IAS 37]
- ED 22, Segment Reporting [IAS 14 (revised)]
- ED 23, Business Combinations [IAS 22 (revised)]
- ED 24, Financial Instruments Disclosure and Presentation [IAS 32]
- ED 25, Impairment of Assets [IAS 36]
- ED 26, Financial Reporting by Units Trusts
- ED 27, Property Development Activities
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