ACR Assignment

TABLE OF CONTENTS
NO. PARTICULARS PAGE
NUMBER
1.0 Explanations on Chairman Duality Roles, Composition of
Independence Directors, Percentage of Directors, Number of
Women Directors on Board, Foreign Directors, Institution
Ownership and Name of Auditor(s) of each Company Selected
2.0 Compliance Rate towards MFRS 8 among Malaysian Companies
from 2016 to 2018
3.0 Compliance Rate Pattern during 2016 to 2018
4.0 Factors that Lead to Compliance and Non-Compliance for MFRS 8
5.0 Costs and Benefits of Complying MFRS 8
6.0 References
7.0 Appendix
1.0 Explanations on Chairman Duality Roles, Composition of Independence Directors,
Percentage of Directors, Number of Women Directors on Board, Foreign Directors,
Institution Ownership and Name of Auditor(s) of Daiman Development Bhd, Scientex
Berhad, Gas Malaysia Berhad, Ajiya Berhad, and Borneo Oil Berhad that selected.
First of all, Borneo Oil Berhad is a Malaysia-based investment holding company. It

provides corporate and management services by operating through four segments which are
Head office and others; Fast food operations; Management and operations of properties, and
Oil, gas, energy and mining related businesses in Malaysia. Besides, Borneo Oil Berhad has
three subsidiaries which are taken part in mining (Borneo Oil & Gas Corporation Sdn. Bhd.,
investment business (Borneo Resources Limited), investment holding business (SB Partners
Sdn. Bhd). The Board of Borneo Oil Berhad is currently having five members composed of
one Chairman (Tan Kok Chor, Independent Non-Executive Directors), two Executive
Directors and two other Independent Non-Executive Directors. The Board of Borneo Oil
Berhad performed really well in the Corporate Governance Practices in showing their
uprightness in protecting shareholder value by intensified the performance of the `Group”.
For instance, the Board follows the instructions and principles that started out in Malaysian
Code on Corporate Governance 2017 when preparing Corporate Governance Overview
Statement. The Auditors that prepared the annual report 2018 for Borneo Oil Berhad are
STYL Associates. Based on the Annual Report 2018 of Borneo Oil Berhad, we can see that
started in 2018, Borneo Oil Berhad has changed its financial year-end date to 30th June. Due
to these changes, the Group’s revenue has resulted in a drop of revenue as compared to the
prior year 2017 and loss before tax that amounted to RM 1.59 million. Even so, they
considered it as gratification and pleasurable. However, due to this alteration, the ‘Group’ had
to provide share-based payment expenses on Employee Share Option Scheme that made the
group to reduce profit for RM9.56 million (Borneo-oil, 2020).
Secondly, Gas Malaysia Berhad (“Gas Malaysia” or “the Group”) was started up to
sell, retail, merchandise and distribute natural gas, also responsible to utilize and control
Natural Gas Distribution System appropriately within Peninsular Malaysia. In addition, Gas
Malaysia is qualified to sell reticulated Liquefied Petroleum Gas (“LPG”) in Peninsular
Malaysia as they obtained the license under the Gas Supply Act 1993. Gas Malaysia has been
one of the biggest contributors and leaders in the oil and gas industry throughout the years.
Moreover, Gas Malaysia tried to improve their business into the non-regulated area of gas
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distribution business. For instance, it expanded and sustaining growth for their business by
setting up subsidiaries and joint ventures which comprised of Gas Malaysia Energy Advance
Sdn Bhd, Gas Malaysia Virtual Pipeline Sdn Bhd, Sime Darby Gas Malaysia BioCNG Sdn
Bhd and Gas Malaysia Synergy Drive Sdn Bhd. As at the end of December 2018, Gs
Malaysia was able to provide their service to 37,922 customers and more than 99% of the
customers are from industrial rather than commercial or residential customers. Referring to
the Annual Report 2018, the composition of the Board of Gas Malaysia consists of five
Independent Directors and four Non-Independent Directors. All of the directors have not
made offence or penalties for the past five years and do not have any close relationship with
any directors or major shareholder except for Sharifah Sofia Binti Syed Mokhta Shah. She is
one of the Non-Executive Directors and the daughter of the indirect major shareholder of
Angio Oriental Sdn Bhd. Next, the chairman of Gas Malaysia is an Independent
Non-Executive Director, Datuk Haji Hasni Bin Harun while Abdul Manap is the CEO of Gas
Malaysia that implemented overall business strategy with his 26 years working experience.
Next, as the board chairman is a non-executive director, a minimum of one-third of the Board
shall be made up of independent directors. The vital of corporate governance practice also
taken into account by the Board such as carried out the Practices set out in the Malaysian
Code on Corporate Governance that had been released in April 2017 (“MCCG 2017”).
Besides, the Board of Gas Malaysia has ratified a Board Charter on November 2018 which
mentioned the roles and responsibilities of the Board and Board Committees in accordance
with the Principles and Proposition of MCCG 2012, elemental stipulation of provisions in the
Companies Act 2016, Bursa Malaysia Securities Bhd, Main Market Listing Requirements,
Articles of Association of the Company and other adaptable rules and regulations. As of the
date of this Annual Report, none of the Independent Directors of the Company has exceeded
a cumulative term of nine years as board Charter has a policy restrained the tenure of
Independent Directors up to nine years (Gas Malaysia, 2018).
Thirdly, Ajiya Bhd was developed and expanded as a manufacturer of Industrialised

