- IFRS-compliant by 2012

International Financial Reporting Standard (IFRS) is defined by the International Accounting Standards Board (IASB) as:

“A single set of high quality, understandable and enforceable global accounting standards that require high quality, transparent and comparable information in financial statements and other financial reporting to help participants in the world’s capital markets and other users make economic decisions.”

What a mouthful!

Malaysian public listed companies are already aligned with the IFRS when we commenced applying our own Financial Reporting Standards (FRS) with effect from 1 January 2006. However, we are not yet fully compliant with IFRS as MASB (Malaysian Accounting Standards Board) is still working on certain standards notably FRS 139 – Financial Instruments: Recognition and Measurement.

We have been incorporating provisions of international accounting standards into our local accounting standards since 1978 and thus we have had a comparatively easier journey towards convergence. The deadline for full convergence with IFRS for Malaysia is set at year 2012. In terms of financial reporting, Malaysian companies and capital markets will be truly aligned with other international economies. There have been lengthy debates on the pros and cons of adopting IFRS into our national standards.

Actually, we do not have a choice here. Global providers of capital expect the financial information on which their decisions are based on IFRS format. For Malaysian companies, financial reporting under FRS will become the standard by which the providers of debt and equity capital make their investment judgments on. Conversion to IFRS is more than just an accounting matter it’s also a business issue.

Approximately one thousand public-listed companies and 20,000 subsidiary and associate companies will be affected by full IFRS compliance. Companies are advised to prepare thoroughly for convergence. They would need to assess their existing reporting infrastructure, systems, human skills and financial resources. They need to start working with their auditors, communicate with their Board members and shareholders to ensure a smooth transition.

For more details, please visit: http://www.mia.org.my/mia/stoppress/detail.asp?id=426