Accounting & Financial Reporting

Sound accounting and financial reporting depend on more than producing a set of figures at the end of a period. The reporting framework, legal form, group structure, accounting records and intended use of the information all affect the work that may be required.

Which framework applies: MFRS or MPERS?

For Malaysian entities the answer turns on whether the entity is a private entity as defined for reporting purposes. Broadly, a private entity is a private company under section 2 of the Companies Act 2016 which is not required to prepare or lodge financial statements under any law administered by the Securities Commission Malaysia or Bank Negara Malaysia, and which is not a subsidiary, associate or jointly controlled entity of a company that is subject to such a requirement.

Two consequences follow. An entity that is required to prepare or lodge financial statements under a law administered by the Securities Commission or Bank Negara Malaysia applies MFRS. A private entity may apply MPERS — but may also elect to apply MFRS in full instead, and that election has consequences for recognition, measurement, presentation and disclosure.

The distinction is not cosmetic. Group relationships matter: a private company that becomes a subsidiary or associate of an entity within the Securities Commission or Bank Negara reporting perimeter may cease to be a private entity for these purposes. A change in ownership, a new investor or a group reorganisation can therefore change the applicable framework.

Confirm the current position from the Malaysian Accounting Standards Board and the applicable MIA guidance against the entity's own facts before a reporting approach is finalised.

When accounting and reporting support may be relevant

Directors and finance teams may need support when preparing annual financial statements, improving the quality of periodic management information, documenting accounting policies, addressing a group or transaction, or bringing accounting records into a condition suitable for reporting.

The question is not simply whether accounts can be produced. It is whether the records, judgements and presentation are appropriate for the entity, period and purpose concerned.

Establishing the applicable reporting context

That framework assessment affects recognition, measurement, presentation and disclosure. It should be made before a reporting approach is finalised, rather than treated as a formatting exercise. The reporting period, group relationships and any requirements arising under the Companies Act 2016 or other applicable regulation should be considered alongside it.

How a scoped engagement may help

Depending on the circumstances and agreed terms, accounting and financial reporting support may include:

• reviewing the reporting objective, available records and information gaps;
• confirming which reporting framework applies to the entity and period;
• preparing or assisting with financial statements and supporting schedules;
• considering accounting-policy, presentation or disclosure questions within the applicable framework;
• developing management information that helps directors understand financial performance, position and cash flow; and
• considering accounting-record or chart-of-accounts changes needed to support reliable reporting.

The appropriate scope depends on the information available, management's responsibilities, timing and the intended use of the output.

Responsibilities remain with management

Directors and management remain responsible for the entity's records, underlying information, judgements and statutory responsibilities. General information on this page does not determine the correct accounting treatment for a particular transaction or confirm that a reporting, filing or audit requirement has been met.

Where an audit is required or proposed, the accounting work and any audit engagement must be considered separately, including the independence requirements that apply to the audit.

Discussing your reporting requirements

Saifudin & Co can discuss the reporting question, relevant period, entity structure, records available and the type of support being considered. An engagement, its scope and any applicable conditions can only be agreed after those facts have been assessed.

This page provides general information only. Financial reporting requirements and the appropriate treatment of a particular matter depend on the relevant facts and applicable requirements.