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Technical Bulletin
Title : 62/2011: MASB Issues Internationally Compliant Accounting Framework and New FRSs
Access No : 62/2011
Edition :
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25 Nov 2011 Circular 62/2011

TO ALL ACCOUNTANTS

MASB ISSUES INTERNATIONALLY COMPLIANT ACCOUNTING FRAMEWORK AND NEW FRSs


In conjunction with the Malaysian Accounting Standards Board (MASB) plan to converge with the International Financial Reporting Standards (“IFRS”) in 2012, the MASB had on 19 November 2011, issued a new MASB approved accounting framework, the Malaysian Financial Reporting Standards (“MFRS Framework”).

The MFRS Framework

The MFRS Framework is a fully IFRS-compliant framework and comprises standards issued by the International Accounting Standards Board (“IASB”) that are/will be effective on and after 1 January 2012. The MFRS Framework is to be applied by all Entities Other than Private Entities for annual periods beginning on or after 1 January 2012, with the exception of entities that are within the scope of MFRS 141 “Agriculture” and IC Interpretation 15 “Agreements for Construction of Real Estate”, including its parent, significant investor and venturer (herein called “Transitioning Entities”).

Therefore, Transitioning Entities will have the option to select either the MFRS Framework or the Financial Reporting Standards (“FRS”) Framework as their financial reporting framework for annual period beginning on 1 January 2012. If a Transitioning Entity elects to apply the FRS Framework as its financial reporting framework for annual period beginning 1 January 2012, it shall disclose the fact and provide information on when it will first present financial statements in accordance with the MFRS framework. Consequently, adoption of the MFRS Framework by Transitioning Entities will be mandatory for annual periods beginning on or after 1 January 2013.

The MASB has decided to provide the transitional period for both the agriculture and real estate industries in view of recent projects and development at the IASB which may result in potential changes on current accounting treatments. As the IASB is planning to issue a new standard on revenue recognition next year that will subsume IC Interpretation 15 and may likely amend IAS 41 “Agriculture” (the equivalent of MFRS 141) requirements for bearer biological assets, the MASB believes that a transitional arrangement should be given until the IASB direction is clearer.

The FRS Framework

In light of the MASB’s decision for the Transitioning Entities, the MASB has withdrawn IC Interpretation 15 from the FRS framework.

In addition, MASB has also issued the following new/revised FRSs, amendments to FRSs and IC Interpretation:
i. Amendments to FRSs that are effective for annual periods beginning on or after 1 January 2012:
 
- Severe Hyperinflation and Removal of Fixed Dates for First-time Adopters (Amendments to FRS 1)
- Disclosures – Transfers of Financial Assets (Amendments to FRS 7)
- Deferred tax: Recovery of Underlying Assets (Amendments to FRS 112)
ii. Amendments to FRS that are effective for annual periods beginning on or after 1 July 2012:
 
- Presentation of Items of Other Comprehensive Income (Amendments to FRS 101)
iii. New/revised FRSs and IC Interpretation that are effective for annual periods beginning on or after 1 January 2013:
 
- FRS 9 Financial Instruments
- FRS 10 Consolidated Financial Statements
- FRS 11 Joint Arrangements
- FRS 12 Disclosures of Interests in Other Entities
- FRS 13 Fair Value Measurement
- FRS 119 Employee Benefits (as amended in November 2011)
- FRS 127 Separate Financial Statements (as amended in November 2011)
- FRS 128 Investments in Associates and Joint Ventures (as amended in November 2011)
- IC Interpretation 20 Stripping Costs in the Production Phase of a Surface Mine
   
The key differences between the FRS Framework and MFRS Framework are that in the former:
a) FRS 2012004 “Property Development Activities” will continue to be the extant standard for accounting for property development activities and not IC Interpretation 15; and
b) There is no equivalent standard to IAS 41.
 
Members can peruse the MASB approved accounting standards from the MASB website at the following link: http://www.masb.org.my.

Please be guided accordingly.


HO FOONG MOI (MS)
Executive Director
On behalf of the Registrar

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