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AN OVERVIEW OF FINANCIAL REPORTING ENVIRONMENT - Coggle Diagram
AN OVERVIEW OF FINANCIAL REPORTING ENVIRONMENT
STATUTORY REQUIREMENTS
Company Act 1965
Companies incorporated under the Act are legally enforceable
Principal legislation governing the formation and operation of companies in Malaysia
Repealed (abolished) earlier ordinances and provide formal rules on accounting and requirement for true and fair view reporting
Act is seen as the absolute disclosure requirements in absence of an accepted accounting framework
S.167
. Every company
must keep proper accounting and other records to sufficiently explain the transactions and financial position of the company
and to
enable true and fair profit and loss accounts and balance sheets
and related documents
to be prepared from time to time
9th Schedule sets out the disclosure requirement
S174
Powers and duties of auditors as to reports on accounts
S169(1)
.
AGM
: 1st -
not later than 18 months after the date of incorporation
, directors are responsible to present at its AGM, an audited profit a loss account, balance sheet and directors’ report
Subsequent AGM
:
must be held once in every calendar year
and at intervals of
not more than 15 months from the last AGM
S166A (w.e.f. 1.9.1998),
comply with approved accounting standards in
accordance with S27 of FRA 1997
S166A(3)
: directors are to
ensure that accounts are made
out in accordance with applicable approved accounting standards
S166A(4) & (5)
:
disclose by way of a note if compliance would not give a true and fair view of the results
of the business and the state of affairs of the company or group
(true and fair view over-ride of approved accounting standards)
S166A(6)
:
Conflict or inconsistency arises between approved accounting standards and 9th Schedule
, applicable approved accounting standard shall prevail
What is the difference between Companies Act 1965 and 2016?
Securities Industry Act 1983
Amended with effect from 1 April 1998,broadening the definition of insidertrading; increase the range of sanctions,including civil sanctions, to deter insidertrading and market manipulation;require additional disclosure fromdirectors and chief executive officers(CEOs)
Securities Commissions Act 1992
SC, a
self-fund statutory body empowered to regulate all matters relating to securities
as issue, offer or listing of securities in Malaysia
Mission is
to promote and maintain efficient, secure and transparent securities and futures market
as well as facilitating the orderly
development of an innovative and competitive capital market
- Guidelines on Corporate Disclosure Policy
Requires public companies to maintain high standards of disclosure
A public company is obliged to fully disclose to the public the information necessary to make informed investment decisions
If public company is listed, it should release information, which are expected to have a material effect on market activity in, and prices of, its listed securities.
Post-Listing Obligations
Requirements on submissions of reports by listed public companies Annual reporting , Interim & periodic financial reporting. Related party transactions and reporting
Accounting Standards and valuation of Asset
High standards of disclosure is to be maintained and public companies
are required to comply with the statutory and regulatory framework of accounting
Anti Money Laundering Act 2001
Money laundering is the process by which criminals attempt to conceal the true origin and ownership of the proceeds of their criminal activities or unlawful activity as listed in Schedule 2
Companies Act:
Invitation to public by private companies, Invitation to public to lend or deposit with a corporation and Inducing persons to invest money
Copyright Act:
Infringement of copyright
Securities Industry Act:
No licenses
Banking and Financial Institution Act 1989
BNM
issues guidelines on financial reporting practices for banking and financial institutions
established under the
Banking
and
Finance Act 1989(BAFIA)
departure from AS in the notes to the accounts
objectives of the Act are to provide new laws
For the licensing and regulation of the institutions carrying on banking, finance company, merchant banking, discount house and money broking business
For the regulation of institutions carrying on certain other financial businesses and
For the matters incidental thereto or connected therewith
Financial Reporting Act 1997
2 bodies
(FRF & MASB)
were formed to be responsible for setting accounting standards
S 27
requires compliance with approved accounting standards where financial statements are required to be prepared or lodged under any law administered by the Securities Commission, the Central Bank or the Company Commission of Malaysia (formally known as Registrar of Companies)
S166A
(amendment to companies Act to cater this change) – FRA provides the enforcement authority to the standards issued by MASB
The
Malaysian Accounting Standards Board
(MASB) was established under the
Financial Reporting Act 1997 (Act)
as the
standard-setting body of FRF whose functions shall be the determination and issuance of accounting standards for the preparation of financial statements
, which are required to be prepared or lodged under any law administered by the Securities Commission Malaysia, Bank Negara Malaysia or the Registrar of Companies.
FRF
MASB
REGULATORY REQUIREMENTS
KLSE Listing and Disclosure Requirements
KLSE
, a
private sector body
(self- regulatory body), incorporated to regulate companies listed on its Exchange and
does not have legal power to enforce compliance
but has power to delist, suspend or publicly reprimand errant listed companies for any non-compliance with its regulations
KLSE LISTING & DISCLOSURE REQUIREMENTS
Submission of Reports : Annual reporting • Printed annual report should be issued to company’s shareholders within a period not exceeding 6 months from the close of the financial year of the company
Notwithstanding the above, the annual audited accounts together the auditor’s and directors’ reports shall, in any case, be given to Exchange for public release, within a period not exceeding 4 months from the close of the financial year of the company
The annual audited accounts should be prepared in accordance with the accordance with the accounting standards and pronouncements of the MASB and the 9th Schedule of the Companies Act 1965
KLSE
MASB
MASB
to issue AS as approved accounting standards
FRS is to
review, revise or adopt as approved accounting
standards existing AS. Secondly, to
issue statements of principles (SOP)
for financial reporting and to
sponsor or undertake development of possible accounting standards
. Next, to
develop a conceptual framework
for the purpose of evaluating proposed AS
Functions of MASB is to c
onduct such public consultations as may be necessary
in order to determine the contents of accounting concepts, principles and standards. Next , also to
make such changes to the form and content of proposed accounting standards
as it considers necessary
Corporate Governance and Disclosure
A narrative statement to be included in the annual report of public listed companies in Malaysia
Disclose adequate information to enable informed assessment of the application of principles and code of best practice by management
Companies are required to disclose the statement of extent of Compliance with Best Practice as well as reasons for departure from best Practice if any
It is the
duty of BoD to provide this statement in discharging their responsibilities
. The directors are to
disclose information on extent to which a sound internal control for shareholder protection and safe guard company assets is maintained
What is corporate governance?
Other Reference