harmonisation or adoption of ifrss? – the malaysian perspective raja arshad-uda chairman,...

Harmonisation or Adoption of IFRSs? –The Malaysian Perspective

Raja ARSHAD-UDAChairman,Malaysian Accounting Standards BoardExecutive Chairman,PricewaterhouseCoopersMalaysia

Harmonisation or Harmonisation or Adoption of IFRSsAdoption of IFRSs

(The Malaysian Perspective)(The Malaysian Perspective)

Raja Arshad Uda Raja Arshad Uda Chairman, Malaysian Accounting Standards BoardChairman, Malaysian Accounting Standards Board

Executive Chairman, PricewaterhouseCoopers, MalaysiaExecutive Chairman, PricewaterhouseCoopers, Malaysia

© 2002 PricewaterhouseCoopers. PricewaterhouseCoopers refers to the individual member firms of the world-wide PricewaterhouseCoopers organisation. All rights reserved.© 2002 PricewaterhouseCoopers. PricewaterhouseCoopers refers to the individual member firms of the world-wide PricewaterhouseCoopers organisation. All rights reserved.

PwCPwC

PricewaterhouseCoopers Malaysian Accounting Standards Board

The Malaysian PerspectiveFinancial Reporting Framework

Prior to 1997 - Malaysian Institute of Accountants (MIA) and Malaysian Institute of Certified Public Accountants (MICPA)

FRA 1997 - Established:

Financial Reporting Foundation (FRF)

19 members

Malaysian Accounting Standards Board (MASB)

8 members and 3 advisors

FRA: Financial Reporting Act


The Malaysian PerspectiveComprehensive due process

Comprehensive due process

• To give ownership to preparers and users, particularly, to non-accountants for greater acceptance, and hence, compliance

• To provide wide consultation

• To address issues of difficulty in compliance

• To address specific local issues

• To fully understand IASB’s stand on certain issues

Companies Act 1965 (Amended 1998) s166A (Not confined to PLCs)

KLSE Listing Requirements


The Malaysian PerspectiveCommitment to Harmonisation

• MASB Standards are based on IASs / IFRSs

• Differences, if any (not significant):

– To cater for:

specific local issues

local regulatory & statutory requirements

– Certain Standards:

provide additional guidance

include guidance from SICs

– Provide exemption to certain enterprises


The Malaysian PerspectiveDifferences with IAS

(i) Local Issues (Stringent / Stricter)

• Stricter: Local CircumstancesE.g. MASB 1, Presentation of Financial Statements and MASB 5, Cash Flow Statements

– requires both company & consolidated cash flow statements.

• Stricter: Greater transparency & corporate governanceE.g. MASB 8, Related Party Disclosure

– disclosure of identity (not in IAS 24)– disclosure terms & conditions of each different type of transaction

(IAS 24 only requires pricing policies)

(ii) Local Regulatory Requirements / additional guidanceE.g. MASB 8, Related Party Disclosures:

• definition of close members of family – per Malaysian Companies Act 1965 (members of directors family)


The Malaysian PerspectiveIAS – Narrowing the Gap

IAS STANDARDS

• IAS with MASB equivalent Standards 26 1/2

• IAS issued as EDs 3 1/2

• IAS with no equivalent MASB Standards / EDs 4

34

IOSCO RECOMMENDED IAS STANDARDS

• IAS with MASB equivalent Standards 26 1/2

• IAS issued as EDs 2 1/2

• IAS with no equivalent MASB Standards / EDs 1

30


The Malaysian PerspectiveLocal Standards (no IAS equivalent)

Extant Local Standards Adopted by MASB:

• MAS 5, Accounting for Aquaculture

• MAS 7, Accounting for Property Development

Local Standards In Progress:

• ED 26, Financial Reporting by Unit Trusts

• ED 27, Property Development Activities

MASB Islamic Standard Issued

• MASB i-1, Presentation of Financial Statements of Islamic Financial Institutions


The Malaysian PerspectiveGoing Forward

Should MASB Continue to Issue MASB Standards or Adopt IFRSs?

• Case for adopting IFRS

– Alignment with global standards

– Perception that local Standards are inferior than IASs / IFRs will be overcome

• However, can only be considered after addressing the following issues:

– ownership issue

– specific regulatory and local issues

– compliance difficulty

– exempt enterprise

– local standards



Possible Solutions:

• Ownership issue

– Greater participation – longer exposure period required

– Bigger Voice – presently, comments on IASB Exposure Drafts & representation in SAC

– Major jurisdictions have bigger voice through liaison in standard setting role

• Specific regulatory and local issues

– To include in KLSE Listing Requirements / Companies Act 1965


Possible Solutions:

• Compliance difficulty

– Guidance documents from IASB

– More Implementation Guidance (IG), e.g. IG on IAS 39

• Exemption for exempt enterprise

– IASB to develop small company GAAP?

• Local standards


Thank You

harmonisation or adoption of ifrss? – the malaysian perspective raja arshad-uda chairman,...

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