What Is The Malaysian Financial Reporting Standard?

Financial Reporting Standards refer to the regulations guiding the preparation of an organization’s financial statement. If you’re starting a company in a foreign jurisdiction, you must learn about the financial reporting standards in that region. Failure to get familiar with the necessary financial framework could be quite costly. Every business owner has to stay aware of the financial framework in Malaysia. That’s where we come in. This piece will reveal all the essential details about Malaysia Financial Reporting Standard.

Types Of Financial Reporting Standards that Applied In Malaysia

Before we get into details about financial reporting standards in Malaysia, you first need to note that there is more than one set of financial reporting standard applied in Malaysia. Each company or business is expected to determine which regulations apply to them.

What Is The Financial Reporting Framework For Companies In The Private Sector?

There are two financial reporting standards for companies in the Malaysian private sector – the MPERS and MFRS. The Malaysian Accounting Standards Board is responsible for producing the MPERS and MFRS. Every company required by law to submit its financial statements must do so according to the rules administered by the Central Bank of Malaysia, the Securities Commission of Malaysia, and the Companies Commission of Malaysia. They must also use the financial reporting standards crafted by the Malaysian Accounting Standards Board (MASB).

Malaysia Financial Reporting Standards Framework

The Malaysia Financial Reporting Standards Framework is crafted in direct compliance with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB). As a result, you’ll find that the MFRS standards are a direct replica of the IFRS.

Malaysia Private Entities Standards Framework

When you look at the Malaysia Private Entities Standards Framework, you’ll see that it’s relatively similar to the International Financial Reporting Standards for Small and Medium-sized Entities (IFRS for SMEs). The only difference between both accounting standards is found in;
● Section 1 Private Entities of MPER.
● Section 9 Consolidated and Separate Financial Statements of MPERS.
● Section 34 Specialised Activities of MPERS.

The MPERS is the most popular financial reporting standard most private entities use. At the same time, the MFRS is a full suite of regulations for non-private entities that are required to prepare financial statements. However, a private entity may decide to take on the regulations stipulated in the MFRS fully.

How To Determine The Financial Reporting Framework Use?

There are about three financial standards for organizations in Malaysia. So, how do businesses determine the financial framework to use? You can use the decision tree indicated in the Malaysian Institute of Accountants (“MIA”) to determine the best alternative for you.

The first thing to consider is whether the entity is incorporated under the Companies Act 2016. This aspect focuses on the type of organization a business is classified as – private sector, public sector, etc. Using this act, business owners will easily identify the financial reporting standards they are subject to. This section typically helps you know whether you’re a public or private sector firm.

Subsequent aspects of the decision tree will help the business determine whether it can use MPERS. As established earlier, MPERS is only applicable to private businesses. Paragraph 1.2 of the MPERS clearly explains the meaning of a private entity. According to this section, a private entity is an organization that;
● Is not required to submit any financial documents under laws relating to the Securities Commission or Bank Negara Malaysia
● Is not a subsidiary or jointly controlled by an organization that’s required to submit any financial documents under laws relating to the Securities Commission or Bank Negara Malaysia

How Can We Help?

Every business organization must maintain its financial records properly and submit them to the appropriate authorities. However, you must comply with the standards framework guiding the nature of your business. These standards are laws that must be adhered to, or your business may face serious punishments. It’s worth noting that many Malaysian businesses struggle with maintaining their financial records, and that’s where we come in.

Premia TNC is a consultancy firm with numerous years of expertise handling different aspects of a business in Malaysia. We understand the laws guiding financial reporting standards and frameworks. Also, we have teams of experts willing to help you create accurate financial records while staying compliant. When you contact us, we’ll start by identifying the framework you’re subject to and work our way from there.

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