FAR 210

Notes Chapter 1
 • 1. The first documented financial reporting regulation were those of the
Companies Ordinance of 1940, 1946 and 1956, before Malaysia achieve
independence on 31 August 1957.
• 2. Malaysia Companies Act 1965, Financial Statement must contain a profit
and loss account, a balance sheet, a statement of source and application of
funds, and accompanying notes to the accounts
• 3. In 1998, Companies tend to use the Companies Act 1965 as the absolute
disclosure requirement rather than as minimum requirement.

Historical
• 4. In April 2016, the Companies Bill 2015 was approved in Parliament to
introduce a new Companies Act 2016 to replace the original Companies Act
1965.

Perspectiv
• -The key features of the Companies Act 2016 is the requirement for reporting
companies to comply with approved accounting standards issued by MASB.
• 5. MICPA was established in 1958 as a company limited by guarantee.

e •
•
-The first accounting guidance was in 1968.
6. In 1978, MICPA was admitted as a member of the IASC.
• 7.The MIA was established in 1967 under the accountant act 1967
• -The MIA operated as a large private sector accountancy book and its regulation
covers the practice of the whole accounting profession in Malaysia.
• -It remained inactive and concentrated mainly on the registration of accountants
in Malaysia, then in 1987 it was elevated to a national accounting body.
 • 1. The Function of FRF
• -To provide its view to the MASB.
• -To review the performance of the MASB.

The Current • -To be responsible for all the financial arrangement for
the operation of MASB.

Financial • -To perform as the Minister of Finance.

• 2. The FRF serves as an overseeing body of the

Reporting
operation and activities in MASB.
• 3. The Function MASB

Regime • -To issues new accounting standards

• -To review, revise or adopt as approved accounting
standards
• -To issues statement of principles for financial reportig.
 • 1.4.1 The Financial Reporting Act 1997
• 1. Section 27 of the Financial Reporting Act FRA
Statutory deals with compliance with approved accounting
standards of Malaysia Accounting Standards Board
Regulation (MASB).

s On •
•
2. There are 4 Standards of Accounting Boards
-International Accounting Standards Boards
Financial • -Financial Accounting Standards Boards, USA
•
Accountin •
-Accounting Standards Board, UK
-Australian Accounting Standards Boards, Australia
g and • 3.All 140 countries include UK and Australia have
converged their reporting standards to those of the
Reporting IASB.
 1.4.2 The Companies Act 2016

• -The Companies Act 2016 was approved by parliament in April 2016 to

replace the original Companies Act 1965.
• -Every Company incorporated must comply with Companies Act 2016
• 1. Compliance with approved Accounting Standards
• -Section 244(1) of the Act requires the Financial Statement of a Company
must comply with the approved accounting standards issued by the
MASB.
• 2. True And Fair View over-ride
• -Section 244(3) of the Act provides for directors of a company or holding
shall not be required to ensured the Financial Statements
• -Section 244(4) of the Act requires that if the Financial Accounting is not
made according to approved accounting standards, the company directors
shall:
• a. Disclose by a way of Note on the Financial Statements
• b. Give Particulars in the note of the quantified Financial effect on the
Financial Statements .
• 3. Compliance with other Law Of Authorities
• -Section 244(5) of the Act specifies that the Financial Statements prepared in accordance with the
approved accounting standards are subjects to any specifications, guidance or regulation as may be
issued by the authorities.
• 4. Conflict Between The Act And Approved Accounting Standards
• -Section 244(7) of the Act Clarifies that if a conflict or inconsistency arise between the provisions of an
applicable approved accounting standards and the Act in their respective application of the Financial
Statements of a company.
• 5. Accounting And Other Records To Be Kept
• -The Act requires every company to keep proper Accounting and other records to sufficiently explain
the transaction and the financial position of the company to truly see fair profit and loss.
• -For proper Accounting records, the account must record and kept:
• a. Enable them to be conveniently and properly audited
• b. Within 60 days of the completion of the transaction which it relate
• c. For seven years after completion of the related transaction and operation
• 6. System Of Internal Control
• -The directors of public and subsidiary of public company will have a
system of internal controls:
• a. The assets of the company are safeguarded against loss from
unauthorized use.
• b. All Transaction are fully authorized, and that the transaction are
recorded as necessary to enable the preparation of true fair and value.
• 7. Accounting Periods of Companies within the same group
• -Section 247(1) requires that a local parent company must ensure that
within two years after any companies becomes its subsidiary
 1.4.3 The Income Tax Act 1967

• 1. Taxation is considered a business expense that needs to be reflected in the income

statements
• 2. This Act requires company to keep sufficient record to enable the profit and loss from
the business for the basis period of any year.
• 3.When paying dividend, company needs to keep a record the dividend net of income tax
• 4.The actual Tax Payable could only be confirmed after the Inland Revenue Board(IRB).
• 5. Section 110 of the Act allowed the recipients shareholder to set off against its own tax
liability, the tax that the paying company had deducted and paid over the tax authority.
1.4.4 Regulation by the Securities Commission

