MASB Chairman's Statement 2012

Chairman’s Statement                     

2012 was a groundbreaking year for the Malaysian Accounting Standards Board (MASB). It was Malaysia’s first year to fully converge with the International Financial Reporting Standards (IFRSs) and the Malaysians’ entities financial statements to report compliance on two frameworks, i.e. the Malaysian Financial Reporting Standards (MFRSs) and the IFRSs. It was also the year in which we brought many of the world’s top regulators and accounting standard setters to Malaysia, raising the MASB’s profile in the international arena. Our achievements could not have been attained without the efforts from the members of the Financial Reporting Foundation (FRF), MASB, and countless other stakeholders (including Malaysian regulators, working group members, practitioners, auditors and other relevant parties); and I want to personally thank everyone who contributed to our goals.

To meet our objectives, the MASB and FRF worked tirelessly to assist practitioners with the implementation of IFRS. We also continued to lobby for changes and to contribute positively to the IASB so as to ensure that the IFRS issued would better reflect the economic realities of our Malaysian companies. As we continue to support the full-adoption of IFRS within Malaysia, our activities and initiatives for the year can be summarised into the following areas:

·         IFRS Convergence

·         Engaging various stakeholders locally and internationally

·         Sharing knowledge

·         IFRS developments of particular interest to Malaysia

·         Islamic finance

·         Small and medium enterprises

·         XBRL

These areas are elaborated on below.

IFRS convergence

On 1 January 2012, Malaysia fully converged with IFRS when it adopted the Malaysian Financial Reporting Standards (MFRS) Framework – the first word-for-word IFRS-based framework for the country. The MFRS Framework is mandatory for almost all entities that previously followed the MASB’s Financial Reporting Standards (FRS).

One exception was granted for companies that undertook operations that were within the scope of either MFRS 141 Agriculture or IC 15 Agreements for the Construction of Real Estate (including its parent, significant investors and venturers). These qualifying companies, called ‘Transitioning Entities,’ would be eligible to continue applying FRS for an additional year. This exception was granted because the MASB anticipated changes to the aforementioned standards, and wanted to avoid the possibility of repetitive substantial restatement in the financial statements. However, as 2012 progressed, it became apparent that a one-year deferral may not be long enough for the projected changes to be finalised. As such, the MASB decided to extend the Transitioning Entities exception for another full year until 1 January 2014.     

In view that 2012 is the first year into the new MFRS Framework, we increased our active engagement with our constituents through convergence-specific meetings, trainings, teleconferences and public forums. Our aim was to understand real-time implementation challenges our constituents faced and provide potential solutions to ease the burden of a change in accounting framework.

To achieve these objectives in 2012 a total of twenty-five (25) documents were issued: comprising of eight (8) amendments to MFRSs, six (6) amendments to FRSs, nine (9) technical draft pronouncements, and one (1) Islamic Feedback Statement. Additionally thirteen (13) International Accounting Standards Board (IASB) draft documents were reviewed.

Engaging various stakeholders locally and internationally

In 2012, we increased our outreach activities, hosting and attending various international and local conferences, public forums, working group meetings and teleconferences. In 2012, the MASB participated in a multitude of events: one (1) IFRS Conference, four (4) technical public forums, one (1) IASB session with investors and analysts, one (1) video conference briefing on IFRS 8 Operating Segments, eight (8) educational sessions with universities and academicians, thirteen (13) meetings with regulators and governmental agencies, eight (8) industry-specific meetings (including agriculture and real estate entities), three (3) convergence task force meetings, and five (5) meetings with private entities. In addition to our participation in the events listed above, in 2012 MASB staff also attended thirteen (13) international and regional forums, participated in an outreach meeting in Dubai, and hosted a Nigerian study visit.

Despite this busy schedule, I also took every opportunity to participate in the various MASB working group meetings and attended external meetings with other bodies such as Malaysian Institute of Accountants (MIA), Bank Negara Malaysia (BNM), Suruhanjaya Syarikat Malaysia (SSM) as well as other Government agencies.

During the year, we held and participated in various events as follows:

International participation

We continued to maintain a presence in international forums.  

Of particular importance, we hosted a series of international events in Kuala Lumpur in March of this year. These events included the IFRS Regional Policy Forum, IFRS Conference, International Forum Accounting Standard Setters (IFASS) meeting, IASB Roundtable on the Investment Entities Exposure Draft, and IASB Outreach meetings on Revenue Recognition and Investor and User views. One-hundred and forty-four (144) delegates from twenty-two jurisdictions participated in the IFRS Regional Policy Forum, and three-hundred and six (306) individuals participated in the IFRS Conference – which made it a sold-out event. These events demonstrated the sophistication of the Malaysian accounting industry and put the MASB in a prominent place on the international stage.  

