The Malaysian Accounting Standards Board (MASB) has issued a new MASB approved accounting framework, the Malaysian Financial Reporting Standards (MFRS Framework).

The issuance finalises MASB Exposure Draft 75 IFRS-compliant Financial Reporting Standards exposed in June 2011 and is made in conjunction with the Board’s plan to converge with International Financial Reporting Standards (IFRSs) in 2012.

Convergence with IFRS needs no further introduction as after the convergence announcement was made back in 2008, various initiatives have been done to instill awareness amongst numerous stakeholders and other affected parties.

The MFRS Framework

The MFRS Framework comprises Standards as issued by the International Accounting Standards Board (IASB) that are effective on 1 January 2012. It also comprises new/revised Standards recently issued by the IASB that will be effective after 1 January 2012 such as Standards on financial instruments, consolidation, joint arrangements, fair value measurement and employee benefits, amongst others.

The adoption of the MFRS Framework is a significant milestone for the capital market as entities will be able to assert that their financial statements are in full compliance with IFRSs. This is because it is a fully IFRS-compliant framework and equivalent to IFRSs.

“This is a landmark achievement after a long haul and countless endeavors. Now comes the time when we must equip ourselves with adequate IFRS knowledge so as to position ourselves in the global market environment,” says the Chairman of the oversight body of the MASB, the Financial Reporting Foundation, Datuk Ali Tan Sri Abdul Kadir.

The MFRS Framework 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 entities that are within the scope of MFRS 141 Agriculture (MFRS 141) and IC Interpretation 15 Agreements for Construction of Real Estate (IC 15), including its parent, significant investor and venturer (herein called ‘Transitioning Entities’).

Transitioning Entities will be allowed to defer adoption of the new MFRS Framework for an additional one year. Consequently, adoption of the MFRS Framework by Transitioning Entities will be mandatory for annual periods beginning on or after 1 January 2013.