CIRCULAR TO MEMBERS
The Malaysian Institute of Certified Public Accountants (3246-U)
(Institut Akauntan Awam Bertauliah Malaysia) (3246-U)
March 1, 2006
Circular No. TEC/002/03/2006/W
FINANCIAL REPORTING STANDARDS AND
PRIVATE ENTITY REPORTING STANDARDS
ISSUED BY MALAYSIAN ACCOUNTING STANDARDS BOARD
I.
New / Revised MASB Approved Accounting Standards
The Malaysian Accounting Standards Board (MASB) has recently issued the
following new / revised approved accounting standards, which shall apply to
annual periods beginning on or after October 1, 2006:

FRS 117, Leases

FRS 124, Related Party Disclosures

FRS 139, Financial Instruments: Recognition and Measurement
This is the second tranche of the set of 21 new / revised approved accounting
standards announced by the MASB earlier. Members may purchase the 3 new /
revised MASB Standards from the MICPA Secretariat at a special discounted
price of RM5.00. The full set of 21 new / revised MASB Standards and IC
Interpretations is available at RM30.00 per set.
II.
Private Entity Reporting Standards
The MASB on February 22, 2006 announced that Financial Reporting Standards
(FRS) are now optional for private companies.
Two sets of approved accounting standards are now in place:

Financial Reporting Standards (FRS)
These standards are mandatory for all entities other than private entities.
Public listed companies, their subsidiaries, associates, or companies jointly
controlled by them are required to comply with FRS in the preparation of their
financial statements.

Private Entity Reporting Standards (PERS)
These standards are applicable to private entities. A private entity is a private
company incorporated under the Companies Act, 1965 that:
-
is not itself required to prepare or lodge any financial statements under
any law administered by the Securities Commission or Bank Negara
Malaysia; and
-
is not a subsidiary or associate of, or jointly controlled by, an entity which
is required to prepare or lodge any financial statements under any law
administered by the Securities Commission or Bank Negara Malaysia.
Essentially, PERS are MASB Standards issued by the MASB prior to January 1,
2005 except for certain standards which have been removed. In addition, each
PERS includes an amendment regarding the applicability and compliance with
the standard effective January 1, 2006. The list of PERS is attached as per
Annexure I. These standards, which carry the old MASB reference numbers,
have been issued to members previously.
Private entities are now given the option to use FRS, which are equivalent to
International Financial Reporting Standards, or to use PERS. If an entity
chooses to use FRS or PERS, it must comply with the full set of FRS or PERS
respectively in their entirety.
In the meantime, the MASB has embarked on a more comprehensive review of
the reporting needs of private entities in line with the initiative undertaken by the
International Accounting Standards Board (IASB) on accounting for small and
medium-sized entities.
The Institute had in October 2005 submitted a proposal to the MASB to defer the
implementation of the new / revised FRS on SMEs pending the issuance of the
SME accounting standard by the IASB, which is expected to be issued in 2007.
The Institute highlighted that much of the complex measurement and disclosure
requirements within the new / revised FRS are not relevant for decision making
by users of SME financial statements, which means the cost of compliance far
exceeds benefits.
TAN SHOOK KHENG (Ms)
Secretary
TEC002.2006.MASB
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Annexure I
MASB Approved Accounting Standards for Private Entities
The list of Private Entity Reporting Standards (PERS) are as follows:
MASB 1
Presentation of Financial Statements
MASB 2
Inventories
MASB 3
Net Profit or Loss for the Period, Fundamental Errors and Changes in
Accounting Policies
MASB 4
Research and Development Costs
MASB 5
Cash Flow Statements
MASB 6
The Effects of Changes in Foreign Exchange Rates
MASB 7
Construction Contracts
MASB 9
Revenue
MASB 10
Leases
MASB 11
Consolidated Financial Statements and Investments in Subsidiaries
MASB 12
Investments in Associates
MASB 14
Depreciation Accounting
MASB 15
Property, Plant and Equipment
MASB 16
Financial Reporting of Interests in Joint Ventures
MASB 19
Events after the Balance Sheet Date
MASB 20
Provisions, Contingent Liabilities and Contingent Assets
MASB 23
Impairment of Assets
MASB 25
Income Taxes
MASB 27
Borrowing Costs
MASB 28
Discontinuing Operations
MASB 29
Employee Benefits
MASB 30
Accounting and Reporting by Retirement Benefit Plans
MASB 31
Accounting for Government Grants and Disclosure of Government
Assistance
MASB 32
Property Development Activities
IAS 25
Accounting for Investments
IAS 29
Financial Reporting in Hyperinflationary Economies
MAS 5
Accounting for Aquaculture
IB-1
Preliminary and Pre-operating Expenditure
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