This update was first published in the January 2012 Malaysia edition of Accounting and Business magazine.
On 19 November 2011, the Malaysian Accounting Standards Board (MASB) issued a new accounting framework, the Malaysian Financial Reporting Standards (MFRS).
The framework is IFRS-compliant and comprises standards issued by the IASB. It is to be applied by all entities, other than private entities, for annual periods beginning on or after 1 January 2012, with the exception of ‘transitioning’ entities that are within the scope of MFRS 141, Agriculture, and IC Interpretation 15, Agreements for Construction of Real Estate, including its parent, significant investor and venturer.
Therefore, transitioning entities will have the option to select either the MFRS framework or the Financial Reporting Standards (FRS) framework. If a transitioning entity elects to apply the FRS framework as its financial reporting framework for the annual period beginning 1 January 2012, it shall disclose the fact and provide information on when it will first present financial statements in accordance with the MFRS framework. Consequently, adoption of the MFRS framework by transitioning entities will be mandatory for annual periods beginning on or after 1 January 2013.
In light of the MASB’s decision regarding transitioning entities, the MASB has withdrawn IC Interpretation 15 from the FRS framework. In addition, the MASB has also issued new/revised FRSs: FRS 9, Financial Instruments, FRS 10, Consolidated Financial Statements, FRS 11, Joint Arrangements, FRS 12, Disclosure of Interests in Other Entities, FRS 13, Fair Value Measurement, FRS 119, Employee Benefits, FRS 127, Separate Financial Statements, and FRS 128, Investments in Associates and Joint Ventures, four limited amendments to FRSs and a new Interpretation. Some of these pronouncements become effective on 1 January 2012 while others become effective later.
The key differences between the FRS framework and MFRS framework are that in the former, (a) FRS 2012004, Property Development Activities, will continue to be the extant standard for accounting for property development activities and not IC 15, and (b) there is no equivalent standard to IAS 41.
Vilashini Ganespathy, head – technical and professional development, ACCA Malaysia