logo
MASB Chairman's Statement 2017

The year 2017 was special for the Financial Reporting Foundation (FRF) and Malaysian Accounting Standards Board (MASB). In December, we celebrated the 20th anniversary of establishment in a simple but meaningful way, reminiscing about our journey over the past 20 years.

The experiences that we have gained were truly invaluable and catapulted us to the regional and international levels as a respected national standard-setter.

It was also a great honour for us to have celebrated this joyous occasion with none other than the International Accounting Standards Board (IASB) Chairman himself, Mr. Hans Hoogervorst.

I am glad to report that 2017 was another remarkable year during which the MASB undertook a number of activities based on the following objectives:

·         Timely adoption of IFRS Standards

·         Participation and contribution to the IASB standard-setting due process

·         Collaboration with other national standard-setters for the development of globally accepted financial reporting standards

·         Promoting the use of and seeking views on the application of financial reporting standards

·         Promoting and supporting research in the area of financial reporting for emerging and Islamic markets

·         Monitoring the application of MASB-approved accounting standards

These activities are elaborated below:

Timely adoption of IFRS Standards

The year witnessed the finalisation of a new Insurance standard by the International Accounting Standards Board. In August 2017, the MASB issued MFRS 17 Insurance Contracts which replaces the existing standard on Insurance Contracts, MFRS 4. MFRS 17, which is effective for annual periods beginning on or after 1 January 2021, includes several transition reliefs to assist entities in applying MFRS 17 for the first time.

In accordance with the MASB due process, the MASB also issued two (2) limited amendments to MFRS Standards; one (1) IC Interpretation under the MFRS Framework, one (1) IC Interpretation under the FRS Framework and one (1) MFRS Practice Statement.

Earlier in the year, we revised the definition of private entity in line with the coming into operation of the Companies Act 2016 and Interest Schemes Act 2016, both on 31 January 2017.

In view of the changes to interest schemes introduced by the Companies Commission of Malaysia, the private entity definition has been revised but retains the MASB’s original intent that all management companies of interest schemes shall be prohibited from applying the MPERS.

In total, we issued thirteen (13) documents, comprising six (6) final and seven (7) draft technical pronouncements.  

Participation and contribution to the IASB standard-setting due process

The MASB together with its working group members continued to deliberate and contribute inputs to the IASB draft technical pronouncements.

Our involvement in the IASB standard-setting due process is necessary and we have to be in an earlier position to challenge or put forth our views as to the applicability of changes in the accounting standards to Malaysia’s listed companies and private entities.

During the year, we provided comments on four (4) Exposure Drafts, one (1) Discussion Paper and one (1) Post-implementation Review. Together with our Working Group members, we deliberated topics on principles of disclosure, operating segment, amendments on income taxes, borrowing costs as well as post-implementation review on fair value measurement.

Collaboration with other national standard-setters for the development of globally accepted financial reporting standards

As with previous years, our representatives and I travelled to attend international meetings and conferences. During the year, we went to Taipei, Mumbai, Tokyo, Jakarta, London and Hangzhou.

We participated in two International Forum of Accounting Standard Setters (IFASS) meetings, namely in Taipei and London. Among the subject matters discussed in these meetings were implementing IFRS 15 Revenue from Contracts with Customers and IFRS 16 Leases; treatment of income tax on distribution of dividends; business combination under common control; implementation issues on IAS 12 Income Taxes and IAS 24 Related Party Disclosures; and wider corporate reporting.

In Mumbai, our representative, Puan Tan Bee Leng, attended the 13th IASB EEG meeting which was hosted by the Institute of Chartered Accountants of India. We also attended the IASB Islamic Finance Consultative Group meeting held in Jakarta; the meeting  was chaired by Dato’ Mohammad Faiz Azmi and attended by delegates from Indonesia, Pakistan, Saudi Arabia, Turkey as well as representatives from AAOFII.

As a member of the Asian-Oceanian Standard-Setters Group Chair’s Advisory Committee (AOSSG CAC), we participated in both its meetings that were held in Tokyo, London and Hangzhou. Accompanying the AOSSG CAC meetings were the AOSSG Interim meeting, which usually would be held prior to main meetings such as the World Standard Setters and AOSSG annual meetings.

This year, the Ministry of Finance, China hosted the 9th AOSSG Annual Meeting in Hangzhou and it was attended by 19 AOSSG member standard-setters as well as representatives of the IASB and IFRS Foundation.  

