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AN OVERVIEW OF THE FINANCIAL REPORTING IN MALAYSIA - Coggle Diagram
AN OVERVIEW OF THE FINANCIAL REPORTING IN MALAYSIA
ACCOUNTING STANDARD PRONOUNCEMENTS IN MALAYSIA
Pronouncements Before the Current Financial Reporting Regime
Due Process of the MASB Before 2004
Pursued a policy of harmonization of MASB Standards so as to to be compatible, in all material respects with the standards of international and other national standard setters.
The Boards adopted 24 of the extant IASs and MASs issued by the Councils of the MIA and the MICPA.
MASB issued technical pronouncements other than MASB Standards and these include Statements of Principles (SOP), Urgent Issues Abstracts (UIA), Technical Releases (TR) and Guidance Notes (GN).
Purpose of technical pronouncement was to provide guidance on the application of generally accepted accounting principles to the resolution of a particular accounting issue.
Due Process of the MASB After 2003
Stage 1
: MASB seeks public comments on IASB's draft technical pronouncements.
Stage 2
: Deliberation at the Working Group level on IASB's draft pronouncements
Stage 3
: Deliberation at the MASB (the Board).
Stage 4
: Issuance of Standard by IASB.
Stage 5
: Issuance of Standard by MASB.
STATUTORY REGULATIONS ON FINANCIAL ACCOUNTING AND REPORTING
The Companies Act 1965
i) Every company incorporated under the Act must comply with the Act's provisions concerning accounting and reporting as they are legally enforceable.
ii) For proper accounting records, the accounts must be recorded and kept in such a manner as to enable them to be conveniently and properly audited, within 60 days of the completion of transactions to which they relates and for seven years after the completion of the related transactions or operations.
iii) In relation to accounting periods of companies in a group, the Act requires that a local parent company must ensure that within two years after any corporation becomes its subsidiary, the financial year of that subsidiaries coincide.
The Financial Reporting Act 1997:
i) Section 27 of the Financial Reporting Act (FRA) deals with compliance with approved accounting standards of the Malaysian Accounting Standards Board (MASB). It requires that where financial statements are required to be prepared or lodged under any law administered by the Securities Commission, the Central Bank or the Registrar of Companies, and approved accounting standards have been issued or adopted by the MASB.
ii) Foreign companies listed on a stock exchange in Malaysia to apply either MASB approved accounting standards or any acceptable international accounting standards issued by accounting standards issuing bodies recognised by MASB.
The Income Tax Act 1967
i) More relevant to the subject of taxation as it is mainly concerned with the ascertaining of chargeable income and tax payable under the Act.
ii) It has some significant impact on financial accounting and reporting because taxation is considered a business expense that needs to be reflected in the income statement.
Regulations by the Securities Commission
i) The Securities Commission (SC) is a public sector statutory body established under the Securities Commission Act 1993 with investigative and enforcement powers.
ii) Its main functions are the encouragement and promotion of the development of the capital market in Malaysia through the regulation and enforcement of all matters relating to the securities industry.
The Audit Oversight Board:
i) Established under Part 111A of the Securities Commission Acts 1993.
ii) Part 111A was incorporated in the Securities Commission Act by the Amendment in 2010 and the Act comes into force on 1 April 2010.
Regulations by Bursa Malaysia:
i) An exchange holding company (a private sector body) incorporated under Section 15 of the CMSA 2007 ii) To regulate companies listed on its Exchange.
Regulations by Bank Negara Malaysia:
Bank Negara Malaysia has also issued two sets of guidelines on financial reporting practices of financial institutions established under the Banking and Financial Institutions Act 1989. They are as follows:
a)
BNM/GP3:
Classification of Non-Performing Loans & Provision for Substandard and Bad & Doubtful Debts.
b)
BNM/GP8:
Guidelines on Financial Reporting for Licensed Institutions.
HISTORICAL PERSPECTIVE
Malaysian Institute of Certified Public Accountants (MICPA) 1958
Malaysian Institute in Accountants (MIA) 1967 under Accountant Act 1967
Malaysian Companies Act 1965
Securities Commission Malaysia (SC) established on 1/3/1993 under SC Act 1993
Companies Ordinance 1940, 1946 & 1956
THE CURRENT FINANCIAL REPORTING REGIME
2 body established:
i) Financial Reporting Foundation (FRF)
ii) Malaysian Accounting Standards Board (MASB).
Function FRF set in section 4(1) FRA:
i) To provide its view to MASB on matters that MASB seeks to undertake/ implement in relation to the MASB's function of issuing, reviewing, developing app acc standard.
ii) Review the performance MASB.
iii) Perform other function as Minister of Finance may prescribe by order published in the Gazette.
6/3/1997 Financial Reporting Act 1997 was gazette.
Function of MASB:
i) Issue new accounting stand as app accounting standard.
ii) Review, revise, adopt as app acc stand, existing acc stand
iii) Issue statement of principle for financial reporting.
iv) Perform such other function as Minister of Finance may prescribe by order published in the Gazette.
1996 Malaysian Government announced to establish new financial accounting & reporting.