Narrow – Scope Amendments to Pension Accounting in Malaysia
The Malaysian Accounting Standards Board (MASB) recently issued narrow-scope amendments to pension accounting. The amendments to the Malaysian Financial Reporting Standards (MFRS) Employee Benefits are word-for-word Plan Amendment, Curtailment or Settlement (Amendments to IAS 19) issued by the International Accounting Standards Board. Under the amendments, an entity is required to use updated actuarial assumptions to determine current service cost and net interest for the remainder of the annual reporting period after the plan amendment, curtailment or settlement when the entity remeasures its net defined benefit liability (asset). Using updated assumptions provides more useful information to users of financial statements and enhance the understanding of financial statements.
Before the amendments, MFRS 119 did not require an entity to use updated assumptions to determine current service cost and net interest for the period when changes to a defined benefit pension plan occur. The amendments are effective for annual periods beginning on or after 1 January 2019. Earlier application is permitted. Pursuant to subsection 7(1) of the Financial Reporting Act 1997 (Act 558) and regulation 3 of the Financial Reporting (Publication of Approved Accounting Standards) regulations 1999, the MASB gives notice of issuance of the following MASB approved accounting standard for application in relation to financial statements which are required to be prepared or lodged under any law administered by the Securities Commission of Malaysia, Bank Negara Malaysia or the Registrar of Companies.
The MASB is established under the Financial Reporting Act 1997 (the Act) as an independent authority to develop and issue accounting and financial reporting standards in Malaysia. The MASB, together with the Financial Reporting Foundation (FRF), make up the frameworks for financial reporting in Malaysia. These frameworks comprises an independent standard-setting structure with representation from all relevant parties in the standard-setting process, including preparers, users, regulators and the accountancy profession. The MASB is made up of eight (8) members who are appointed by the Minister of Finance. It comprises the Chairman of the MASB, the Accountant-General and six (6) other members who posses knowledge and experience in the matters of financial accounting and reporting, and in one or more of the fields of accountancy, law, business and finance. In addition, the Minister of Finance has appointed three (3) advisors to the MASB, one each from Bank Negara Malaysia, the Securities Commission Malaysia and the Registrar of Companies
