Malaysia Issues Amendments to Several Standards and a New Interpretation

The Malaysian Accounting Standards Board (MASB) has issued a few amendments to certain existing Standards and one new Interpretation, namely the Malaysian Financial Reporting Standards and the Financial Reporting Standards.

The pronouncements are:

Malaysian Financial Reporting Standards (MFRSs)

Applying MFRS 9 Financial Instruments with MFRS 4 Insurance Contracts (Amendments to MFRS 4)

Transfers of Investment Property (Amendments to MFRS 140)

Annual Improvements to MFRS Standards 2014–2016 Cycle]

IC Interpretation 22 Foreign Currency Transactions and Advance Consideration

Financial Reporting Standards (FRSs)

Applying FRS 9 Financial Instruments with FRS 4 Insurance Contracts (Amendments to FRS 4)

Transfers of Investment Property (Amendments to FRS 140)

Annual Improvements to FRS Standards 2014–2016 Cycle

IC Interpretation 22 Foreign Currency Transactions and Advance Consideration

The above pronouncements are word-for-word the respective pronouncements issued by the International Accounting Standards Board (IASB).

The amendments issued clarify existing requirements of the respective Standards except for the amendments on applying the Standards on financial instruments with insurance contracts that provide pragmatic solution to address the transitional challenges in view of an upcoming new Standard on Insurance Contracts (the forthcoming IFRS 17), which IASB plans to issue by first quarter of next year.

Consequently, the IASB has introduced two additional voluntary options, namely an overlay approach and a deferral approach to be applied subject to certain criteria being met, which help to address temporary volatility in reported results of entities dealing with insurance contracts.

The overlay approach involves option to recognize the possible volatility in other comprehensive income, instead of profit or loss, whilst the deferral approach provides temporary exemption from applying the Standard on Financial Instruments for entities whose activities are predominantly connected with insurance.

Commenting on the upcoming IFRS 17, the MASB Chairman Encik Mohamed Raslan said, “The IASB in November 2016 had tentatively decided that the effective date of the forthcoming IFRS 17 will be on 1 January 2021.

"Assuming if IFRS 17 is issued in the first quarter of 2017, this would give entities more than 3 years of preparation time to get ready for the new IFRS 17. I am happy to note that this tentative effective date coincides with the expiration date of the temporary exemption from MFRS 9.”

The Amendments to the Investment Property Standard clarifies the existing provisions in the Standard on transfer to, or from the investment property category.

The Annual Improvements for the 2014-2016 Cycle covers amendments to the Standards on:

First-time Adoption: Certain provisions that have served their intended purposes and are no longer required are removed from the Standard;

Disclosure of Interest in Other Entities: Clarifies the applicability of this Standard to an entity’s interest in other entities which are classified as held for sale or discontinued operations; and

Investments in Associates and Joint Ventures: Clarifies that an entity, which is a venture capital organisation, or a mutual fund, unit trust or similar entities, has an investment-by-investment choice to measure its investments in associates and joint ventures at fair value in accordance with the Standard.

The new Interpretation issued addresses which exchange rate to use in reporting foreign currency transactions that involve advance consideration paid or received.

 

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