ACT 3122

1. ACT 3122 PN JALILA JOHARI A206 89467743

2. An Overview of Financial Reporting Framework in Malaysia • The origin cannot be traced • First documented financial reporting regulations were in the Companies Ordinance (1940,46 and 56) • Until after independence, an establishment of Companies Act 1965 are made. • Until after independence, an establishment of Companies Act 1965 are made.

3. The Flow of Financial Reporting Regime: After Independence: Traditional Stewardship Reporting System MICPA MIA (1978 adopt 4 IAS (start issue standard and MAS 1987, but basically follow IAS standard)

4. Early 1990: Full Disclosure Reporting System ( Regulatory authorities play major role) Central Bank of M’sia Securities (BNM/GP8) Commission (93) Malaysian Professional Bodies (Voluntarily Disclosure: to be more relevant and reliable)

5. New Financial Reporting Regime Financial Reporting Act 1997 (6 March 1997) Financial Reporting Malaysian Foundation Accounting Standard Board (Sec 4 (1): FRA 1997) (Sec 7(1): FRA 1997) (Overseeing bodies of (Issuing accounting MASB activities) standard)

6. FRS tsunami MASB (FRS) Change names Standard 1 January 2005 changes 1 Jan 2006

7. Statutory Regulations on Financial Accounting & Reporting • Companies Act 1965 • All companies incorporated in Malaysia under this Act. • Act contains Ninth Schedule, rules and regulation and reporting requirement. • Requirement: kept proper accounting and other records to explain the transactions and the financial position of the company. • Accounting records: P&L and Balance Sheet

8. Upon AGM present an audited P&L and B/S and Directors report • Follow disclosure requirement in 9th Schedule • On 1st Sept Co’s Amendment Act 1998 Sec 166A: Provision compliance of approved accounting standards in accordance with Sec 2 FRA 1997

9. Financial Reporting Act 1997 • Deals with compliance with approved accounting standards of the MASB • Approved accounting standard issued or adopted by MASB apply to all companies in Malaysia and overseas subsidiaries and associated corporation i.e. the consolidated account incorporated in Malaysia • Enforcement in all laws such as Co Act, SC, BNM

10. Income Tax Act 1967 • Concerning the chargeable income and tax payable. • Impact on the company tax expense and dividend • For company the impact between the accounting rules and tax rules • From year 2000 onwards the preceding year basis will be changed to current year basis

11. Guidelines of Securities Commission 1995 • Public Sector Company established under the Securities Commission Act 1993 • To promote capital market in Malaysia • Concentrate on due diligence and professional responsibilities of corporate advisers, directors and management of public companies and the maintenance of high standards of disclosure and accounting standards • Guidelines: Corporate Disclosure Policy, Post Listing Obligations, Accounting Standard and Valuation/ Revaluation of Asset

12. KLSE Listing Requirement • Private Sector body incorporated to regulate companies listed on its exchange • Does not have a legal power to enforce compliance • Rely on power to delist, suspend or publicly reprimand errant • KLSE requirement: Submission of reports, Additional Disclosure

13. Accounting Standard Pronouncement Before the New Financial Regime: • All members follow a regulation made by MIA and MICPA but there are no legal power to enforce a compliance. • The standards followed at that time are: - International Accounting Standard (IAS) - Malaysian Accounting Standard (MAS) • Issued technical bulletins and other pronouncement that were considered as part of GAAP.

14. After the New Financial Regime: • MASB has adopted 24 of the extent IASs and MASs. • Issued new accounting standard, in which the potential topic will be identified by the MASB. • Also issued the technical pronouncement - Statements of Principles (SOP), Urgent Issue Abstracts (UIA), Technical Release (TR) and Guidance Notes (GN).

15. Reporting Requirement by Types of Enterprise The reporting requirement depend on the form of business: • Sole Proprietorship • Partnerships • Companies Incorporated under Companies Act - Private Company (Sdn Bhd) - Unlisted Public Company (unlisted Bhd) - Listed Public Company (listed Bhd)

17. Listed Company • Quarterly financial statement • Interim and periodic financial statement • Final audited financial statements to SC, KLSE, ROC and Director General of IR. • Financial statement that have been drawn up to show a true and fair view and compliance with approved accounting standard.

18. Exempt Enterprise Criteria: • The enterprise does not have public accountability • At the balance sheet date, all of it’s owners are members of governing bodies • The enterprise is not large According to FRS 101: All enterprise that fail to meet any of the criteria do not qualify as exempt enterprise.

19. Criteria “ public accountability”: • Few users/stakeholder base their decisions upon the knowledge of the enterprise. • The enterprise does not posses or enjoy particular position on society • The parents does not have the coercive power to tax, rate or levy

20. Criteria “ big enterprise”: • The annual gross revenue of RM10M • Gross assets of 5M at the end of financial year • An average of 50 employees for the financial year. This condition must be satisfied in two of the last 3 years.

21. Basis of Exemption: • By way of block or full exemption • By the application of a designated standard for eligible enterprises • On a standard by standard

22. Current State – Of – The – Art Accounting and Reporting Practices • Influence by Companies Act and KLSE Listing (statutes) • In Malaysia stick on the mandatory disclosure and not much in voluntary disclosure • Current view required the companies to follow statues and accounting standard but if not viewed either regulation, the account must be considered as true and fair view.

23. Future: the financial reporting is more likely influence by the SC’s guidelines. • The relevancy of information is main consideration to which the it is consistent with most accounting frameworks. (IFRS and FRS)

24. END