The annual meeting was a great platform for members and other attendees to get updates from the IASB and also gain more understanding of technical topics presented by the respective AOSSG working groups.

Promoting the use of and seeking views on the application of financial reporting standards

During the year, we collaborated with the IFRS Foundation and organised the 2017 IFRS Regional Conference. A total of 185 participants from Malaysia and other countries including Australia, Brunei, Cambodia, Hong Kong, Iran, Pakistan, Philippines, Singapore, Thailand and Vietnam participated in the Conference.

The objective of the Conference was to provide insights on the new IFRS Standards namely IFRS 15 Revenue from Contracts with Customers and IFRS 16 Leases, particularly on practical implementation issues and challenges in view of these Standards will come into effect soon.

The Conference was presented by Ms. Mary Tokar, IASB member; Mr. Matt Tilling, the IASB Director of Education; and Ms. Kathryn Donkersley, Senior Technical Manager at the IASB.

Prior to the 2017 IFRS Regional Conference, the MASB together with the IFRS Foundation jointly hosted the IASB Workshop for Academics. As the name suggests, the Workshop provided a forum for those teaching IFRS Standards to discuss the development of new and amended IFRS Standards and also to receive an update on the main principles being considered in developing major new IFRS Standards that are on the IASB’s active agenda.

The participants at the Workshop had the opportunity to explore Framework-based IFRS teaching and related case studies.

As the IASB representative Ms. Mary Tokar was in Kuala Lumpur, we also held a few private sessions respectively with the regulators, government-linked companies and the MIA Financial Reporting Standards Implementation Committee (FRSIC).

Each session explored and deliberated on different topics and issues. However, the ultimate objective of these sessions was to provide an opportunity for our constituents to hear directly from the IASB representative and share their views.  

Promoting and supporting research in the area of financial reporting for emerging and Islamic market 

The MASB Technical Unit (ITU) is no longer working on its own but operates together with our Conventional unit. This approach is timely and it is also similar to the approach of the country in the treatment of Islamic finance operating together with Conventional in the market place as one full ecosystem.

This year, the MASB staff had undertaken a joint project with the Malaysian Institute of Accountants (MIA) staff, with inputs from the Working Groups of the MASB Standing Committee on Islamic Financial Reporting, to review twelve (12) Bank Negara Malaysia’s Policy Documents from the financial reporting perspective.

The outcome of the review will be produced in a document titled “Report – A Review of BNM’s Shariah Policy Documents from a Financial Reporting Perspective”.

Subsequent to that project, the MASB staff are currently working with the MIA to support the latter’s initiative to publish a textbook on accounting for Islamic finance transactions.

Two (2) roundtable discussions with the industry experts, covering areas on banking, takaful, asset management and capital market were held from August to November 2017 to provide practical insights as inputs to the proposed book.

Therefore, the the MASB staff is providing necessary support on the topic “IFRS Principles and Application”. The textbook is expected to be published in March 2018.

Monitoring the application of MASB-approved accounting standards

As reported in previous years, we have pledged to work together with the MIA in our respective roles for the betterment of the accounting profession in Malaysia.

We are still working with the MIA in resolving the accounting issues on several matters such as bearer fruits and treatment of involuntary common infrastructure costs in property development. The details of these accounting issues are [[being]] discussed further in the Results of Evaluation of Outcomes for 2017 (SPA 1/2012).

Conclusion

In 2018, the Transitioning Entities will be applying the Malaysian Financial Reporting Standards (MFRSs) after a few years of deferment. We will also see the implementation of one of the major Standards, MFRS 15, which will come into effect on 1 January 2018. We are also gearing up to prepare the industry to implement a very complex accounting standard. i.e. MFRS 17 Insurance Contracts by 2021.

This is in addition to the finalisation of Conceptual Framework and several other amendments projects that are in the IASB pipeline. It will definitely be another busy year for us. In view of this, we are strengthening our technical team by subcontracting work with global talents whom have previously gained experience with other national standard setters.

Last but not least, I would like to express my deepest gratitude to all the stakeholders in the financial reporting framework for their involvement with MASB for the past 20 years. The contribution from the stakeholders is certainly invaluable and I hope that the relationship built over the years will strengthen further.

I am also thankful to the Ministry of Finance, IASB, regulators, professional bodies, academia, professional firms, members of our working groups and the commercial sectors for the unwavering support.

 

Encik Mohamed Raslan Abdul Rahman

Chairman

Malaysian Accounting Standards Board