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Disclaimer

The MASB's primary role is to develop accounting and financial reporting standards. It is the MASB's operating procedure that generally precludes the MASB or its staff from giving advice to any individuals or corporations or to individual cases nor to act as an arbitrator regarding any issue. Resolution of matters concerning the application of the accounting standards should be addressed and discussed with the respective independent accountants, or auditors.

In addition, the MASB's resources do not allow for it to respond to student's requests for assistance in completing assignments.

Here are some of the questions that the staff frequently receives from preparers, auditors and users of MASB Standards. The answers to the following questions have been prepared by the MASB staff and do not in any way represent the official position of the MASB.

 

1.

What are approved accounting standards?

 

Approved accounting standards are defined in the Financial Reporting Act 1997 as (a) accounting standards which are issued or adopted by the Malaysian Accounting Standards Board (MASB); and (b) in relation to foreign companies listed on a stock exchange in Malaysia, acceptable internationally recognised accounting standards.

2.

 What are the acceptable internationally recognised accounting standards?

 

The acceptable internationally recognised accounting standards are accounting standards issued by the following bodies:

  1. International Accounting Standards Board
  2. Financial Accounting Standards Board, United States of America
  3. Accounting Standards Board, United Kingdom
  4. Australian Accounting Standards Board, Australia

3.

Who can comply with acceptable internationally recognised accounting standards?

 

Foreign companies listed on the stock exchange in Malaysia. However, they have the option to comply in their entirely with either:

  1. any acceptable internationally recognised accounting standards; or
  2. MASB approved accounting standards.

4.

Does MASB issue auditing standards?

 

No, MASB is responsible for setting accounting standards only. Auditing standards are issued by the Malaysian Institute of Accountants.

5.

Do all companies need to comply with approved accounting standards?

 

The Financial Reporting Act 1997 prescribes that all financial statements that are prepared or lodged with the Securities Commission, Bank Negara Malaysia or the Registrar of Companies shall comply with the approved accounting standards issued by the MASB.

Where non-compliance of a particular approved accounting standard is necessary to achieve a true and fair view of the matters required by section 169 of the Companies Act 1965, section 166A(4) of that Act prescribes that in such a case, the accounts shall not be made out in accordance with that particular approved accounting standard.

In this extremely rare circumstance, the entity shall also refer to MFRS 101 Presentation of Financial Statements or MPERS - chapter 3 Financial Statements Presentation respectively for the manner in which the entity shall depart from the requirement of a particular accounting standard.

6.

What is the relationship between MASB approved accounting standards and the Companies Act 1965?

 

The Companies Act 1965 mandates companies to comply with approved accounting standards. Section 166A of the Companies Act 1965 requires directors of companies incorporated under the Act to ensure accounts are prepared in accordance with the applicable accounting standards to the extent that the accounts give a true and fair view.

7.

What happens when there is a conflict between approved accounting standards and a provision in the Ninth Schedule of the Companies Act 1965?

 

Section 166A(6) of the Companies Act 1965 prescribes that approved accounting standards shall prevail but only to the extent of a provision in the Ninth Schedule.

8.

What does effective date mean?

 

The effective date is the date when an approved accounting standard becomes operative. For example, an approved accounting standard with an effective date of “annual periods beginning on or after 1 July 2002” would mean that the first set of financial statements that must comply with the standard shall be those financial statements with annual periods ending on or after 30 June 2003.

9.

What if dispute arises between the management and the auditor regarding a requirement on accounting treatment prescribed by an approved accounting standard?

 

Any dispute of this nature should be resolved by the respective parties. MASB is not in a position to act as an arbitrator regarding any company-specific dispute nor it is within its scope of establishment to act as one.

10.

Two-tier reporting structure

What are the approved accounting standards issued by the MASB?

 

  1. For entities other than private entities, please refer here, and
  2. For private entities, please refer here.

11.

What is a private entity?

 

A private entity is a private company, incorporated under the Companies Act 1965, that

(a)    is not itself required to prepare or lodge any financial statements under any law administered by the Securities Commission (SC) or Bank Negara Malaysia (BNM); and

(b)    is not a subsidiary or associate of, or jointly controlled by, an entity which is required to prepare or lodge any financial statements under any law administered by the SC or BNM.

The meaning of "subsidiary", "associate" and "jointly controlled" are as respectively defined and explained in MFRS 10 Consolidated Financial Statements / FRS 10 Consolidated Financial Statements, MFRS 128 Investments in Associates and Joint Ventures / FRS 128 Investments in Associates and Joint Ventures and MFRS 11 Joint Arrangements / FRS 11 Joint Arrangements.

12.

From the definition of private entities, it would appear that subsidiaries of a parent that is listed in other than Bursa Malaysia will still be considered as private entities. Is my reading of the definition of private entities correct?

 

Yes, a private company which is a subsidiary of a parent that is listed outside Malaysia is, by our definition, a private entity.

13.

