The Malaysian Accounting Standards Board (Board) has issued a new financial reporting framework for private entities, the Malaysian Private Entities Reporting Standard (MPERS); and amendments to several standards for non-private entities.
All private entities shall apply the MPERS for its financial statements beginning on or after 1 January 2016.
The MPERS is word-for-word the IFRS for SMEs issued by International Accounting Standards Board (IASB) in July 2009 except for the requirements on income tax and property development activities.
To date, over 80 countries have adopted the IFRS for SMEs or announced plans to do so.
“This is another landmark achievement in addition to convergence with IFRS in 2012. According to the SME Master plan (2012-2020), private entities (which primarily are SMEs) will be the key driver of economic growth to propel the country to a high income nation by 2020," says Datuk Ali Tan Sri Abdul Kadir, chairman of the Financial Reporting Foundation, the oversight body of the Board.
"Consequently it is timely to equip them with adequate IFRS-based knowledge as they gain prominence in the regional and global markets.”
MASB's chairman, Dato’ Mohammad Faiz Azmi notes the adoption of MPERS is partly in response to the recommendation by the World Bank’s Report on the Observance of Standards and Codes (ROSC) - Malaysia (published in February 2012).
The World Bank recommended that the review of the Private Entity Reporting Standards, which are based on 2003 version of international accounting standards,to be given priority as they are outdated and the changes to the accounting standards and reporting framework should be based primarily on the needs of the users of the financial statements and public interest considerations.
"The Board believes the MPERS meets the World Bank recommendations as it is primarily based on the IFRS for SMEs which was developed by IASB and does take into account the needs of non-listed entities in Malaysia,” says Dato' Azmi.
Maintenance of the MPERS
The IASB is currently undertaking a review of the IFRS for SMEs and has issued an Exposure Draft of proposed amendments in October 2013. The Board has also issued it to the Malaysian public for comments and interested parties are encouraged to provide their feedback to the Board.
Similar to the MFRSs due process, the Board will not issue Exposure Drafts based on IASB final revisions. This approach enables the Board to update the MPERS requirements with that of the revised IFRS for SMEs. Nonetheless, the Board has the prerogative to amend or revise the MPERS when the need arises given that it is a standard distinct from the IFRS for SMEs.