In addition to the events we hosted locally, we participated in many global events. These included the IFASS meeting in Zurich, IASB Roundtables in Singapore and Seoul, the IASB World Standard-setters meeting in London, the IASB Emerging Economies Group (EEG) meeting in Buenos Aires, and the 4th Annual Meeting of the Asian-Oceanian Standard-Setters Group (AOSSG) in Kathmandu and informal AOSSG meetings in Kuala Lumpur, London and Kathmandu. At many of these meetings, we were invited to lead discussions on IAS 41 Agriculture, the proposals in the upcoming Revenue Standard, and accounting for Islamic finance under IFRS.

We continued our involvement with the AOSSG member countries to keep up-to-date on the latest IFRS developments, commenting on all projects issued for exposure by the IASB, and recommending changes to existing standards when necessary. We continued our leadership role in some topics, such as Islamic finance and agriculture– heading the AOSSG Islamic Finance Working Group and co-leading the AOSSG Agriculture Working Group in determining how current and potential IFRS’s would impact Islamic finance transactions and agriculture, respectively. On others – including revenue recognition, insurance, and financial instruments – we joined various AOSSG working groups to determine how the latest changes would affect constituents in the Asian-Oceanian region.

Organising local forums

With full-convergence, we increased our local outreach efforts to meet the demand for more information. In 2012 we also hosted national events, including public forums, road shows and meetings with regulators and other stakeholders.

Our four (4) public forums focused on the following topics: Investment Entities, Revenue from Contracts with Customers, and Private Entities: Way Forward (two (2) forums were held on this topic). The two forums on private entity accounting were of particular importance, as the MASB is focusing on changes to the current Private Entity Reporting Standards (PERS) in the coming year. The private entity forums were primarily organised to solicit views on if and how PERS should be updated to meet needs many private entities to attract foreign investors and produce robust financial statements.  

All of our local forums were well received; participants were engaged in the implementation of the MFRS Framework, and readily contributed convergence issues for public discussion and resolution.

Sharing knowledge

In 2012, I focused on sharing knowledge through two main mediums: articles published on our website and interactive presentations via live video conferencing, webcast and conference calls. 

The MASB published ten (10) articles in 2012 – five (5) written by the MASB staff, and another four (4) drafted by others, with contributions from MASB staff.  The articles focused on for areas: the adoption of new standards, private entity accounting, Islamic finance, and the role of the audit committee. The MASB undertook the development of these articles to explain recent and anticipated changes to IFRS, outline proposed changes to Malaysia’s private entity accounting framework, provide a detailed background on what Islamic finance is and why the MASB promotes an IFRS-based accounting framework for Islamic finance transactions, and brief company audit committees on how IFRS convergence would impact their oversight role.

To increase participation in the meetings and trainings we hold at the MASB offices, we initiated a video conference system whereby constituents outside Kuala Lumpur could actively participate in meetings held at our offices via telephone and internet. This video conference system was used widely. We invited participants from around the country to participate in working group meetings, outreach sessions, and trainings, among others. We even used the video conferencing technology to host a real-time outreach meeting between users of financial statements (preparers, auditors and regulators) and IASB’s Technical Manager, April Pitman in soliciting feedback on IASB’s post implement review on IFRS 8 Operating Segment.

We educated practitioners and academics on the latest IFRS developments. As part of a BNM conference on Islamic finance, we partnered with the Malaysian Institute of Accountants (MIA) to deliver a half-day training on IFRS. We also housed eight (8) different training sessions for academicians and university students, including student-focused introductions to the MASB and an academician-focused video conference training session lead by staff at the IASB on IFRS framework-based teaching methods. The session aims to illustrate how Framework-based teaching enhances the ability of students to exercise the judgements that are necessary to apply IFRSs and better prepares them to continuously update their IFRS knowledge and competencies in the context of lifelong learning. In addition, the MASB’s Islamic Technical Unit (ITU) also led a full-day master class for Malaysian academicians who teach accounting for Islamic finance transactions.

