The Malaysian Accounting Standards Board (MASB) has issued an exposure draft, MASB Exposure Draft 75 IFRS-compliant Financial Reporting Standards (FRS) reaffirming its plan to fully converge with IFRS on 1 January 2012. The standards contained in the Exposure Draft, when finalised, will result in the Malaysian financial reporting framework being recognised as an IFRS-compliant financial reporting framework.
IFRS-Compliant FRS Framework
Convergence with IFRS means full compliance with IFRSs issued by the International Accounting Standards Board (IASB) as a basis for financial reporting in Malaysia. The FRSs contained in the Exposure Draft are equivalent to the IFRSs issued by the IASB. Therefore financial statements that are drawn up in accordance with the new IFRS-compliant FRS framework will be equivalent to financial statements that have adopted the IFRS framework. However, as a first step, under the new IFRS-compliant FRS framework, non-private entities are required to apply FRS 1 First-time Adoption of Financial Reporting Standards. Adoption of FRS 1 will enable financial statements in Malaysia under the new IFRS-compliant FRS framework to assert full compliance with IFRSs.
This means financial statements from 2012 onwards will simultaneously assert compliance with FRSs and IFRSs. The Board is of the view that a dual compliance reporting approach will provide clarity that financial statements in Malaysia, whilst prepared under our local framework, are based upon globally accepted standards.
The existing framework is virtually the same as the IFRS framework except for IAS 41 Agriculture, IFRIC 15 Agreements for the Construction of Real Estate, different effective dates and additional transitional provisions in a limited number of standards. The Board will deal with entities affected with IAS 41 and IFRIC 15 separately. For all other entities, the Board does not expect significant impact arising from full convergence with IFRS.
"Accounting professionals and non-private entities are advised not to delay their preparations to converge with IFRS. In fact, non-private entities should have already developed and implemented its formal transition plan. On an individual level, all accounting professionals must make a personal commitment to be conversant with the new IFRS-compliant framework," says MASB's chairman, Encik Mohammad Faiz Azmi.
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