Theory

THEORY AND PRACTICES OF ACCOUNTING

(DAC 0033)

BACKGROUND

The Financial Reporting Foundation (FRF) is established under the Financial Reporting Act 1997 (Act). The FRF comprises representation from all relevant parties in the standard setting process, including preparers, users, regulators and the accountancy profession.

The FRF, as a trustee body, has responsibility for the oversight of the MASB's performance, financial and funding arrangements, and as an initial source of views for the MASB on proposed standards and pronouncements. It has no direct responsibility with regard to standard setting. This responsibility rests solely with the MASB.

International Financial Reporting Standards

Since the early 2000s, the Malaysian Accounting Standards Board (MASB) has been committed to convergence of Financial Reporting Standards (FRSs) with International Financial Reporting Standards (IFRSs) issued by the International Accounting Standards Board (IASB). According to a June 2007 MASB press release, prior to 2005, the policy of the Malaysian accounting standard-setters had been to adopt international standards, albeit adding additional explanatory guidance and examples in order to reflect local circumstances and cover topics not addressed in the international standards. In October 2005, the MASB issued in batches 21 FRSs, which had been revised in order to incorporate the revisions made by the IASB to IFRSs. The following year, FRSs were finalized for application to financial statements that are required to be prepared or lodged under any law administered by the Securities Commission, Central Bank of Malaysia, or the registrar of Companies for periods beginning on or after January 1, 2006. However, differences still persisted and on August 1, 2008, the Financial Reporting Foundation, which oversees the MASB, announced the plan to fully converge Malaysian accounting requirements with IFRSs for the above mentioned entities by January 1, 2012. In line with the IASB...