The MASB, along with BNM, also hosted a delegation of Senior Government Officials from Nigeria. The goal of this meeting was for the Nigerian delegation to get a better understanding of BNM’s experience with the implementation of IFRS. As such, we organized a detailed half-day presentation of the steps the MASB has taken since 2008 to make IFRS convergence a reality.

Finally, we participated in two global knowledge shares, sending representatives to Dubai and Indonesia. I travelled to Dubai with senior members of our staff who was invited to present at the IASB’s IFRS Conference. Here, we presented on accounting for Islamic finance under IFRS. Additionally, one of our Board members, Dr Nurmazilah, spoke at an accounting conference hosted by Universitas Muhammadiyah Yogyakarta, in Yogyakarta, Indonesia.

IFRS developments of particular interest to Malaysia

As stated above, in anticipation of changes to IFRS (specific to agriculture and real estate), we decided to extend the MFRS framework exception for Transitioning Entities for an additional year – in hopes that change in the IFRS guidance would be issued by the end of 2013. Since these issues are important to many of our constituents, we took them up as priorities – increasing our lobbying efforts to push for amendments.  

In 2012, the IASB published its Feedback Statement on its 2011 Agenda Consultation paper – which asked constituents to comment on which projects the IASB should focus on in the coming years. Our effort to drive changes in agriculture was well-received, with the IASB noting in its Feedback Statement and adopting a limited-scope project on agriculture (that we hope it would be addressing the MASB’s concerns). This was a boon for the MASB, as Malaysia has been working diligently for years to drive changes in the accounting guidance related to agriculture and real estate. In addition, to deal with the fair value measurement issues, the IASB has also decided to set up a Valuation Expert Group, and one of our fair value working group members was also invited to this Group.


As the accounting for agriculture is extremely important to many Malaysian agricultural entities, the MASB wanted to wholeheartedly support any efforts to get revisions to the standard. At the international level, we have made significant progress in driving limited amendments to IAS 41 Agriculture. By the end of 2012, the IASB agreed to address the bearer biological asset issues which MASB has been driving for the change. This addition to the IASB’s project agenda was a huge victory for us, culminating in all our efforts in the past few years.

The IASB’s plan is to issue an Exposure Draft on limited amendments to IAS 41 by first half of 2013, drawing upon the research already undertaken by the MASB to determine the appropriate changes.

Real estate

We attempted to attack the problem from two fronts, namely, to request clarification from the IFRS Interpretation Committee (IFRS IC) on the concept of ‘continuous transfer’ in IFRIC 15, Agreements for the Construction of Real Estate, as well as to provide feedback to IASB to ensure that the upcoming Standard on Revenue Recognition is clear in its concept and application to industry such as the real estate

Just getting IFRS IC to re-open the issue of ‘continuous transfers of control’ within the context of IFRIC 15 was a monumental feat - as the IFRS IC had twice rejected similar requests made by others. Unfortunately, the IFRS IC was unable to reach a conclusion and also in view of the IASB project on Revenue, decided to seek the IASB’s guidance. This resulted in the IASB, in its February 2012 meeting, to recommend not changing IFRIC 15 as the issue of ‘continuously transfer’ is being addressed in the upcoming Revenue standard.

Specific to the latter approach, it is worth noting that the revised Exposure Draft of the upcoming Revenue Standard has provided clearer explanation of its concept on the use of continuous recognition of revenue over time, and if companies meet the criteria including those in in the real estate industry, they would be able to recognise revenue on a progressive basis instead of at a point in time. The IASB expects to issue the new Revenue Standard by first half of 2013.

Islamic finance

The MASB’s ITU, which is tasked with researching how IFRS could be applied to Islamic finance transactions, witnessed many achievements and changes in 2012. These include an Islamic Master Class, IASB’s proposed Consultative Group on Shariah (CGS), and changes to the ITU’s agenda. 

Following the success of the first Islamic Master Class held in 2011, the MASB ITU hosted its second annual Master Class on accounting for Islamic financial transactions for the Malaysian academia. Over thirty (30) representatives from nine (9) academic institutions were in attendance. In addition to in-person participation, the Master Class was telecasted live online and archived for future reference. The Master Class entitled ‘Reporting under IFRS’ provided an overview of contemporary issues in reporting Islamic finance transactions under MFRS.

Part of the IASB’s Agenda Consultation Feedback Statement identified a need of the IASB to understand Islamic finance in greater detail. As such, the IASB proposed to create a CGS, which would inform the IASB on the inner workings of Islamic finance products. I played an instrumental role in advising on the development of this body. The MASB was honored to accept a seat on IASB's newly-formed CGS and expects to contribute actively to the group in the upcoming year.

