The Malaysian Accounting Standards Board has issued Exposure Draft 77 Malaysian Private Entities Financial Reporting Standard (MPERS) for comment.
The Board is proposing that all private entities would be required to apply a single financial reporting framework, the MPERS (or such name as the Board may decide), on 1 January 2016. Private entities are those non-public interest entities such as non-listed companies.
The MPERS is a set of national accounting standards for private entities which is closely aligned to the IFRS for SMEs issued by the International Accounting Standards Board (IASB) in 2009 but is not word-for-word the IFRS for SMEs.
In March 2013, the Board issued the Roadmap for Private Entities Financial Reporting Framework to solicit views from the public whether the Board should introduce differential reporting requirements for private entities by way of stratification - whereby private entities (which primarily are SMEs) with an annual revenue of RM500,000 or more for two consecutive preceding years would be required to apply the new framework which is based on the IFRS for SMEs.
To solicit feedback on the Roadmap proposals, the Board held six public forums throughout the country which had provided very useful information and an insight into the views of a broad group of affected parties.
The majority of the respondents did not support the Roadmap proposals to stratify private entities and neither did they support retaining the existing Private Entity Reporting Standard (PERS) for the micro-sized entities due to significant concerns of the costs of maintaining three accounting frameworks, amongst others.
In light of these comments together with the formal responses received, the Board decided not to proceed with the stratification proposal in the Roadmap and proposes instead to require all private entities to adopt the MPERS on 1 January 2016.
The Roadmap had indicated that the new framework for private entities would be virtually identical to the IFRS for SMEs and that the Board does not intend to make any modifications.
However, during the consultation process, the Board received differing views on whether it should adopt the IFRS for SMEs word-for-word. There were suggestions that the Board should modify some of the requirements in the IFRS for SMEs. On the contrary, others believe that amending the IFRS for SMEs could inadvertently result in a framework similar to the existing PERS.
The Board considered all the views and noted that it is important to balance the need of local circumstances but at the same time, prescribing a set of standards for private entities that are not too different from global standards.
In this regard, the Board proposes to only amend the requirements on income tax, real estate and to include an additional criterion on the exemption to present consolidated financial statements, besides specifying the applicability of the Standard in the scope section.
In other words, apart from the sections on income tax and real estate as well as the exemption of the presentation of consolidated financial statements, the requirements in all other sections in the MPERS are word-for-word the IFRS for SMEs.
Given the different stakeholder views, the Board has decided to re-expose its final proposal as an Exposure Draft. The Board now invites final comments on the questions raised in Exposure Draft 77. The deadline to comment is 30 September 2013.