Definition of Approved Accounting Standards

Is the definition of approved accounting standards applicable in Malaysia changed due to the change in 2-tier reporting?

 

No. Approved accounting standards definition remains unchanged under the Financial Reporting Act 1997. Auditors can continue to refer to the applicable approved accounting standards as FRSs, MFRSs and MPERS are issued pursuant to section 7 of the FRA 1997.

14.

Change in Status

Which set of MASB approved accounting standards shall my company comply when my company changes its status from non private entity to private entity during the financial year? Prior to the change in status, my company was applying MFRSs.

 

MFRSs. This is because an entity may only be treated as a private entity in relation to such annual periods or interim periods throughout which it is a private entity.

15.

Compliance with Standards

My company is a private company as defined in section 15(1) the Companies Act 1965. In addition:

(a) my company is not required to lodge financial statements to the SC or BNM and is not a subsidiary / an associate / jointly controlled by a company that is required to lodge any financial statements to the SC or BNM. Which set of MASB approved accounting standards shall be applicable to my company?

Your company has the option to apply the following accounting standards in its entirety:

(i)   MPERS.

(ii)  MFRSs.

(iii) FRSs, provided your company satisfies the criteria as prescribed by the MASB

- see Implementation of MFRSs FAQ (3) Transitioning Entities

Please also refer to the FAQ on the implementation of MPERS 

(b) my company is not required to lodge financial statements to the SC or BNM. However, it is a subsidiary / an associate / jointly controlled by a company that is required to lodge any financial statements to the SC or BNM. Which set of MASB approved accounting standards shall be applicable to my company? 

Your company has the option to apply the following accounting standards in its entirety:

(i)  MFRSs.

(ii) FRSs, provided your company satisfies the criteria as prescribed by the MASB 

- see Implementation of MFRSs FAQ (3) Transitioning Entities 

(c) my company is required to lodge financial statements to the SC or BNM. However, it is not a subsidiary / an associate / jointly controlled by a company that is required to lodge any financial statements to the SC or BNM. Which set of MASB approved accounting standards shall be applicable to my company?

(i)  MFRSs.

(ii) FRSs, provided your company satisfies the criteria as prescribed by the MASB - see Implementation of MFRSs FAQ (3) Transitioning Entities

(d) my company is required to lodge financial statements to the SC or BNM and is also a subsidiary / an associate / jointly controlled by a company that is required to lodge any financial statements to the SC or BNM. Which set of MASB approved accounting standards shall be applicable to my company?

(i)  MFRS.

(ii) FRSs, provided your company satisfies the criteria as prescribed by the MASB - see Implementation of MFRSs FAQ (3) Transitioning Entities 

16.

My company is a private company as defined in the Companies Act 1965 and has an investment in a public listed company. Which set of MASB approved accounting standards shall be applicable to my company?

 

MPERS. However, your company is allowed to comply with MFRSs if it chooses to. Nonetheless, your company must comply with either MPERS in its entirety or MFRSs in their entirety.

17.

My company is a private company as defined in the Companies Act 1965. My company is the parent company of a public listed company. Which set of MASB approved accounting standards shall be applicable to my company?

 

MPERS. However, your company may wish to comply with MFRSs to facilitate the preparation of the consolidated financial statements since your subsidiary company is required to comply with MFRSs.

MPERS Section 9, Consolidated and Separate Financial Statements, prescribes that consolidated financial statements shall be prepared using uniform accounting policies for like transactions and other events and conditions in similar circumstances. If a member of the group uses accounting policies other than those adopted in the consolidated financial statements for like transactions and events in similar circumstances, appropriate adjustments are made to its financial statements in preparing the consolidated financial statements.

18.

My company is a private company as defined in the Companies Act 1965. My company is an investor company of an associate which is a public listed company. Which set of MASB approved accounting standards shall be applicable to my company?

 

MPERS. However, your company may wish to comply with MFRSs since your associate company is required to comply with MFRSs.

MPERS Section 14, Investments in Associates, prescribes that if the associate uses accounting policies that differ from those of the investor, the investor shall adjust the associate’s financial statements to reflect the investor’s accounting policies for the purpose of applying the equity method unless it is impracticable to do so.

19.

There are some FRSs with a subscript '2004' - what does that mean?

 

Only companies that satisfy the criteria as prescribed by the MASB are permitted to apply FRSs - see Implementation of MFRSs FAQ (3) Transitioning Entities

The subscript "2004" attached to some FRS refers to standards issued by MASB prior to 1st January 2005. These standards will remain in force until they are revised and superseded by another FRS.

20.

MFRS 10  Consolidated Financial Statements

 

According to MFRS 10 paragraph 4(a), a parent need not present consolidated financial statements if certain conditions are met, one of which is that the ultimate or any intermediate parent produces consolidated financial statements available for public use that comply with IFRSs. What does “public use” mean?

The “public use” criteria would generally be satisfied as long as the consolidated financial statements of the parent will be made available to a third party upon request. The request may be made either directly from the parent or by other means, such as by way of a company search.