• 1. The securities Companies is a public sector establish under the

securities act 1993.
• 2.The Securities Companies place great importance on diligence and
professional responsibilities of corporate adviser.
• 3.In 2007, The Capital Markets And Service Act 2007 was enacted in
Parliament to consolidated the Securities Industries 1983.
 1.4.5 The Audit Oversight Board

• 1. The Audit Oversight Board is under the Securities Commission Act 1933.
• 2.The AOB mission is to assist the securities Commission in overseeing the
auditors of public interest entities and to protect the interest of investors.
• 3.The AOB requires all auditors of public interest in entities to be registered
• 4.The AOB has the power to conduct inspection and monitor programmed on
registered auditors to assess the extend of there compliance.
1.4.6 The Regulation By Bursa Malaysia

• 1. The Bursa Malaysia in an exchange Holding Company incorporated under section 15 of the CMSA
2007 to regulated companies listed on its exchange.
• 2.The Bursa Malaysia Listing Requirements contain some provision relating to financial accounting and
reporting. They are:
• a. Submission Of Reports
• -The printed annual report shall be issued to the company shareholders within a period not exceeding six
months.
• b. Interim Reporting Requirements
• -Is reporting about the Balance sheet, Income Statement, Equity Statement, Cash Flow Statement, and
Explanatory Notes
1.4.7 Regulation by Bank Negara Malaysia

• 1. Bank Negara Malaysia has issue two guideline on Financial reporting practice of financial institutions established under the Banking
And Financial Institutions Act 1989:
• a. BNM/GP3: Classification of Non-Performing Loans and Provision for substandard, Bad and doubtful Debt
• b. BNM/GP8: Guidelines of Financial Reporting For licensed Institutions
• 2. The main provision of BNM/GP3 were as follows:
• -Where a loan is classified as non-performing, interest accrued should be suspended and credited to interest-in-suspense account.
• 3. Three specimens accounts of financial institutions, namely Model Bank Berhad, Modal Merchant Bank Berhad and Model Finance
Company Berhad had been prepared as guidance for standard practice on basis of following criteria:
• -Classification of assets and liabilities
• -Liquidity of Assets and liabilities
• -Maturity analysis of assets and liabilities
• -Concentration of assets and liabilities
 • 1.5.1 Pronouncement Before The Current
Financial Reporting
• 1.The standards were formulated in the
Accountin approved accounting standards and
g comprised:
• a. International Accounting Standards (IAS)
Standards adopter for operation in Malaysia.
• b. Malaysia Accounting Standards (MAS)
Pronounce
• 2. As of 31 December 1996, the extant
ment In approved accounting standards of the
profession consisted of 24 and eight MAS.
Malaysia
1.5.2 Pronouncement Under The Current Financial Reporting Regime

• 1. Due process of the MASB after 2013

• - Stage 1, MASB seeks public comment on IASB draft technical Pronouncement
• -Stage 2, Deliberation at the working group level on IASB draft pronouncement
• -Stage 3, Deliberation at the MASB Board
• -Stage 4, Issuance of Standard by IASB
• -Stage 5, Issuance of Standard by MASB
 • 1. The IASB issued draft technical
pronouncement, which may include
Discussion Papers, Exposure Drafts and
Request for views.
• 2. The MASB disseminate that draft
pronouncement together with an invitation
to comment to local constitutions by
Stage 1 publishing in the MASB website.
• 3.The due date to submit to the MASB is
usually one month.
• 4.Public forums may be organized if an
IASB draft pronouncement represent a
major change or shift from current practice.
 • 1. The IASB draft pronouncement are
deliberated in WG meetings to provide
comments and recommendations to the
Stage 2 issues in the draft pronouncement for the
MASB Boards consideration
 • 1. The public comments received and the
WG command and recommendations are
tabled at the MASB Board for deliberation
and consideration

Stage 3 • 2. The MASB Board considers all comments

received
• 3. A comment letter received is prepared and
submitted to the MASB
 • 1.Following the pronouncement of the final
standard (IFRS) by the IASB. The WG
further deliberates on the change made to
the original draft pronouncement
Stage 4 • 2.Th WG then makes recommendation on
the IFRS, including possible issuance for the
MASB Board
 • 1. The MASB Board considers the WG
recommendation and after due deliberations,
approved the IFRS for adoption as FRS.
• 2. A copy of the FRS is presented to the FRF
Stage 5 members for there comments before the
FRS is issued as an approved accounting
standard in Malaysia
Process of FRS and IC Interpretations from the MASB websites
 • 1. Process align with the board timeline to
1.5.3 Future that of IASB with the aim of putting the new
or amended standards in place for adoption
Pronounce and application within a timely manner.
ment-IFRS- • 2. The Board also requires that financial
statement simultaneously assert compliance
Compliant with IFSR as issued by the MASB dual
Financial statement compliance.

Reporting
Standards
Diagram:
Developm
ent of
Financial
Accountin
g and
Reporting