Reasons Why Implementing IFRS in Malaysia is Necessary
In 2006, the Malaysian Accounting Standards Board (MASB) adopted the International Financial Reporting Standards (IFRS). Accordingly, with this decision come the changes in how Malaysian companies measure and record economic transactions. Implementing IFRS in Malaysia is an action to unify accounting standards globally.
Why is this IFRS necessary? This article discusses the implementation of IFRS in Malaysia. Here, we discuss what it means to adopt the IFRS and the reasons why we need this change.
So, why is implementing IFRS in Malaysia crucial?
The Convergence of Accounting Standards
The primary reason why Malaysia adopts the IFRS is to have one set of rules to govern the accounting function. The IFRS is the international accounting standard that is used globally by many countries and companies. Herein states the rules on how to properly quantify business transactions.
With IFRS, different companies can record similar transactions in the same manner. Of course, this is helpful for comparability purposes. Because of the unified standard, there is now a common criterion that allows appropriate and immediate comparison among companies inside and outside the country.
IFRS provides a means for countries to scale globally. Hence, local companies can now easily look into the public financial statements of foreign companies and benchmark their standing and performance. At the same time, foreign countries could also look into local businesses, when they plan to invest in a business in Malaysia.
Moreover, this convergence of accounting standards allows accountants from one country to work in another country. Before, the accountant has to learn a different set of accounting rules when moving to another country. Today, any accountant can move and aspire to grow to different countries implementing the IFRS.
Increase Economic Openness
As the economy of Malaysia develops, there is also an increasing number of multinational companies investing in the country. This creates a demand to improve the accounting standards of Malaysia. For instance, implementing IFRS in Malaysia has aided to support the country’s booming economy.
The country can now produce financial reports that are in sync with other countries. This entices more companies to set footholds in Malaysia as accounting interpretation and analysis is now easier for them.
More Opportunities for Accounting Talents
The change to IFRS is a total improvement of the whole accounting process. With the IFRS, issues, and disputes with the old standard are resolved. Further, it is also the overall development of the accountancy profession because now Malaysian accountants are knowledgeable and skilled with global standards.
With many companies looking to go global, the need for accountants who know the IFRS is increasing. Implementing IFRS in Malaysia has increased the demand for Malaysia’s accounting talents. Multinational companies are demanding more accounting talents from Malaysia who are knowledgeable and skilled in using the IFRS.
Moreover, the adoption of the IFRS has opened doors for accountants to go and work anywhere in the world. Before, Malaysian accountants were constrained to work exclusively in Malaysia because of the differences in standards. If they want to work abroad, they will have to study and earn a license again to work under different accounting standards. With the IFRS, these constraints are eliminated. Any Malaysian accountants can now work anywhere, as long as they use the IFRS.
Gives SMEs Room to Grow
Big businesses are not the only ones affected by the implementation of IFRS. The MASB also includes Small and medium companies in the organizations that would use IFRS. In 2015, MASB added the guidelines of how SMEs will use IFRS in their accounting systems.
This additional framework for SMEs gives equal chances for every company in Malaysia, whether big or small, to grow and without limitations. With this opportunity, SMEs can now easily transition from an SME to a large-scale business. This provision gives SMEs the chance to expand and grow internationally, too.
The change to IFRS is a long journey ahead. This change is a big leap for accounting students, academicians, regulatory bodies, and accountants in Malaysia. It is a big challenge to take on and the path towards a whole new IFRS accounting system is arduous.
But this change is necessary. This is our first step towards development and global growth. By the end of this road, Malaysia would have risen as a top accounting nation, and Malaysian talents soaring as competent and globally competitive professionals.
Quality Service Firm in Malaysia
3E Accounting is a global accounting firm providing professional accounting services in Malaysia. We employ qualified accountants in Malaysia who are trained and experienced in using the IFRS in any business industry. Our goal is to help businesses grow by providing accurate and relevant financial services.
Do you need expert assistance on how to implement IFRS in your business? Contact 3E Accounting today!