|Extent of IFRS application||Status||Additional Information|
|IFRS Standards are required for domestic public companies||Public companies are required to use the MFRS Framework, which is identical to IFRS Standards.|
|IFRS Standards are permitted but not required for domestic public companies|
|IFRS Standards are required or permitted for listings by foreign companies||Permitted.|
|The IFRS for SMEs Standard is required or permitted||SMEs are permitted to use the Malaysian Private Entities Reporting Standard (MPERS), which is substantively equivalent to the IFRS for SMEs Standard except for the requirements for property development activities plus some terminology changes.|
|The IFRS for SMEs Standard is under consideration|
In August 2008, the MASB announced its plan to converge Malaysian Financial Reporting Standards (MFRS) with IFRS Standards in 2012. See this press release.In November 2011, the MASB issued the MFRS Framework which is Malaysian Financial Reporting Standards (MFRS) that are, in substance, word-for-word in agreement with all IFRS Standards in effect as of 1 January 2012. Moreover, MASB’s plan is to maintain the identity of MFRS and IFRS Standards going forward by adopting all new or amended IFRS Standards.
On 2 September 2014 the MASB announced that the mandatory effective date for Transitioning Entities to migrate to the MFRS Framework is 1 January 2017. The MASB also announced the adoption of two recent IFRS Standards as part of the MFRS Framework as follows:
The announcement (MASB Notice 2014-09-02) is here.
On 8 September 2015, the MASB announced that in the light of the IASB Board’s deferral of IFRS 15 Revenue from Contracts with Customers, the mandatory effective date for Transitioning Entities to migrate to the MFRS Framework will also be deferred to 1 January 2018. The MASB has consistently used the effective date of MFRS 15 (which is, in substance, word-for-word IFRS 15) as the basis for setting the effective date for the Transitioning Entities to apply the MFRS Framework. See this press rel="noopener noreferrer" release and announcement (MASB Notice 2015-10-28).
Financial statements that have been prepared in accordance with the MFRS are required to include an explicit and unreserved statement of compliance with IFRS Standards.
Non-private entities were mandated by law to apply the MFRS Framework (ie IFRS Standards) for annual periods beginning on or after 1 January 2012, with the exception of Transitioning Entities (TEs).
TEs are mandated by law to apply the MFRS Framework for annual periods beginning on or after 1 January 2018, with early application permitted. In the meantime, TEs that have not chosen to apply the MFRS Framework will continue using the existing Malaysian national GAAP (known as the FRS Framework) in its entirety.
TEs are entities that are subject to the application of MFRS 141 Agriculture (identical to IAS 41 Agriculture) and/or Malaysian Interpretation 15 Agreements for Construction of Real Estate (identical to IFRIC 15 Agreements for the Construction of Real Estate). An entity that consolidates or equity accounts another TE that has chosen to apply FRS (rather than MFRS) may itself choose to apply the FRS Framework. The MASB had permitted TEs to continue to use FRS until the IASB Board completed its projects on revenue recognition and bearer biological assets. Those projects are now completed, and MASB has adopted IFRS 15 and the bearer plant revisions to IAS 41 as part of the MFRS Framework.
Through 31 December 2015, private entities were permitted to use the MFRS Framework (identical to IFRS Standards) or they were permitted to use the Private Entity Reporting Standard (PERS) issued by the MASB. However, with effect from 1 January 2016, PERS is withdrawn and be replaced by the Malaysian Private Entities Reporting Standard, MPERS. MPERS is word-for-word the IFRS for SMEs Standard (including the Amendments to the IFRS for SMEs Standard issued in May 2015) except for the requirements for property development activities, plus some terminology changes (details are in the section below on Application of the IFRS for SMEs)
Under MASB guidelines, an entity that is a subsidiary, an associate, a joint operation, or a joint venture whose parent/investor is required by the Malaysian securities or banking regulator to prepare full MFRS financial statements must itself prepare full MFRS financial statements. That is, it does not meet the definition of a private entity under MASB guidelines and cannot use the PERS.
Section 7 of the Financial Reporting Act 1997 (FRA) empowers the Malaysian Accounting Standards Board to issue approved accounting standards for application in Malaysia. Under section 26D of the FRA, financial statements that are prepared or lodged with the Central Bank, Securities Commission, or Registrar of Companies are required to comply with the standards issued by MASB. Consequently, the accounting standards issued by MASB are given the force of law.
The MASB must make a public announcement of the issuance of a new or amended MFRS that is equivalent to a new or amended IFRS so as to give the standard the legal status of MASB Approved Accounting Standards under the Financial Reporting Act 1997. Please see this link for the announcement of issuance of the MFRS Framework and FRS Framework.
On 14 February 2014, the MASB issued a new set of framework for its private entities, MPERS (Malaysian Private Entities Reporting Standard). MPERS takes effect for financial statements with annual periods beginning on or after 1 January 2016, with early application permitted. The MPERS is, in substance, word-for-word the IFRS for SMEs Standard issued by International Accounting Standards Board in July 2009 except for the requirements on income tax and property development activities, plus some terminology changes (details below).
On 28 October 2015, the MASB issued Amendments to MPERS, word-for-word the 2015 Amendments to IFRS for SMEs Standard. With those amendments, section 29 on income taxes has been made, in substance, word-for-word the requirements on income taxes prescribed in the Amendments to IFRS for SMEs Standard issued in May 2015. Consequently, the MPERS (including the Amendments to MPERS) is, in substance, word-for-word the IFRS for SMEs Standard (including the Amendments to IFRS for SMEs Standard) except for the requirements for property development activities plus some terminology changes.
Section 1 Small and Medium-sized Entities has been modified to prescribe the applicability of the MPERS in the Malaysian context. In this regard, all references to ‘SMEs’ and ‘public accountability’ in Sections 1-35 have been replaced by the term ‘private entities’.
Section 9 Consolidated and Separate Financial Statements requires the ultimate Malaysian parent to prepare consolidated financial statements regardless of whether its ultimate parent that is not incorporated in Malaysia prepared consolidated financial statements.
Section 34 Specialised Activities has been amended to provide guidance on the accounting for property development activities in Malaysia. Consequently, Example 12 on Agreements for the Construction of Real Estate contained in the Appendix to Section 23 Revenue has been removed.
Entities that meet the definition of a private entity are permitted to use MPERS. A private entity is a private company, incorporated under the Companies Act 1965, that –
Private entities must choose their accounting framework as follows: