The Malaysian Accounting Standards Board (MASB) has set
1 January 2012 as the deadline for full adoption of
IFRS.

Malaysia has followed IAS since 1978 and all the provisions of
the international standards have been incorporated into Malaysian
accounting standards since then. Explaining the recent history of
Malaysian accounting standards, MASB executive director Nordin Zain
told The Accountant the board was established in 1997 with
the sole responsibility of issuing standards. “[The MASB] carried
on the work that had been done prior to 1997 by professional
accounting bodies. In our review of the international standards
since 1997, we added more guidance to the standards and additional
disclosures to meet the requirements of local laws.

Nordin Zain, Malaysian Accounting Standards Board
 Nordin Zain, Malaysian Accounting
Standards Board

“In essence, our standards were ‘higher’ in terms of disclosure
requirements compared to the IAS. Unfortunately, the world does not
appreciate tweaking of the IAS, even if it was for better guidance
for preparers or better information disclosure for users. So from
January 2006, we decided to remove all of the provisions we had
added to be word-for-word identical with the IFRS,” Zain said.

Major exceptions

Since 2006, on a per standard basis, Malaysian standards have
been identical to IFRS. The difference lies in standards the nation
has not adopted. The two major ones are IAS 39 – Financial
Instruments: Recognition and Measurement, which will be effective
from 1 January 2010, and IAS 41 – Agriculture, which is being
reviewed for adoption.

Zain said IAS 41 has attracted a lot of attention in Malaysia:
“We are the largest palm oil producer in the world and the world’s
third largest rubber producer. Certainly the standard has become
significant to preparers and users. With that in mind, we have
decided to give constituents more time to study the implications of
the standard.” Zain said the MASB has not decided the date of
implementation of the agriculture standard. It may be earlier than
2012; but not later.

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“The plantation sector, auditors and directors have to prepare
themselves for its eventual implementation,” he explained. “They
have the expectation that the standard is coming and, therefore,
know they have to be ready.”

When Malaysia made its accounting standards identical to IFRS in
January 2006, it also adopted a two-tier reporting system.
Malaysia’s 1,000-odd stock exchange-listed companies and about
20,000 subsidiaries, associates and joint-venture companies use the
IFRS-based financial reporting standards.

The nation’s 700,000 private entities use Private Entity
Reporting Standards (PERS), which are the version of IAS issued up
until 2003. Following the 2012 announcement, these private entities
will continue to use PERS until the MASB decides otherwise.

Zain said the MASB is awaiting the release of IFRS for Private
Entities with great interest. If the board decides to adopt the
simplified international standards, it will likely drop the
PERS.

See: ‘Malaysia charts its convergence course’ for
firms’ reaction to the MASB announcement and an adoption time
line.

Carolyn Canham