The Malaysian Accounting Standards Board (MASB) has released an exposure draft or proposed standard that involves the extractive industries in line with global accounting standards for extractive activities.
The proposed standard on exploration for and evaluation of mineral resources, an important economic sector in the country, seeks to increase transparency by requiring improved disclosures for exploration and evaluation assets.
It is identical to the International Financial Reporting Standard on Exploration for and Evaluation of Mineral Resources issued by the International Accounting Standards Board in December 2004 that put in place for the first time guidance on accounting for exploration and evaluation expenditures.
And like the international standard, MASB's proposed financial reporting standard enables entities reporting exploration and evaluation assets to comply with international financial reporting standards while avoiding wholesale changes to their accounting policies.
MASB executive director Dr Nordin Mohd Zain says that under the proposed standard, entities may continue to account for exploration and evaluation assets using the existing accounting policies.
However, if an entity wishes to change its accounting policy on exploration and evaluation assets, it should determine whether the change would result in the financial statements providing reliable and more relevant information.
In this regards, he notes, the proposed standard has made modest improvements to the recognition and measurement practices, in particular with regard to the recognition of impairment on exploration and evaluation assets.
In many economies, exploration and evaluation expenditures are significant to entities engaged in extractive activities.
Worldwide, an increasing number of entities incurring exploration and evaluation expenditures present their financial statements in accordance with international financial reporting standards, and many more are expected to do so from this year.
MASB's release of the proposed standard to professional accounting bodies, regulators, users and other interested parties for comments is part of its consultative process of seeking public views and convergence efforts to align its standards to international financial reporting standards.Comment Period
Interested parties are welcome to give comments on the Exposure Draft to the MASB by 30th Aug 2005. Copy of the Exposure Draft is available free of charge at:
Malaysian Accounting Standards Board
Suites 5.01-5.03, 5th Floor
No. 338, Jalan Tuanku Abdul Rahman
50100 Kuala Lumpur
Tel: 03-2715 9199
Fax: 03- 2715 9212
Alternatively, the proposed Standard is also available on MASB website at http://www.masb.org.my. The public may also provide their comments electronically through ED Online on our website.Press enquiries:
For enquiries, please contact:
Dr Nordin Mohd Zain