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Financial reporting framework in Malaysia

Companies registered in Malaysia are required to prepare statutory financial statements in accordance with the approved accounting standards issued by the Malaysian Accounting Standards Board (MASB). Foreign companies listed on a stock exchange in Malaysia may prepare financial statements in accordance with certain internationally recognised accounting standards such as International Financial Reporting Standards (IFRSs).

MASB has three sets of approved accounting standards, namely:

  • MASB approved accounting standards for entities other than private entities – Malaysian Financial Reporting Standards (MFRSs)
  • MASB approved accounting standards for private entities – Private Entity Reporting Standards (PERSs) – to be withdrawn with effect from 1 January 2016
  • MASB approved accounting standards for private entities – Malaysian Private Entities Reporting Standard (MPERS) – effective for annual reporting periods beginning on or after 1 January 2016.

On 1 August 2008, the Financial Reporting Foundation, which oversees the operations of MASB, and MASB issued a statement on their plan for full convergence of the MFRSs with IFRSs as issued by IASB by 1 January 2012.

On 17 November 2011, the MASB issued a new MASB approved accounting framework, the Malaysian Financial Reporting Standards (MFRS Framework), which is a fully IFRS-compliant framework and equivalent to IFRSs. The MFRS Framework comprises Standards as issued by the International Accounting Standards Board (IASB) that are effective on 1 January 2012. It also comprises new and revised Standards recently issued by the IASB that will be effective after 1 January 2012 such as Standards on financial instruments, consolidation, joint arrangements, fair value measurement and employee benefits, among others. The adoption of the MFRS Framework allows Malaysian entities to be able to assert that their financial statements are in full compliance with IFRSs.

The MFRS Framework is to be applied by all entities other than private entities for annual periods beginning on or after 1 January 2012, with the exception of entities that are within the scope of MFRS 141 Agriculture (MFRS 141) and IC Interpretation 15 Agreements for Construction of Real Estate (IC 15), together with parents, significant investors and venturers of such entities (called 'Transitioning Entities'). Transitioning Entities were allowed to defer adoption of the new MFRS Framework for an additional one year, which was subsequently extended a number of times pending completion of the IASB's projects on revenue recognition and bearer plants. In completing these two projects, the IASB issued IFRS 15 Revenue from Contracts with Customers and Agriculture: Bearer Plants (Amendments to IAS 16 and IAS 41) during 2014 and the MASB subsequently announced on 2 September 2014 that the MFRS Framework will be mandatorily applied by Transitioning Entities for annual periods beginning on or after 1 January 2017, with earlier adoption permitted. This was later deferred to 1 January 2018.

On 14 February 2014, the MASB issued Malaysian Private Entities Reporting Standard (MPERS), which is effective for annual periods beginning on or after 1 January 2016. The MPERS applies to 'private entities', which are private companies as defined in the Malaysian Companies Act 1965 that are not required to prepare or lodge financial statements under laws administered by the Malaysian Securities Commission or Bank Negara Malaysia (the Malaysian Central Bank), and are not a subsidiary, associate, or jointly controlled by such an entity. Eligible entities have the choice of applying either the MPERS or Malaysian Financial Reporting Standards (MFRS).


Correction list for hyphenation

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