2012 also brought change to the ITU procedures. Consistent with past precedent, as 2012 began, the MASB intended to develop Technical Releases (TRs) based on the Discussion Papers issued in 2011 (on Takaful, Sukuk, and Shariah Compliant Profit-sharing Contracts). However, the MASB subsequently became wary that issuing TRs may be misconstrued as local interpretations of IFRS – which may not be acceptable to the IASB. This concern was also shared by a Malaysian professional body. Thus, at the present time, the MASB will not be issuing any new TRs to deal with Islamic financial reporting matters. The MASB is currently seeking other acceptable avenues for getting consensus opinions to its constituents. An option being explored is for local industry regulators or the Malaysian Institute of Accountants (MIA) to provide assistance to Malaysian preparers. Another is to lobby for the IASB itself to issue guidance on Islamic financial reporting matters. This is still ongoing, and I hope to resolve the issue in 2013.

Small and medium enterprises

The MASB’s current PERS framework is outdated and is in need of a major refresh. Post-convergence, the MASB has prioritised the updating of an accounting framework for private entities (also known as small and medium enterprises (SMEs)).

In 2012, we started polling constituents to understand their accounting needs, as well as what would be the most appropriate framework to replacing the current PERS Framework is. I spoke at an SME convention, and the MASB set up an informational booth at Malaysia’s SME Corp. headquarters. We also issued a Request for Views (RFV) document that detailed the alternative approaches to updating PERS the MASB is considering. We also worked with MIA to solicit responses from a larger pool of SMEs. Results from our research suggest that the MASB should have two SME frameworks – a simple framework for micro-sized companies, and a more-complex framework for larger SMEs.    

Based on the feedback received from the RFV, private entities would require a longer lead time to learn and plan for the transition processes. For this reason, the MASB targets to issue the FRS for SMEs by first half of 2013, so private entities are given more than a year from the date of transition of 1 January 2015 to plan for the transition process. In 2013, in collaboration with MIA and SME Corp. I plan to target outreach activities to more stakeholders in the financial reporting chain. These include regulators, government agencies (i.e. SME Corporation), users, preparers, professional bodies, academia, auditors and accountants.

The MASB also plans to continue monitoring the development of the IASB’s comprehensive review of the IFRS for SMEs and the IASB staff guidance for micro-sized entities in order to determine their impact to the MASB’s policy decision.


Like much of the world, Malaysia is in the process of developing and issuing a country-specific eXtensible Business Reporting Language (XBRL) taxonomy for financial and regulatory reporting purposes. In layman’s terms, XBRL is an approach by which financial reporting information, such as revenue and expense numbers, is tagged. Through tagging, the reported number is labelled with identifying information, such as the financial reporting period, reporting entity, account classification, etc. Malaysia’s taxonomy encompasses the breath of XBRL tags that can be added to financial reporting information.

I am chairing the committee tasked with creating Malaysia’s XBRL taxonomy.  The committee comprises representatives from the MASB, BNM, SSM, and Bursa Malaysia, among others. The MASB’s role in this committee is to provide accounting standard oversight – clarifying the requirements of the MFRS Framework.        


With the one-year extension for the Transitioning Entities to continue applying the existing FRS Framework, and the push for a revised framework for the larger private entities, the main tasks of 2013 include monitoring and championing the completion of the agriculture and revenue (real estate) project, and moving towards completion the plan to issue a new framework for SMEs.

With respect to accounting for Islamic finance, I want to continue our involvement in outreach – interacting with foreign jurisdictions to inform them of Malaysia’s approach to applying IFRS to Shariah compliant transactions. I also want to build upon the IASB’s decision to create CGS, supporting the IASB in any way that I can. We also want to finalise our approach for providing IFRS-based guidance specific to Islamic finance reporting.  

Most importantly, I want to sincerely thank all the staff who have contributed their time and resources to promoting IFRS compliance this year, and hosting a series of international events to showcase the achievements of the MASB. The Board could not have achieved its objectives without their efforts.  I am also thankful to the FRF members for their continued guidance and direction in their independent oversight capacity. Finally, I would like to commend the efforts of the Malaysian regulators; professional bodies; academia; professional firms; and members of our working groups, the commercial sector, the Board and Ministry of Finance for continuing their commitment to support the efforts of the MASB and make IFRS compliance with Malaysia a reality.



Malaysian Accounting Standards Board