The Malaysian Accountant - The Malaysian Institute Of Certified ...

PROFESSIONAL NEWSMASB UpdateMASB issues 10 revised accountingstandards and new accountingframeworkThe Malaysian Accounting Standards Board on June 15, 2007announced the issuance of the Framework for the Preparationand Presentation of Financial Statements and 10 revisedFinancial Reporting Standards (FRSs). The revised FRSs andthe framework are virtually identical to the InternationalFinancial Reporting Standards (IFRSs) and IASB’s accountingframework respectively and took effect from July 1, 2007.In a statement issued, MASB Executive Director Dr. NordinMohd Zain said, “Prior to 2005, MASB made improvementsto certain international standards by adding explanation,guidance and examples for clarity before the standardswere issued for application in Malaysia. This was done tobroaden the content of the standards to cover domestic andregulatory issues and to provide guidance to the localconstituents for topics not addressed in the IFRSs.However, in line with the policy of convergence withIFRSs and based on experience in implementing FRSs, theBoard decided to make FRSs issued prior to 2005 the sameas the respective IFRSs. The Board considered this to benecessary in order to enjoy the full benefit of convergence.”The revised FRSs are Cash Flow Statements, ConstructionContracts, Income Taxes, Revenue, Employee Benefits, Accountingfor Government Grants and Disclosure of Government Assistance,Accounting and Reporting by Retirement Benefit Plans, FinancialReporting in Hyperinflationary Economies, Interim FinancialReporting and Provisions, Contingent Liabilities and ContingentAssets. The proposed revisions, contained in MASB ED 55Proposed Amendments to Financial Reporting Standards, wereexposed to the public for comments in March 2007. Generally, therevisions were removal of local guidance and editorial matters.Prior to the finalisation of MASB ED 55, the Board helda dialogue with preparers, accounting firms, professionalaccountancy bodies, regulators and other interestedorganisations to solicit views on whether or not the FRSs shouldbe revised. There was general consensus among delegatesto align the 10 FRSs with IFRSs. However, the additionalguidance removed should be made available to readers inother forms or through professional bodies.Dr. Nordin added that, “Currently, there are only twoFRSs which have not been realigned to IFRSs. This isbecause the Board is in the process of reviewing IFRS 8Operating Segments and the revised IAS 23 Borrowing Costs,which will replace FRS 1142004 and FRS 1232004 once they arefinalised. The Board plans to issue these two documents asexposure drafts for public comments in the near future.”In another development, MASB has also issued theFramework for the Preparation and Presentation of FinancialStatements. Dr Nordin explains, “The framework sets out theconcepts that underlie the preparation and presentation offinancial statements for external users. It is not an FRS anddoes not deal with any accounting measurement or disclosureissue. The purpose of the framework is to provide support topreparers and users of financial statements so as to enhancetheir understanding of the information presented. Thepurpose of the framework amongst others is to assist MASB indeveloping FRSs, facilitate preparers in applying FRSs and indealing with topics not addressed in FRSs and help users ininterpreting information contained in financial statements.”The revised FRSs and the framework are available fromMASB website (http://www.masb.org.my) or can be purchasedin booklet form from MASB office.Notes:The 10 revised Financial Reporting Standards (FRSs) are:(a) FRS 107 - Cash Flow Statements(b) FRS 111 - Construction Contracts(c) FRS 112 - Income Taxes(d) FRS 118 - Revenue(e) FRS 119 - Employee Benefits(f) FRS 120 - Accounting for Government Grants and Disclosure ofGovernment Assistance(g) FRS 126 - Accounting and Reporting by Retirement Benefit Plans(h) FRS 129 - Financial Reporting in Hyperinflationary Economies(i)(j)FRS 134 - Interim Financial ReportingFRS 137 - Provisions, Contingent Liabilities and Contingent AssetsFRS 1142004 Segment Reporting and FRS 1232004 Borrowing Costs are notincluded in the list of amendments as the Board is in the process of reviewingIFRS 8 Operating Segments and the revised IAS 23 Borrowing Costs, whichwill replace FRS 1142004 and FRS 1232004 respectively once they are finalised.The Board plans to issue IFRS 8 and the revised IAS 23 for public commentsin the near future.FRS 1292004 Financial Reporting in Hyperinflationary Economies isnot included in the list of amendments as that Standard is alreadyidentical to IAS 29 Financial Reporting in Hyperinflationary Economies.BackgroundWhen the MASB was set up in 1997, the Board subscribed tothe policy of “harmonisation with International AccountingStandards (IASs)”. Harmonisation involved using IASs as abasis in the development of accounting standards forMalaysia. The Board would carry out detailed examinationof accounting standards and practices in other jurisdictionsbut recognised the IASs were the most appropriate basis forall MASB Standards. Up until December 31, 2004, all MASBStandards, apart from locally developed standards arewww.micpa.com.myJune/August 2007 | The Malaysian Accountant |43