IAS 41 is among the topics in the Agenda Consultation The new revenue standard is anticipated to subsume the requirements of IC 15 upon issuance.
The IASB recently issued a revised exposure draft and deliberations are ongoing whether the real estate industry concerns will be addressed and whether the changes will be the preferred approach of the industry. How does the Board address the issues facing the agriculture and real estate industries? In other words, adoption of the MFRS Framework by these entities will be mandatory for annual periods beginning on or after January 1, The Board considered whether the option should be restricted to entities involved in the management of such biological assets and property development activities but in view of the uncertainty at this stage whether the IASB agrees with the Issues Paper proposals or will make further amendments to IAS 41 and the new revenue standard, the Board decided the option should be extended to all entities affected by MFRS and IC 15, such as entities involved in livestock farming or the construction of real estate.
An entity that consolidates or equity accounts or proportionately consolidates another entity that has applied FRSs as its financial reporting framework may itself apply FRSs as its financial reporting framework.
The Board intends the exemption is to assist a particular type of industry. An entity shall consider the relief given in paragraphs D16 and D17 of MFRS 1 when an entity becomes a first-time adopter earlier than its subsidiary or associate or joint venture or vice versa. The rationale to provide the transitional period for both the agriculture and real estate industries is because of the imminent accounting standard changes on the horizon that may change current accounting treatments.
The Board is not aware of any other potential changes to other standards by the IASB in the near future that would necessitate similar treatment for other industries. How does a preparer take advantage of this option and what do they need to do? An entity that avails to the option should take the opportunity to educate its investors and stakeholders of the possible outcome if MFRS is amended and of the requirements of the new revenue standard.
However the entity must take cognisant that its financial statements will not be able to assert compliance with IFRS. Therefore management and Board of Directors need to consider the implications arising from its decision e. In addition, entities that elect to use the option will have to disclose in their financial statements the reasons for not adopting the MFRS framework and to disclose the fact that its financial statements are prepared in accordance with the existing FRS Framework and not the MFRS framework.
The auditors shall conduct the audit in accordance with approved standards on auditing in Malaysia. In particular, in forming an opinion on whether the financial statements are prepared, in all material respects, in accordance with the applicable financial reporting framework, auditors shall evaluate whether the financial statements of the entity electing the option are prepared, in all material respects, in accordance with the requirements of the existing FRS Framework.
The Board intends the option to assist a particular type of entity in view of the timing of the related IASB projects and believes that the number of entities that will elect the option will not represent a significant portion of the total market capitalisation.
In any case, that exemption is a transitional measure as we hope the issues will be resolved by end of Such knowledge will help entities facilitate the need for appropriate internal reporting, information systems and training to accommodate their particular circumstances.
In addition, entities should establish the appropriate implementation plans and assess the potential impact of changes in current FRS and IFRS during the transition period. Among others, auditors should take advantage of platforms provided to share their knowledge and also participate in the due process of adopting new standards. They should also be consistently keeping up to date with technical developments. Auditors also need to be equipped with a deep understanding of the requirements of standards effective on 1 January , particular the new ones in order to be able to assist the industry in implementation aspects.
Academia, though not directly involved in the implementation process, have a significant role to play in the education of IFRS so that graduates will be equipped with IFRS knowledge when they join the capital market. Much was accomplished towards our goal to Converge and we will, in , refocus our efforts on the remaining issues.
With the release of the MFRS Framework, and the one-year extension of the FRS Framework, the main tasks of include assisting all stakeholders in the adoption of the MFRS Framework and monitoring the progress on agriculture and real estate accounting guidance.
In addition to convergence initiatives, we also want to further promote the application of IFRS to Islamic finance transactions across the globe. Finally, I want to sincerely thank all the staff who have contributed their time and resources to ensuring Malaysia would be IFRS compliant on 1 January The Board could not have achieved its objectives without their efforts. I am also thankful to the FRF members for their continued guidance and direction in their independent oversight capacity.
Finally, I would like to commend the efforts of the Malaysian regulators, professional bodies, academia, professional firms, the commercial sector, members of the Board and Ministry of Finance for continuing their commitment to support the efforts of the MASB and make IFRS compliance within Malaysia a reality.
To accomplish this goal the Board undertook significant activities and initiatives, which are summarised into the following areas: IFRS Convergence Engaging various stakeholders locally and internationally Sharing knowledge and experiences The push for change and clarification in IFRS guidance Seeking clarification for service concession arrangements Islamic finance developments These areas are elaborated on below.
Engaging various stakeholders locally and internationally In my second year as Chairman, I reaffirmed my commitment to engaging both local and international stakeholders through participation in international groups, hosting and attending public forums and road shows, and publishing articles.
During the year, we held and participated in various events as follows: International participation We were very active in international forums. Organising local forums In we also hosted national events, including public forums, road shows and meetings with regulators and other stakeholders.
Sharing knowledge and experiences One of our goals of was to increase our presence globally. Agriculture Specific to agriculture, the Secretariat continued to lobby for changes in IAS 41 in all international arenas — specifically asking to have separate measurement requirements for bearer biological assets, such as palm oil plants. Real estate With regards to real estate, some in Malaysia believe that IFRIC 15, as written, may lead to the prohibition of using the percentage-of-completion method for local real estate development sales.
Conclusion It is clear that was a busy year. For instance, are IFRS Standards required or permitted for companies whose securities do not trade in a public market? If the jurisdiction currently does NOT require or permit the use of IFRS Standards for domestic companies whose securities trade in a public market, are there any plans to permit or require IFRS Standards for such companies in the future?
Yes, financial statements that have been prepared in accordance with Malaysian Financial Reporting Standards are required to include an explicit and unreserved statement of compliance with IFRS Standards. If yes, how does that process work? Does the jurisdiction have a formal process for the 'endorsement' or 'adoption' of new or amended IFRS Standards including Interpretations in place?
If yes, what is the process? If yes, what are the changes? If they are translated, what is the translation process?
A single control model for consolidation, involvement with Other Entities and Fair Value Measurement? These are:. IAS 27 r deals only with accounting for investments in subsidiaries, joint ventures and associates in the separate financial statements of an investor retains the part on separate financial statements in the former IAS Disclosure requirements on subsidiaries, joint arrangements, associates and involvement in unconsolidated structured entities are prescribed in IFRS The Appendix to this article provides guidance on the application of the various IFRSs for a reporting entity?
IFRS 13 conceptualises the meaning of fair value and provides a framework on how to measure fair value of assets, liabilities and equity required or permitted by other IFRSs. This article examines the history, rationale and reasons for the new IFRSs, explains the salient features and draws some implications on practice.
It aims to assist preparers and other users understand better the requirements of the new IFRSs and prepare for application when they become effective in Malaysia.
The IASB has published proposals to introduce new models for revenue and lease accounting. The proposed new accounting models would affect all reporting entities and would bring about fundamental changes to the current practice.
Hence, it is imperative that preparers and other users of financial statements are aware, and understand these developments, which would latter be part of the IFRS Framework when the proposals are finalised.
This article examines the history, reasons for and rationale of the proposed standards, explains the salient features and draws some implications on practice. Student Resources - Talks by visiting guests. Research Project Guidelines for Undergraduates. Articles by Staff. Audit Exemption for Private Companies. News Alert May Accounting IASB.
Accounting MASB. Accounting Notes. International Business. Amendments to FRSs contained in the document entitled? Improvements to FRSs ". Amendment to MFRS The amendment clarifies that an entity is required to present a third statement of financial position only if a retrospective application, retrospective restatement or reclassification has a material effect on the information in the statement of financial position at the beginning of the preceding period.
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