Malaysia finalises accounting standard for private entities

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17 Feb 2014

The Malaysian Accounting Standards Board has issued 'Malaysian Private Entities Reporting Standard' (MPERS) for use by private entities. The MPERS is based on the 'IFRS for SMEs' as issued by the IASB in July 2009, with some limited amendments.

The finalised standard follows a long consultation process, including the issue of a 'roadmap' to adopt a Malaysian equivalent to the IFRS for SMEs in March 2013, and the publication of revised proposals in August 2013.

The MPERS replaces the existing Malaysian Private Entity Reporting Standards (PERS), which are based on pre-2003 international accounting standards, and these older standards will be withdrawn once the MPERS becomes effective.

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, equivalent to IFRSs).

The key amendments made to the IFRS for SMEs in finalising the MPERS include:

  • Application to private entities. As the MPERS applies to 'private entities', all references to "SMEs" and "public accountability" have been replaced or deleted to align with the scope of the MPERS.
  • Consolidated financial statements. Ultimate Malaysian parents are required to prepare consolidated financial statements regardless of whether its ultimate parent company (incorporated outside of Malaysia) prepares consolidated financial statements.
  • Income taxes. The requirements for income tax accounting have been aligned with the requirements of MRFS 112 Income Taxes (equivalent to IAS 12 Income Taxes). The IASB is considering making similar changes to the IFRS for SMEs as part of its exposure draft of proposed changes to the IFRS for SMEs issued in October 2013.
  • Real estate. Amended guidance is included in the MPERS based on Malaysian-specific requirements in FRS 201 Property Development Activities, and information in the IFRS for SMEs derived from IFRIC 15 Agreements for the Construction of Real Estate have been deleted.

The MPERS is effective for annual periods beginning on or after 1 January 2016. Click for MASB announcement (link to MASB website).

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