The Malaysian Accounting Standards Board (“MASB”) has, on 28 June 2011, issued MASB Exposure Draft 75 “IFRS-compliant Financial Reporting Standards” (“MASB ED 75”), which proposes to replace the existing Financial Reporting Standards (“FRS”) in conjunction with the plan to fully converge with International Financial Reporting Standards (“IFRS”) on 1 January 2012.
At present, MASB tentatively decided that the new IFRS-compliant FRS framework shall be applicable in the financial reporting by an entity that does not meet the definition of a “private entity”, and the definition of a “private entity” is as defined in the Notice of Amendment of MASB Approved Accounting Standards for Entities Other Than Private Entities released on 23 February 2006.
When the proposals in MASB ED 75 are put in place for adoption in 2012, the FRS framework in Malaysia will be recognised as being IFRS-compliant, hence the financial statements that are drawn up in accordance with the new IFRS-compliant FRS framework will be equivalent to the financial statements prepared in accordance with IFRS. Therefore, entities adopting the new IFRS-compliant FRS framework for the first time in the accounting periods beginning on or after 1 January 2012 are required to apply FRS 1 “First-time Adoption of Financial Reporting Standards” to enable such entities to assert full compliance with IFRS as issued by the International Accounting Standards Board.
Whilst significant impact arising from full convergence with IFRS is not expected, MASB has also indicated the intention to deal with entities affected by FRS 141 “Agriculture” and IC Interpretation 15 “Agreements for the Construction of Real Estate” separately.
IFRS not yet adopted and comparison differences
In its 2,410 pages of Exposure Draft ED 75, it provides a summary of IFRSs and amendments to IFRSs which the MASB has not adopted under the existing FRS framework (Table A) and it also provides a high level comparison of the textual differences between the standards in the existing framework and the new IFRS-compliant FRS framework. The differences are mainly additional transitional provisions to cover domestic, regulatory or other issues (Table B).
Same effective dates between IFRS and FRS in Malaysia
MASB also said that any new/amended IFRS standards issued by IASB will be adopted in Malaysia with the same effective dates. In the past, IASB’s new IFRS or amendments were normally adopted by MASB in Malaysia after one year up to few years after the effective dates of the IFRS standards.
When is the new IFRS-compliant FRS framework effective?
The new IFRS-compliant FRS framework will be effective on 1 January 2012. In practical terms, this means entities must apply the new framework effective at that date retrospectively to the 2012 and 2011 reporting periods, and to the opening statement of financial position on 1 January 2011. 1 January 2011 would then be the first time data have had to be collected in accordance with the new IFRS-compliant FRS framework.
Source: MASB’s press release