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TOPIC 1

FINANCIAL
REGULATORY
FRAMEWORK IN
MALAYSIA
OBJECTIVES
 Understand the development of
financial accounting and reporting
practices in Malaysia
 Understand the statutory
regulations/requirements of financial
reporting
 Understand the setting of accounting
standards in Malaysia
 Aware on the Financial Regulatory
Framework in Malaysia.
 Know the historical perspective and
the current financial reporting regime.
 Understand the Statutory regulations
on Financial Accounting and Reporting.
 Understand the link between MASB and
MFRS Framework with international
standards.
 Know the roles of accountant in
society.
THE DEVELOPMENT OF FINANCIAL
ACCOUNTING AND REPORTING PRACTICES IN
MALAYSIA
The origin of financial reporting in M’sia
(Financial reporting regulations)
1. Company Ordinances 1940,1946,1956
2. Companies Act 1965, Ninth schedule(the revised Ninth
schedule)
3. Companies Act 2016

The origin of financial reporting in M’sia


(Accounting profession)
4. Malaysian Institute of Certified Public Accountants(MICPA)
1958
5. Malaysian Institute of Accountants 1967
6. Bank Negara Malaysia (BNM) 1959 (regulatory authorities)
7. Securities Commission(SC) 1993 (regulatory authorities)
THE DEVELOPMENT OF FINANCIAL
ACCOUNTING AND REPORTING PRACTICES IN
MALAYSIA
Current Financial Reporting Regime
1. Financial Reporting Foundation(FRF)
2. Malaysian Accounting Standards Board(MASB)
Both bodies were established under Financial
Reporting Act 1997.
FRF acts as an overseeing body of the operation
and activities of the MASB.

FRF Function ??? refer pg 3


MASB Function??? refer pg 3 - 4
THE STATUTORY REGULATIONS /REQUIREMENTS OF
FINANCIAL REPORTING
1. The Financial Reporting Act 1997
2. The Companies Act 2016
3. The Income Tax Act 1967
4. The Securities Commission Act 1993
5. The Audit Oversight Board 2010 (established
under part 111A of SCA 1993)
6. Capital Market and Service Act 2007, Section
15 (Bursa Malaysia)
7. Banking and Financial Institutions Act 1989
(Bank Negara Malaysia)
BNM/GP3
BNM/GP8
The Companies Act 2016 in force on 31 Ja
nuary 2017:
10 Things To Immediately Prepare For
(5) No-Par Value Comes into Effect
The no-par value comes into effect. Firstly,
this means that the issuance of all shares no
longer carries a par value. That also means
that there is no more concept of prohibiting
the issuance of shares at a discount. The
directors now have the discretion and the duty
to determine the appropriate value for the
shares when issued.
THE SETTING OF ACCOUNTING STANDARDS IN
MALAYSIA
Before the current financial reporting regime:
1. MIA
2. MICPA
(Both bodies are private sector)
Role: to ensure widest compliance with the
approved standards in the published financial
statements.
THE SETTING OF ACCOUNTING STANDARDS
IN MALAYSIA
Under the current financial reporting regime:

Due process of the MASB before 2004


1. 1997 , MASB standards were developed with
reference to International Accounting
Standards Committee(IASC)
2. 1998 , MASB adopted 24 IASs and MASs
issued by MIA and MICPA.
3. 2004 , 32 MASB standards, 1 IAS, 3 MASs,
1 TR( technical release) were effective for
application.
THE SETTING OF ACCOUNTING STANDARDS
IN MALAYSIA
Due process of the MASB after 2003
1. 2004 , MASB standards were renamed as
Financial Reporting Standards (FRSs).
2. 2008, FRF and MASB had planned to bring
Malaysia to full convergence with IFRS in
2012.
3. 2011, name change from IFRS-compliant
Financial Reporting Standards to MFRS
Framework.
4. 1/1/2014, MFRSs = IFRSs. Refer pg 16 -18
PRIVATE ENTITY REPORTING STANDARDS
All private entities in Malaysia should apply PERS.
(effective February 2006) or MFRS.
PERS – Private Entity Reporting Standards.

Due process,
1. 2013, MASB issued MASB Exposure Draft ED77 Malaysian
Private Entities Reporting Standard to propose a single
MPERS Framework for private entity reporting in Malaysia.
2. February 2014, MPERS Framework was endorsed as a
Standard for application by private entities which is based
on IFRS for Small and Medium-Sized Entities.

3. Effective 2016, Malaysia will use


MPERS(previously known as PERS) for
its private entities.
MALAYSIAN PUBLIC SECTOR
ACCOUNTING STANDARDS (MPSAS) 
 The Preface to Malaysian Public Sector
Accounting Standards was issued in March 2013.
 The Preface should be used as a reference for
interpreting Exposure Drafts, Recommended
Practice Guidelines and Standards developed
and issued by the AGD.
 GOVERNMENT
The link between MASB and the MFRS
Framework with the international accounting
standards

 - The role of IASB and the Application of IFRS


as Financial Reporting Standards
 - Principles-based standards

(the use of estimates and professional judgement


in applying the standards)
 In 2008, MASB issued a statement about their
plans to bring Malaysia to full convergence with
IFRS by 1 January 2012.
 As part of the convergence, a new IFRS-
compliant framework (herein after referred to as
the “MFRS Framework”) will be introduced
effective 1 January 2012.
 Investors would have better understanding of
financial statements prepared by companies in
Malaysia and in making comparisons between
companies worldwide as investors are
increasingly making decisions in a global context.
 Therefore it is important the Malaysian capital
market uses internationally recognised standards
for financial reporting purposes.
BRIEF INTRODUCTION ON THE ROLE OF
ACCOUNTANTS IN SOCIETY
 - Public interest
 - Ethics
 An accountant performs financial functions
related to the collection, accuracy,
recording, analysis and presentation of a
business, organization or company's financial
operations.
 Generally, the accountant can also deal with
third parties, such as vendors, customers and
financial institutions.
 The information they provide is crucial in
aiding managers, investors and others in
making critical economic decisions.

 Accordingly, ethical improprieties by
Accountants can be detrimental
to society, resulting in distrust by the
public and disruption of efficient capital
market operations.
 Professional accountants play a major role
in reducing corruption. 
 The accountancy profession—acting in the
public interest—is an important part of
national governance architectures that
confront corruption, in partnership with
good governance and strong businesses.
 Professional ethics, education, and
oversight—at the core of the global
accountancy profession—are key to our
positive impact in tackling corruption.
THE TERMS
 IFRS – International Financial Reporting
Standards
 MFRS – Malaysian Financial Reporting
Standards
 IAS – International Accounting Standards
 IC – Interpretation Committee
 IFRIC – International Financial Reporting
Interpretations Committee(IFRS
Interpretations Committee)
 SIC – Standard Interpretations Committee
 MASB - Malaysian Accounting Standards Board
TUTORIAL
 FINANCIAL ACCOUNTING AND REPORTING 1
(FAR410)
 Tutorial Chapter 1
 Please answer the questions
 To be discuss during the tutorial
 Write your answer in the blank space
provided.