TOPIC 1

FINANCIAL REGULATORY
FRAMEWORK IN MALAYSIA
 Know the Understand Understand the
Aware on link between Know the
historical the Statutory
the Financial MASB & MFRS roles of
perspective & regulations on
Regulatory the current Framework with accountant
Financial
Framework financial international
in Malaysia.
Accounting in society
reporting regime and Reporting standards

1 2 3 4 5
OBJECTIVES
 TOPIC OVERVIEW

Historical Perspective
The link between MASB
and the MFRS Framework
with the international
accounting standards
Current Financial
Financial
Reporting Regime Regulatory
FW
The Role of
Statutory Regulations on Accountants in
Financial Accounting and Society
Reporting
 The development of financial accounting and
reporting practices in Malaysia
Current Regime
Historical perspective
Financial Reporting Act
Financial reporting regulations
• The Companies Ordinances (and 1997 (FRA)
amendments) of 1940,1946,1956 (before • was passed and gazetted on 6 March
independence) 1997
• The Companies Act 1965, also contains the • 2 independent bodies were established
under FRA 1997:
*Ninth Schedule (the revised Ninth
Schedule remains in force till now) • The Financial Reporting Foundation
* specifies the disclosure requirements in the FS of Malaysian company
(FRF)
• The Malaysian Accounting Standards
Accounting profession Board(MASB)
• The Malaysian Institute of Certified Public
Accountants(MICPA) 1958 – members carry the title of a
CPA
* FRF acts as an overseeing body of
• The Malaysian Institute of Accountants (MIA) 1967 – to the operation and activities of the
regulate the practices of accounting profession in MASB.
Malaysia
* Refer to Page 5 & 6 (Tan Liong Tong)
• The Securities Commission(SC) 1993 – a regulatory
authority in setting the financial reporting landscape for FRF & MASB Functions
 The Statutory Regulations/Requirements on
Financial Accounting and Reporting
The Financial Reporting Act 1997 The Audit Oversight Board 2010
(established under part 111A of SCA 1993)

The Companies Act 1965

The Capital Market and Service Act
(CSMA) 2007,
Section 15 (Bursa Malaysia)
The Income Tax Act 1967
The Banking and Financial
The Securities Commission Act 1993 Institutions Act 1989 (Bank Negara
Malaysia)
BNM/GP3
BNM/GP8
 The Setting of Accounting Standards In Malaysia
Under the current financial
2 professional accountancy bodies reporting regime
that regulated the FAR practices Due process of the MASB before 2004
• 1997 , MASB standards were developed with
Before • MIA only regulate members but did reference to International Accounting Standards
not have the statutory power to
the • MICPA enforce compliance
Committee(IASC)
current • 1998 , MASB adopted 24 IASs and MASs
To ensure widest compliance issued by MIA and MICPA.
financial • 2004 , 32 MASB standards, 1 IAS, 3 MASs,
with the approved standards in
reporting the published financial • 1 TR( technical release) were effective for
regime statements application.

•Due process of the MASB after 2003

Members were bounded by the mandatory
compliance which formulated in the Approved
Accounting Standards comprises of:
• International Accounting Standards (IASs)
adopted for operations in Malaysia
• Malaysian Accounting Standards (MASs)
• 2004, MASB standards were renamed as
Financial Reporting Standards (FRSs).
• 2008, FRF and MASB had planned to bring
Malaysia to full convergence with IFRS in
2012.
• 2011, name change from IFRS-compliant
Financial Reporting Standards to MFRS
Framework.
• 1/1/2014, MFRSs = IFRSs. Refer pg 21
New Due Process of FRS and IC Interpretation
 Private Entity Reporting Standards
#All private entities in Malaysia should apply PERS. (effective February 2006) or MFRS.

In February 2014, MPERS Framework was endorsed as a

Standard for application by private entities. (Based on
Due process IASB’s IFRS For SME issued in July 2009) with a choice
of:
• To continue applying the existing PERS framework
• Voluntarily adopt the MFRS Framework used by public
entities
• By 1 January 2016, makes a mandatory transition to the
new MPERS Framework.

2010, Malaysia had adopted and issued an

Exposure Draft ED72 Financial Reporting
Standard for Small and Medium-Sized
Entities which is identical to IFRS for Small
and Medium-Sized Entities.
Development of Financial Accounting and Reporting in Malaysia
 The Role of Accountants In Society
Main Role
to ensure the quality of
financial reporting is not
overly emphasized.
Public Trust
maintain high standards but also
have a key role to play in helping
organizations to act ethically.
need to be trusted to provide
public value. Accountants will
lose their legitimacy as
protectors of public interest if
there is no public trust.
Ethics
exercise professional judgment in
performing their roles so that
when times get challenging, they
do not undertake actions that will
result in the profession losing the
public’s trust as protectors of
public interest.
uphold of values of integrity,
objectivity, professional
competence and due care,
confidentiality and professional
behaviour.
* Authors: Len Jui CPA MBA, is KPMG Huazhen’s Partner &
Jessie Wong CPA PhD, is KPMG Huazhen’s Director
THANK YOU