On 1 May 2015, I was appointed by the Ministry of Finance as the Chairman of MASB for a three-year term. My immediate predecessor, Dato’ Mohammad Faiz Azmi, had achieved significant milestone and progress during his tenure for the last six years. The ideas and energy that he brought in had paved the way for the MASB in becoming a proactive national standard-setter and evolving to be one of the main voices in the global arena.
Thus I have taken on a challenging role. However, given the great amount of support by the FRF, MASB members and the secretariat, I believe we can work together towards a common goal.
Our main priority for the year was ensuring a smooth implementation of the new framework for private entities, Malaysian Private Entities Reporting Standard (MPERS), and also to bring the Transitioning Entities to adopt the MFRS Framework.
I am glad to report that 2015 was an eventful year where the MASB had undertaken a number of activities and initiatives as follows:
• Transitioning Entities and the MFRS Framework
• Putting MPERS on the financial reporting map
• Engaging various stakeholders and organising forums
• Channeling Malaysia’s voice to the world
• Sharing of knowledge and experiences
• Islamic Finance
• Cooperation for the betterment of accounting profession in Malaysia
These areas are elaborated below.
Transitioning Entities and the MFRS Framework
In accordance with the MASB due process, in 2015, we issued a total of nineteen (19) documents, comprising five (5) final and fourteen (14) draft technical pronouncements and consultative documents. The five (5) final pronouncements comprised of two (2) documents issued under the MFRS Framework, two (2) documents issued under the FRS Framework and one (1) document issued under the MPERS Framework.
In light of the IASB’s decision to defer the application of IFRS 15 Revenue from Contracts with Customers to another year, i.e. 1 January 2018, the MASB has taken a parallel measure to amend the effective date of MFRS 15 and consequently amended the effective date of application of MFRSs by Transitioning Entities (TEs). This is because the MASB has consistently used the effective date of MFRS 15 as the basis for setting the effective date for TEs to apply the MFRSs. TEs will now be mandated to only apply the MFRSs for financial statements with annual periods beginning on or after 1 January 2018.
Putting MPERS on the financial reporting map
To commemorate the application of MPERS on 1 January 2016, the MASB, in collaboration with SSM had officially launched the new financial reporting framework for private entities on 27 October 2015. The launch was officiated by the Chairman of FRF, Tan Sri Azlan Zainol, together with the CEO of SSM, Dato’ Zahrah Abd Wahab Fenner, and the President of MIA, Dato’ Mohammad Faiz Azmi, at Menara SSM. The event was attended by approximately 200 participants from various organisations and industries, particularly the SMEs, as well as members of the media.
Despite having officially published the MPERS on 14 February 2014, the official launch was intended to promulgate the adoption of MPERS by 1 January 2016 and accordingly, to gently remind the SMEs or private entities to prepare and start mobilising for the transition to the new financial reporting framework.
A series of outreach events on MPERS were also held during the year which included one (1) briefing session for SSM stakeholders who also attended the launch of MPERS, one (1) presentation of MPERS to the Inland Revenue Board and two (2) briefing sessions for the ACCCIM and AMCAF. I was also invited to present at the MPERS Conference 2015 organised by the MIA.
Engaging various stakeholders and organising forums
The involvement and contribution of various stakeholders in our financial reporting due process remain important. We believe that in order to promote the use and seek views on the application of accounting standards, engagement with the local and international stakeholders was and will remain a priority and this objective has not changed over the years. In fact, it has become one of our key drivers.
During the first half of the year, we requested IASB member, Darrel Scott, to present MFRS 9 Financial Instruments and the new IFRS on Leases to directors of financial institutions. Darrel also presented in another session on the topic of Insurance Contracts which was attended mainly by directors of insurance companies. Darrel chairs the IASB SME Implementation Group and is an advisor to the IASB projects on Leases, Insurance and Impairment.
In June, Darrel together with Michael Wells, Director of IFRS Education Initiative presented in a two-day Framework-based IFRS Teaching Workshop. Subsequently, a number of outreach events followed suit, namely - one (1) session on IFRS 9 with Chief Financial Officers, one (1) IASB-MASB Outreach on the Conceptual Framework with IASB staff, one (1) session with PIKOM on MFRS 15 and one (1) session with REHDA also on MFRS 15. We were also invited to present in a forum, ‘Conversation with Audit Committee’, organised by the AOB. In addition, we held seven (7) briefing sessions with the institutions of higher learning on the topic of MASB’s role and responsibilities as well as on financial reporting frameworks in Malaysia.
