MASB Chairman's Statement 2016

Much work has been done during the year and we remain on course to deliver the targets we have set for 2016. As reported in my inaugural statement last year, with the major IFRSs coming on board, we strive to focus on reaching out to our preparers, practitioners, regulators and other stakeholders and work closely to understand better their issues and concerns. We also continued to play an active role in the international standard-setting arena.

Our activities and initiatives for the year are guided by the following objectives:

·         Timely adoption of IASB standards

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

·         Collaboration with other national standard-setters in  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 markets and Islamic markets

·         Monitoring the application of MASB approved accounting standards


The areas are elaborated below.


Timely adoption of IASB standards

In 2016, the IASB issued one of its major Standards, Leases. In accordance with the MASB due process, in April 2016 the MASB issued MFRS 16 Leases which is word-for-word IFRS 16. This Standard replaces MFRS 117 and is effective on 1 January 2019. MFRS 16 addresses the wide-spread criticisms that MFRS 117 did not always provide useful information to users when lessees have substantial operating lease commitments. In addition to MFRS 16, we also issued five (5) limited amendments to Standards under the MFRS Framework and four (4) limited amendments to Standards under the FRS Framework.

In total, we issued seventeen (17) documents, comprising sixteen (16) final and one (1) draft technical pronouncements. The sixteen (16) final pronouncements comprised nine (9) documents issued under the MFRS Framework and seven (7) documents issued under the FRS Framework.

Participation and contribution to the IASB standard-setting due process

The development of a single set of high quality, globally accepted financial reporting standards for international use requires the participation and contribution from national standard-setters in the IASB standard-setting due process. At the MASB level, the draft technical pronouncements issued by the IASB, IFRS IC or the IFRS Foundation are discussed in the MASB Working Group meetings and thereafter the input gathered from these meetings as well as from the public would be deliberated by the MASB Board.  

During the year, we had provided comments on two (2) draft IFRIC Interpretations, five (5) IASB Exposure Drafts and one (1) IFRS Foundation Exposure Draft. A comprehensive range of topics were addressed in these draft technical pronouncements, amongst others, definition of a business and accounting for previously held interests, guidance on accounting for uncertainty over income tax treatments as well as a review of structure and effectiveness of the IFRS Foundation.

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

Every year, national standard-setters all over the world would gather for various international meetings and conferences. The MASB was represented in these meetings and conference, which included the World Standard Setters Meeting (“WSS”) that was held in London. The WSS Conference is an annual conference hosted by the IASB that provides a forum for the accounting standard-setters to be updated on developments in IFRS. At the WSS Conference held in September, the agenda included updates on the 2015 Agenda Consultation and IASB technical programme. Our Executive Director, Puan Tan Bee Leng, chaired one of the breakout groups on the topic of “Reporting Financial Performance - case study”. She also took part in a video which was filmed by the IFRS Foundation during the WSS meeting. That video explored the role of national standard-setters and regional groups in the development of IFRS Standards as a worldwide financial reporting language and the importance of international collaboration.

MASB also participated in the International Forum of Accounting Standard Setters (“IFASS”) meeting. IFASS comprise of national standard-setters and other organisations that have close involvement in financial reporting. Earlier in April 2016, the MASB representatives attended the IFASS meeting that was held in Toronto and among the main topics discussed were the IASB work plan and topical issues such as future of corporate reporting and cash flow information as well as IFRS implementation issues. Subsequently in September, another IFASS meeting was held in London and during this meeting, Puan Tan Bee Leng tabled a report on “Assessment of IFASS Meetings”, which included recommendations on how to improve the effectiveness of future IFASS meetings.

At the regional level, we participated in the AOSSG Chair’s Advisory Committee (“CAC”) meetings. The role of the CAC is to provide assistance to the AOSSG Chair and the Vice-Chair in performing their functions. In addition, we also attended the AOSSG meetings. The highlight of the AOSSG gathering this year was the AOSSG 8th Annual Meeting, which was hosted by the New Zealand External Reporting Board (XRB). The AOSSG 8th Annual Meeting featured discussion topics on Fair Value Measurement, Disclosure Initiative, Conceptual Framework, Business Combination Under Common Control, IFRS implementation and updates on IFRS convergence by relevant jurisdictions.

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

Our outreach activities for the year were focused on major topics concerning Leases, Financial Instruments, Disclosure Initiative as well as on the IFRS for SMEs. In February, we held a Discussion Forum on the IASB Exposure Draft ED/2015/8 Practice Statement: Application of Materiality to Financial Statements. The IASB Executive Technical Director, Mr. Hugh Shields came to MASB to speak at the Discussion Forum which was attended by our Working Group members.

Subsequently in March, we organised forums on MFRS 16 Leases and Implementation of MPERS and these forums had been made possible by the presence of another prominent IASB Board Member, Mr. Darrel Scott. The two forums were held consecutively on the same day and each forum was attended by about 160 participants. The forum on Implementation of MPERS was a great avenue for our constituents to understand better the challenges and possible issues on migration to MPERS and there was no better speaker than Mr. Scott himself who is the Chairman of the IASB SME Implementation Group.

