Topic 3 :

Overview Financial Reporting

 Roles of Financial Accounting
Accounting Statements and Standards
Financial ✓
Generally Accepted Accounting
✓As language of trade Reporting Principles (GAAP)
✓Creating accountability and✓Accounting and Capital✓Malaysian Financial Reporting
control Standards
✓Information system Allocation
✓Decision- making tool Statutory and
Regulatory Framework
of Accounting in
Malaysia
✓
✓ Malaysian Accounting Standards Board

✓ ✓ The Securities Commission Malaysia

The Companies Commission of Malaysia

✓ Bursa Malaysia
Bank Negara Malaysi
 INTRODUCTION
⊷ Credibility and reliability of financial statement is very
important

⊷ Well functioning economy depends on accurate financial

reporting

⊷ Issues in financial reporting need to be addresses to

ensure reliable financial information to users.

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 Roles of Accounting

Definition - a system or a process

- collecting, identifying, measuring, recording, summarizing
- communicating the results of business or
- economic transactions to interested parties

Objective :
- provide useful information to users for their decision making
- Information must be relevant and faithfully represented
relevant :
must be capable of making a difference in a decision

faithfully represented :
the numbers and descriptions match what really exist
or happened
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 As creating
As Language Tool Accountability and
Control

trade
“
• Language in world of

• Internal and External

users
• Accountability
• Entrusting person to
manage through
stewardship through
• For decision making performance
evaluation
• Control
• As forecast for future
strategy
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 Decision Making Tool As information System

• Help in making • Covers users in the

“
decision for allocation supply chain activities
of resources • Employee
• Should buy/sell • Buying, selling
• Lend money • Documents
• Tax to pay • Invoices, vouchers
• Procedure
• Equipment ; device,
software
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 FINANCIAL STATEMENTS AND
FINANCIAL REPORTING
The Income Statement
Presents the revenues and expenses and resulting net income or net loss for
a specific period of time.

The Balance Sheet

Reports the assets, liabilities and owners equity at a specific date.

The Statement of Owners or Shareholders Equity

Summarizes the changes in owners equity for a specific period of time.

The Statement of Cash Flows

Summarizes information about the cash inflows (receipts) and outflows
(payments) for a specific period of time.
 Accounting and Capital Allocation
Issues :
Resources are very limited ; financial, workforce, how to ensure effective use?
Accountants must measure
performance accurately and Capital allocation process
fairly on a timely basis,

so that the right managers and

companies are able to attract
investment capital

Explain how ACCOUNTING assists in the efficient use

of scarce resources ?
 ACCOUNTING STANDARDS

✓ guidelines that need to be adhered by the accounting profession in

preparing and reporting

✓ increase the work quality of accounting professionals

December 1996 March 1997 Established

Parliament The Financial Reporting Foundation (FRF
endorsement for The Malaysian Accounting Standards
Board (MASB)
Financial Reporting
Act 1997
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 ACCOUNTING STANDARDS…cont’
Generally Accepted Accounting Principles (GAAP)

set of accounting practice standardized to increases the reliability and

comparability of financial statements

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 The Types of Approved Accounting
Standards in Malaysia

✓ Malaysian Financial Reporting Standards

MFRS : The Malaysian Financial Reporting Standards (MFRS) – exclude private entities

Private Entity Reporting Standards (PERS) - approved accounting standards for all
private entities. However, this
has been withdrawn effective 1 January 2016

Malaysian Private Entities Reporting Standards (MPERS) - replaces the previous PERS
and is in effect from 1 January 2016.

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 Comparison between MPERS and MFRS

For additional information : http://www.masb.org.my

13
 STATUTORY AND REGULATORY FRAMEWORK
FOR ACCOUNTING IN MALAYSIA

Main statutory regulations on financial accounting and reporting in Malaysia

1 The Financial Reporting Act 3 The Income Tax Act

1997
2 The Companies Act 2016 1967

(replaced the Companies Act

1965)

4 Regulations by the
Securities Commission
5 Regulations by Bursa 6 Regulations by
Bank Negara Malaysia
Malaysia

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 Malaysian Accounting Standards Board
✓ independent authority to develop and issue
accounting and financial reporting standards in Malaysia.

✓ The Act conferred the accounting standards issued by the MASB as the legal authority.

✓ The MASB together with the Financial Reporting Foundation (FRF) make up the financial framework for
financial reporting in Malaysia.

Securities Commission Malaysia

✓ established on 1 March 1993
under the Securities Act 1993
✓ investigative
and regulatory powers
✓ promote and maintain fair,
efficient, secured and transparent
securities and futures market and
to facilitate the overall department
of the capital market

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 The Companies Commission of Malaysia

✓ under Ministry of Domestic Trade and Consumer Affairs

✓ body that was established as a result of merger between the Registrar of Companies (ROC)
and the Registrar of Business (ROB) in Malaysia since 2002.

✓ To regulate companies and business entities in Malaysia

✓ To ensure that the provisions of the Companies Commission of Malaysia Act

and laws are administered, enforced

✓ To act as an agent of the Government and provide services

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 Bursa Malaysia
✓ frontline regulator of the Malaysian capital market

✓ to enhance its competitive position

✓ respond to global trends in the exchange sector by making the Exchange more customer-driven
and market-oriented

✓ Governs the conduct of its members and members stockbroking in securities dealings;

✓ Enforces the listing requirements on listing and disclosure standards to be maintained by

public listed companies

✓ responsible for the surveillance of the marketplace.

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 Bank Negara Malaysia

✓ To promote monetary and financial stability

✓ This is aimed at providing a conducive environment for

the sustainable growth of the Malaysian economy

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 ✓ Q&A :

✓ 1. Analyze the functions and roles of accounting

statutory and
✓ regulatory bodies in Malaysia.

✓ 2. Discuss the types of markets for public listed

companies in Malaysia

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 CF Language
The 4 BS
IS
of trade

Acc and statements SCE

capital
allocation
Roles
of Acc Accountability
and control

FS &
Accountants must measure
FR
performance accurately
and fairly on a timely basis, Dec making
Acc info tools

so that the right managers T3 : Overview FR

system

and companies are able to

attract investment capital

accounting practice is
Acc standardized and this increases
Standard the reliability and
Malaysian Private Entities Reporting MFRS GAAP

Standards (MPERS) - replaces the comparability of financial

previous PERS and is in effect from 1 statements
January 2016.

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