Channeling Malaysia’s voice to the world
We remain committed to contributing our views and channeling our stakeholders’ concerns by participating in various international meetings and forums, in which we are active members. In September, we gathered with other national standard-setters in London to participate in the World Standard Setters and IFASS meetings, alongside with other meetings such as AOSSG Chair’s Advisory Committee (CAC) meeting and IASB-AOSSG meeting. We also attended the 2nd IASB Research Forum which was held in Hong Kong in October.
Besides the said international meetings, AOSSG meetings are also our regular platform in the Asian-Oceanian region since the inception of AOSSG in 2009. Participation in these meetings is part of our role as an AOSSG member, in addition to contributing our comments and recommendations on all technical pronouncements issued by the IASB through a number of AOSSG working groups. In 2015, we went to Seoul to attend the AOSSG 7th Annual Meeting as well as the AOSSG CAC and AOSSG Interim meetings. At the Annual Meeting, we presented the implementation issues arising from the Amendments to IAS 41 on Bearer Plants, specifically the determination of the fair value of produce growing on bearer plants.
Occasionally, virtual meetings and forums are one of our effective mediums especially at times when distance becomes a hindrance. Therefore, we have leveraged on our video conferencing facilities to participate in the June IASB-AOSSG Workshop and the September AOSSG CAC and IASB Meetings, both of which were held in Tokyo, Japan.
Sharing of knowledge and experiences
We strive to bridge the information and knowledge gap of the public and other stakeholders by not just organising outreach events, but also through publication of articles. During the year, six (6) articles were published – three (3) were published by MASB and the remaining articles were published by Bernama, The Star and ACCA with inputs contributed by the MASB. The articles that were published this year detailed out the following topics - expected credit loss model of IFRS 9, understanding IFRS 9 for directors, narrow scope amendments on Disclosure Initiative, adoption of MPERS, analysis between MFRS, MPERS and PERS and adoption of international financial reporting standards by Malaysian companies.
On another note, our sharing of knowledge and experiences also include visits from foreign guests who are interested to know more of our financial reporting frameworks. This year, we were pleased to welcome delegates from the Ministry of Finance, Vietnam and professors from Nagoya Sangyo University.
There was no meeting held by the IASB Consultative Group on Shariah-compliant Instruments and Transactions this year. Nevertheless, the MASB Islamic Technical Unit attended the IASB-AAOIFI meeting in Manama, Bahrain which was held to seek views on the application of IFRS 9 to Islamic finance.
We will also continue to play our role as the Lead for AOSSG Working Group on Financial Reporting relating to Islamic Finance particularly in providing our comments on IASB draft technical pronouncements from Islamic finance perspective. This year the Working Group submitted a comment letter on the IASB Exposure Draft, ED/2015/3 Conceptual Framework for Financial Reporting.
Cooperation for the betterment of accounting profession in Malaysia
Over the last few years, the MASB and the MIA have been working closely together and this collaboration is further strengthened by a Memorandum of Understanding (MoU) signed by both bodies on 22 January 2016.
Designed to formalise existing partnerships and facilitate further collaborative efforts between the MASB and the MIA, the MoU also aims to identify and reiterate operational principles and roles of each organisation; being the two main bodies central to the development and implementation of accounting standards in Malaysia.
Despite the distinct operational principles and roles of the MASB and the MIA, both bodies strive to work together to ensure that MASB standards are consistently applied in Malaysia and meet international compliance. Due to the fact that there may well be forthcoming accounting issues and possible challenges, the MASB and the MIA are determined to address them by working together in their respective roles.
Ultimately, whenever there are issues or problems concerning the MASB and the MIA, the decisions or outcomes by both parties are made in the best interest of the country.
With the adoption of MPERS on 1 January 2016 and the three new major MFRSs coming on board in 2018 / 2019 (i.e. MFRS 9, MFRS 15 and the upcoming MFRS 16 Leases), our focus for the next two to three years is conducting outreach activities with preparers, practitioners, regulators as well as other stakeholders. In addition, we will also be working closely with other related parties tasked with the implementation of MASB approved accounting standards.
I want to sincerely thank all the staff who had contributed their time, resources and unwavering commitment to ensure the objectives of the Board were met. I am also thankful to the FRF members for their continued guidance and leadership whilst giving direction in their independent oversight capacity. Also, I would like to applaud the efforts and cooperation of the Malaysian regulators, professional bodies, academia, professional firms, members of our working groups, the commercial sector, the Board and last but not least, the Ministry of Finance for their continuous support to the MASB.
Encik Mohamed Raslan Abdul Rahman
Malaysian Accounting Standards Board
22 March 2016