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Malaysia Financial Reporting Standards
The Financial Reporting Framework in Malaysia very simply, works like this – registered companies in Malaysia are all required to prepare statutory financial statements. And the financial reporting framework serves as a guideline to ensure each criterion that is needed is being fulfilled.
These statements that are prepared must be in accordance with the approved accounting standards which have been set forth by the Malaysian Accounting Standards Board, also known as the MASB for short.
This financial reporting framework applies to all local companies registered here in Malaysia. For foreign companies, it is a little different. Foreign companies who are listed on the Malaysian Stock Exchange can prepare their financial statements or reports in accordance with certain internationally recognised accounting standards. An example of one of these internationally recognised standards is the International Financial Reporting Standards, or the IFRS.
Before we look at the Malaysian Financial Reporting Standards, it is first important to understand the types of approved accounting standards by the MASB that are recognised and practiced in Malaysia.
The Types of Approved Accounting Standards in Malaysia
There are three types of approved accounting standards here in Malaysia:
- The Malaysian Financial Reporting Standards (MFRS) – This is the MASB approved accounting standards for entities, but this does not include private entities
- Private Entity Reporting Standards (PERS) – This is the MASB approved accounting standards for all private entities. However, this has been withdrawn effective 1 January 2016.
- Malaysian Private Entities Reporting Standards (MPERS) – This replaces the previous PERS and is in effect from 1 January 2016.
With the implementation of the new MPERS, private entities can now choose between the existing PERS framework, or apply the Malaysian Financial Reporting Standards framework in preparing their financial reports.
The Malaysian Financial Reporting Standard
The Malaysian Financial Reporting Standard (MFRS) in generally used and practiced by a company that has a holding company which needs to prepare group consolidated accounts which are compliant with the full financial reporting standards that have been set by the MASB.
Companies that would most benefit from the MFRS are companies which are planning for an IPO especially. For Small and Medium Entities (SMEs), there are a couple of regulations that must be adhered to.
Some of what these regulations entail for SMEs are:
- All investment in associates must be accounted for
- Fair value for information disclosures must be comprehensive
- The types of statements that need to be prepared include profit and loss statement, a comprehensive income statement, and a statement for the company’s financial position at the beginning for the comparative period.
A full and detailed description of the MFRS can be found at MASB.
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