logo
MASB Chairman's Statement 2018

The year under review marked another significant milestone for the MASB as all the transitioning entities are finally applying the Malaysian Financial Reporting Standards (MFRS).

In retrospect, it has been a rather long journey for the transitioning entities. In November 2011, the MASB announced that the MFRS Framework was to be applied by all Entities Other Than Private Entities for annual periods beginning on or after 1 January 2012, except for entities within the scope of MFRS 141 Agriculture and/or IC Interpretation 15 Agreements for Construction of Real Estate, including their parents, significant investors and joint venturers (herein referred to as transitioning entities, TEs).

The TEs were initially allowed to defer adoption of the new MFRS Framework until 1 January 2013.

Meanwhile, the MASB had consistently used the effective date of MFRS 15 Revenue from Contracts with Customers as the basis for setting the effective date for the TEs to apply the MFRSs.

Since the first announcement in November 2011, the Board has allowed the deferment of the transition period until 31 December 2017 to avoid the possibility of repetitive substantial restatement in the financial statements in the event of revisions to the new Revenue Standard, MFRS 15 or potential amendments to MFRS 141.

It, therefore, gives me great pleasure to announce that all non-private entities in Malaysia are now complying with a single set of high quality, globally accepted accounting standards for annual periods beginning on or after 1 January 2018 i.e. the MFRS Framework.

I am also pleased to report the following activities during the year.

 

2018 highlights

We have finalised yet another major pronouncement - the revised Conceptual Framework for Financial Reporting (Conceptual Framework). This document comprises a comprehensive set of concepts for financial reporting and is built on the previous version of the Conceptual Framework for Financial Reporting issued in 2011.

The changes to the chapters on the objective of financial reporting and qualitative characteristics of useful financial information were limited, but with improved wording to give more prominence to the importance of providing information needed to assess management’s stewardship of the entity’s economic resources.

In addition to the Conceptual Framework, we have also issued several limited amendments to the standards and these pronouncements made up a total of twenty-eight (28) documents that were issued during the year.  These pronouncements comprised ten (10) final and eighteen (18) draft technical pronouncements.

Throughout   2018, the   MASB   representatives including myself travelled to several countries and met with other national standard-setters to participate in various meetings and forums. It is important for us to establish good working relationships with other standard-setters to discuss issues and share experiences on the adoption of IFRS.

We went to Hong Kong for the AOSSG CAC meeting with the IFRS Foundation, Mumbai for the IFASS meeting, the United Kingdom for the World Standard Setters meeting, and Singapore for the 10th AOSSG meeting. These meetings provided platforms to the participants to share updates on IFRS applications and implementation issues in various jurisdictions.

The month of May was eventful for the MASB as we hosted the IASB EEG 15th meeting and co-hosted the inaugural Regional Workshop on IFRS 17 Insurance Contracts, jointly with the IFRS Foundation. We are cognisant of the fact that the IFRS 17 implementation would be challenging, hence the Workshop was organised with the objective of providing insights into the first truly international IFRS Standard and its implementation challenges.

Delivered by a panel of distinguished presenters who shared their vast industry experiences and knowledge, the Workshop successfully achieved its objectives.  With that, we intend to bring in more experts in the future to engage with our stakeholders.

Prior to the Workshop, we welcomed members of the IASB EEG to Kuala Lumpur for its 15th meeting and presented a few topics. These were analysis of applications of IFRS for SMEs Standard in the AOSSG member jurisdictions, the MASB journey in the adoption of IFRS for SMEs Standard, and the IFRS 9 implementation pertaining to the Malaysian experience and accounting for 'involuntary' public infrastructure costs in a project development. These events were part of the MASB’s initiative to promote the use of and seek views on the application of financial reporting standards.

Over the past years, we had educational sessions with university students and lecturers, and 2018 was no exception. We believe that the educational sessions had given the students relevant exposure to the accounting framework in Malaysia as well as enlightened them on the MASB’s roles and achievements.  In addition, there were four (4) technical articles produced, of which two (2) were published by the MASB and two (2) were published by The Edge and CPA Australia with contributions from the Secretariat.

The MASB also worked hard in promoting and supporting research in the area of financial reporting for Islamic finance. In March 2018, our team attended the 4th Meeting of the IASB Islamic Finance Consultative Group in Dubai. In that meeting, we presented a paper that considered how the requirements in the recently issued IFRS Standards – specifically IFRS 9 Financial Instruments, IFRS 15 Revenue from Contracts with Customers and IFRS 16 Leases – might apply to three examples of Islamic finance arrangements that are common in Malaysia, which are Al-Ijarah Thumma al-Bai, Tawarruq, and Musyarakah Mutanaqisah and Ijarah.

We are steadfast in our mission to develop and promote high quality accounting and financial reporting standards that are consistent with international best practice for the benefit of users, preparers, auditors and the public in Malaysia. The MASB’s work now includes application and implementation of MFRSs that involve looking into issues where there are existing and potential divergent practices, as well as ensuring consistent application of MFRSs.

The MASB’s work programme and involvement in the implementation of MFRSs mirror that of the IASB and its interpretative body, the IFRS Interpretations Committee, which works with the IASB in supporting the application of IFRS Standards.

In this regard, I would like to put on record my appreciation to the Financial Reporting Standards Implementation Committee of the MIA for the effort in supporting the implementation of MFRSs prior to this. Moving forward, the MASB will be the sole authority to support implementation of MFRSs.

In January 2019, the MASB board members and advisors had the opportunity to meet with IFRS Interpretations Committee Chair and IASB Vice-Chair, Ms. Sue Lloyd, in Kuala Lumpur. The sharing session with Ms. Lloyd provided some insights into the IFRIC processes and how these could be adopted by the new MFRS Application and Implementation Committee (MAIC). We also organised a special session with Mr. Henry Rees, IASB Director of Implementation and Adoption Activities, together with Malaysian property developers and some MASB board members which discussed issues concerning the November 2018 IFRIC Tentative Agenda   Decision on over time transfer of constructed goods (IAS 23 Borrowing Costs). The IASB representatives were in Kuala Lumpur in conjunction with the IFRS Foundation Trustees Meeting that was held on 29-31 January 2019.

For 2019, we will work on supporting the implementation and application of new Standards, particularly MFRS  16 Leases and MFRS 17 Insurance Contracts. We are prepared to assist users and preparers on the upcoming implementation and application of these major Standards.

 

Thank you

I would like to convey my appreciation to the members of the Foundation and MASB as well as our dedicated staff for their hard work throughout 2018. I would also like to formally acknowledge and thank all our stakeholders - particularly the Ministry of Finance, regulators, professional bodies, academia, professional firms, members of our working groups, and the commercial sectors - for their continuous support. I look forward to another successful year.

 

 

Encik Mohamed Raslan Abdul Rahman
Chairman
Malaysian Accounting Standards Board
 
14 March 2019