During the year, we also welcomed the IASB Technical Director, Mr. Kumar Dasgupta to speak at the MFRS 9 Financial Instruments forums. Two forums on MFRS 9 were held in September which catered for both the financial institutions and non-financial institutions. Mr. Dasgupta who is responsible for the Financial Instruments project at the IASB shared with our constituents the issues and current developments on MFRS 9 implementation.

We were also pleased to welcome another notable speaker who is also an IASB member, Dr Chung-woo Suh. Dr Suh had previously served as Chairman of Korea Accounting Standards Board and during his tenure as Chairman, he had led Korea’s preparation to adopt IFRS. In the series of events held in collaboration with the Malaysian Institute of Accountants (“MIA”) , Dr Suh brought an outstanding blend of experience, knowledge and insights that had benefitted our stakeholders. His experience as a professor of accounting had also helped to provide input to our academia especially on how the lecturers in Korea migrated to teaching IFRS. He had shared his valuable experience with our academia in a special forum held at the MASB office.

Apart from organising forums for our stakeholders, we participated in forums organised by Suruhanjaya Syarikat Malaysia, specifically in its series of Corporate Directors’ Training where we spoke on MPERS. Other than that, the MASB was also invited to be one of the speakers at the MFRS Conference 2016 organised by the MIA, in a session on “Overview of MFRS Changes”. I was honoured to be given the opportunity to share an overview of the key changes to MFRSs that are expected to impact the accounting profession.

As with previous years, we hosted several sessions with university students and lecturers where we briefed them about the roles and responsibilities of the MASB and the financial reporting frameworks in Malaysia. Apart from the special session with Dr Suh and the academia, we also had eight (8) sessions with university students and lecturers.

We also exceeded our target to publish four (4) articles for the year. A total of seven (7) articles were published; two (2) of which by MASB and the remaining by local newspapers, with contributions from MASB Secretariat. The articles were mainly about MFRS 16 Leases, juggling the cost and benefit ratio of MFRS Framework, MPERS, core profit against net profit and applying IFRS to Islamic Finance.

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

The MASB Islamic Technical Unit had conducted a joint project with the MIA to study the presentation and disclosure in the financial statements of Islamic Financial Institutions. The study aimed to find out how Malaysian Islamic Financial Institutions apply MFRS to the presentation and disclosure of Islamic financial transactions specifically in the areas of Islamic lease-based financing, presentation of income in the statement of comprehensive income, investment account and unearned profit in Islamic financing. A total of 16 Islamic banks’ financial statements were reviewed and the study reported that these financial statements generally complied with presentation and disclosures of MFRS and suggested that the quality of disclosures in the financial statements can be further improved to allow users to understand management’s judgement in the selection of certain accounting policies and treatments.

Back in 2014, as the Lead Country for the AOSSG Islamic Finance Working Group, we had produced a Research Paper on the use of IFRS to account for Islamic financing transactions following our review of financial statements of 132 Islamic financial institutions from 31 jurisdictions. The Research Paper was presented at the 2014 AOSSG Annual Meeting and was published in 2015. During the year, we had updated the study using the most recent financial statements of the 132 Islamic financial institutions. I have presented the updated study at the recent Annual AOSSG Meeting in Wellington.

Monitoring the application of MASB approved accounting standards 

The MASB and the MIA have pledged to work together in our respective roles for the betterment of accounting profession in Malaysia. Therefore, the MASB has been working together with the MIA in resolving the accounting issues on several matters including the determination of the fair value of agriculture produce, treatment of land cost when revenue is recognised over time and capitalisation of borrowing costs in property development. Some of the accounting matters have been resolved whilst some are still ongoing and we are hopeful that the resolution of these issues would be achieved in due time.

On another note, there is less than 12 months to go before the mandatory changeover to two major Standards, MFRS 9 Financial Instruments and MFRS 15 Revenue from Contracts with Customers which will come into effect on 1 January 2018. These Standards were published by MASB in 2014, hence the entities involved in the upcoming transition should have already gotten the process started. It is imperative to be well prepared for the transition in view of certain significant changes from current practice, for example the new impairment model under MFRS 9, i.e. the expected credit loss approach, and a new comprehensive framework for determining when to recognise revenue under MFRS 15. Higher impairment losses shall be recognised under the new impairment model and this will have an impact on the financial performance of the entities. As the scope of MFRS 15 covers revenue from all contracts with customers with the exception of revenue from leases, financial instruments and insurance contracts, this new Standard will practically affect all entities across the board.

I also would like to add that in February 2017, the MASB has revised the Private Entity definition 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 original intent of the MASB that all management companies of interest schemes shall be prohibited from applying the MPERS.


For the year 2017, the MASB is determined to continue its effort to not only accomplish, but to surpass its goals. MASB will work more closely with users, practitioners, other organisations and engage with various stakeholders through outreach activities and other means.

The pursuit of the MASB objectives as elaborated above, would not be possible without the tremendous hard work, determination and dedication of the FRF and MASB members as well as the staff. I would like to convey my heartfelt appreciation for the invaluable support rendered to the MASB that have ensured that the objectives were met. I also would like to thank the Ministry of Finance, regulators, professional bodies, academia, professional firms, members of our working groups, and the commercial sectors for their continuous support and contributions to the MASB.


Encik Mohamed Raslan Abdul Rahman
Malaysian Accounting Standards Board