: Malaysian companies are all set to adopt the global accounting standards by 2018, according to the Malaysian Accounting Standards Board (MASB).
Its chairman, Mohamed Raslan Abdul Rahman said the transition is being done in three stages.
He said the first wave of change took place in January 2012 when non-private entities used the Malaysian Financial Reporting Standards (MFRS), which were identical to the International Financial Reporting Standards (IFRSs), issued by the International Accounting Standards Board (IASB).
However, only about 80 per cent of the companies listed on Bursa Malaysia adopted the MFRS in 2012.
The remaining 20 per cent, comprising real estate and plantation companies were allowed to continue with their current practices in view of the unresolved accounting issues on the agriculture standard, ‘IAS 41’ and the interpretation of accounting for construction of real estate, ‘IFRIC 15’, he added.
“The second wave of change is scheduled to take place in January 2016, when private entities are mandated by law to apply a new reporting framework, the Malaysian Private Entities Reporting Standard or MPERS,” Mohamed Raslan told Bernama.
The MPERS is almost identical to the IFRS for small and medium enterprises (SMEs) except on the requirements relating to real estate. The MPERS replaces the current outdated PERS, which has not been changed since 2006.
“By January 2018, companies involved in the agriculture or real estate industry are mandated by law to comply with the MFRS framework.
“Therefore by 2018, all companies in Malaysia are reporting on the global accounting standards,” said Mohamed Raslan.
Meanwhile, MASB executive director Tan Bee Leng said the board wanted all non-private entities to toe the line in 2012.
However, the agriculture and real estate industries were allowed the choice of the MFRSs or to continue with their current practices as the board was mindful of potential changes to the IAS 41 (namely on bearer assets) and the IFRIC 15.
Tan said these changes were driven by the MASB as the board wanted the IASB to address the issues.
"The MASB recommended that bearer plants, such as the oil palm and rubber trees, should not be measured at fair value as required by IAS 41, instead these bearer plants should be carried using the cost model.
“IASB took up the MASB recommendation and issued the Amendments to IAS 41 in June 2014,” she said.
IASB had in May 2014, issued a new Revenue Standard, IFRS 15, which when effective, will supersede IFRIC 15.
“Unlike IFRIC 15 where there were diverse interpretations on how revenue should be recognised by our property developers, IFRS 15 provides clarity and addresses the issues faced by our real estate industry,” Tan added.
She said the MASB had consistently used the effective date of the IFRS 15 as the basis for setting the effective date for the agriculture and real estate industry to apply the MFRS framework.
“Now that the IFRS 15 becomes effective in January 2018, real estate and plantation companies would be mandated to comply with the MFRSs in January 2018,” she added.
The MASB was established under the Financial Reporting Act 1997 as an independent authority to develop and issue accounting and financial reporting standards in Malaysia.
That Act gives the standards issued by the MASB legal authority.