Harmonisation or Adoption of IFRSs? – The Malaysian Perspective Raja ARSHAD-UDA Chairman, Malaysian Accounting Standards Board Executive Chairman, PricewaterhouseCoopers Malaysia

Harmonisation or Adoption of IFRSs (The Malaysian Perspective) Raja Arshad Uda Raja Arshad Uda Chairman, Malaysian Accounting Standards Board Executive Chairman, PricewaterhouseCoopers, Malaysia © 2002 PricewaterhouseCoopers. PricewaterhouseCoopers refers to the individual member firms of the world-wide PricewaterhouseCoopers organisation. All rights reserved. PwC

PricewaterhouseCoopers Malaysian Accounting Standards Board The Malaysian Perspective Financial Reporting Framework Prior to Malaysian Institute of Accountants (MIA) and Malaysian Institute of Certified Public Accountants (MICPA) FRA Established: n Financial Reporting Foundation (FRF) 19 members n Malaysian Accounting Standards Board (MASB) 8 members and 3 advisors FRA: Financial Reporting Act

PricewaterhouseCoopers Malaysian Accounting Standards Board The Malaysian Perspective Comprehensive due process Comprehensive due process To give ownership to preparers and users, particularly, to non- accountants for greater acceptance, and hence, compliance To provide wide consultation To address issues of difficulty in compliance To address specific local issues To fully understand IASB’s stand on certain issues Companies Act 1965 (Amended 1998) s166A (Not confined to PLCs) KLSE Listing Requirements

PricewaterhouseCoopers Malaysian Accounting Standards Board The Malaysian Perspective Commitment to Harmonisation MASB Standards are based on IASs / IFRSs Differences, if any (not significant): –To cater for:  specific local issues  local regulatory & statutory requirements –Certain Standards:  provide additional guidance  include guidance from SICs –Provide exemption to certain enterprises

PricewaterhouseCoopers Malaysian Accounting Standards Board The Malaysian Perspective Differences with IAS (i)Local Issues (Stringent / Stricter) Stricter: Local Circumstances E.g. MASB 1, Presentation of Financial Statements and MASB 5, Cash Flow Statements –requires both company & consolidated cash flow statements. Stricter: Greater transparency & corporate governance E.g. MASB 8, Related Party Disclosure –disclosure of identity (not in IAS 24) –disclosure terms & conditions of each different type of transaction (IAS 24 only requires pricing policies) (ii)Local Regulatory Requirements / additional guidance E.g. MASB 8, Related Party Disclosures: definition of close members of family – per Malaysian Companies Act 1965 (members of directors family)

PricewaterhouseCoopers Malaysian Accounting Standards Board The Malaysian Perspective IAS – Narrowing the Gap IAS STANDARDS IAS with MASB equivalent Standards 26 1/2 IAS issued as EDs 3 1/2 IAS with no equivalent MASB Standards / EDs 4 34 IOSCO RECOMMENDED IAS STANDARDS IAS with MASB equivalent Standards 26 1/2 IAS issued as EDs 2 1/2 IAS with no equivalent MASB Standards / EDs 1 30

PricewaterhouseCoopers Malaysian Accounting Standards Board The Malaysian Perspective Local Standards (no IAS equivalent) Extant Local Standards Adopted by MASB: MAS 5, Accounting for Aquaculture MAS 7, Accounting for Property Development Local Standards In Progress: ED 26, Financial Reporting by Unit Trusts ED 27, Property Development Activities MASB Islamic Standard Issued MASB i-1, Presentation of Financial Statements of Islamic Financial Institutions

PricewaterhouseCoopers Malaysian Accounting Standards Board The Malaysian Perspective Going Forward Should MASB Continue to Issue MASB Standards or Adopt IFRSs? Case for adopting IFRS –Alignment with global standards –Perception that local Standards are inferior than IASs / IFRs will be overcome However, can only be considered after addressing the following issues: –ownership issue –specific regulatory and local issues –compliance difficulty –exempt enterprise –local standards

PricewaterhouseCoopers Malaysian Accounting Standards Board The Malaysian Perspective Going Forward Possible Solutions: Ownership issue –Greater participation – longer exposure period required –Bigger Voice – presently, comments on IASB Exposure Drafts & representation in SAC –Major jurisdictions have bigger voice through liaison in standard setting role Specific regulatory and local issues –To include in KLSE Listing Requirements / Companies Act 1965

PricewaterhouseCoopers Malaysian Accounting Standards Board Possible Solutions: Compliance difficulty –Guidance documents from IASB –More Implementation Guidance (IG), e.g. IG on IAS 39 Exemption for exempt enterprise –IASB to develop small company GAAP? Local standards The Malaysian Perspective Going Forward

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