Building System to build up the capacity and standard at construction sites, align with
Construction Industry Development Board’s (CIDB) inventiveness. There are two main
Group under Ajiya which are Ajiya Metal Group that undergo as leading manufacturers in
metal reel forming products and Ajiya Glass Group which is undergoing a safety glass
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business process. The Ajiya Metal Group composes Asia Roofing Industries Sdn Bhd, ARI
Utara Sdn Bhd, ARI Timur (KB) Sdn Bhd, Ariteq Eco Sdn Bhd, Ajiya STI Sdn Bhd, and
Thai Ajiya Co., Ltd. (Thailand). While Ajiya Safety Glass Sdn Bhd, ASG Marketing Sdn
Bhd, Thai Ajiya Safety Glass Co., Ltd. (Thailand) is the subsidiaries that grouped under
Ajiya Glass Group. Based on the Annual Report 2018, Ajiya Metal Group has successfully
acquired an uplift in their business by achieving certifications from CIDB for their
self-supporting steel roofing supply by advocating the Perakuan Pematuhan Standard. Next,
Ajiya Safety Glass has gained the support from the World Green Building Council and
therefore acts as a founder of Malaysia Green Building Confederation (MGBC) to endure
benefits for green built environment in Malaysia. While the Board of Ajiya Group that is led
by Board Charter has executed their last review in October 2018 to make sure that Ajiya Bhd
is following the rules and regulations. Moreover, the Board of Ajiya is made up of seven
members with the majority being Independent Non-Executive Directors as more than half of
the directors are Non-Executive Directors. Therefore, compliance to the Bursa Securities
Listing Requirement, the Board of Ajiya Group should have at least two directors or
one-third of the Board (choose the higher) are independent directors. However, the Board
appraised that their members are from various competencies and able to escort extensive
skills and experience concur to the business of the Ajiya Group either in accounting and
finance, legal or any other relevant industry. Yet, board diversification according to gender
was acknowledged as the Board pronounced that Ajiya Group would have become better for
having more contrasting belief and judgments to promote more female Directors on the
Board. Hence, in 2018, there are a sum of 29% of elected female members on the Board
("AJIYA Group Of Companies -"To Build Trust And Commitment Together"", 2020).
Scientex Berhad is one of Malaysia's top manufacturers of flexible plastic packaging

and Scientex Group is also willing to transform its business to economical home developer in
Malaysia. According to the Annual Report 2018 of Scientex Bhd, this company was pulled
off a majestic and stunning performance by gaining a new high record of RM2.6 billion with
an increase of RM0.2 billion compared to 2017. Moreover, due to an increase of RM33.9
million in net profit by Scientex Bhd, their earnings per share has arisen from 54.8 sen to 59.6
sen which showed a 13.3% financial growth. The ability of Scientex Bhd to plan and execute
their expansion decisions has led them to savor outstanding financial performance over the
years especially in 2018. Therefore, Scientex Group had acquired Klang Hock Plastic
Industries Sdn Bhd as a wholly owned subsidiary as they are in a competent position to enter
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a new market or sustained their performance in existing business by taking the advantage on
its robustness. However, for the home developer business, their market shares are still
experiencing instability as their sophisticated affordable home development’s sale was
reduced by RM11.3 million compared to last year. The main reason for the declining sales of
home development business is that their licenses and permits for some home development
projects were held by the governing due to the election period in Malaysia. The Board
composition of Scientex Bhd has six experienced members in the Board which formed by
three Independent Non-Executive Directors. During this year, Mr Wong Chin Mun was
nominated as a senior Independent NED of the Company after the re-appointment of Tan Sri
Dato’ Mohd Sheriff Bin Mohd Kassim who is a Non-Executive Chairman and Director.
Besides, the Group’s risk management and internal control system was considered
satisfactory to protect Scientex Bhd’s shareholders and other stakeholders as the Board had
received assurance from the managing director and financial controller when the system is
under reviewed. The nomination and remuneration committee had suggested to Board that
they should appoint a director to become Chairman of the Board Committees that is not
holding the position of the Chairman of the Board (i.e. Tan Sri Dato’ Mohd Sheriff Bin Mohd
Kassim). Thus, a new composition for Board Committees and new Board are fully disclosed
by the Auditors (Deloitte) in the Annual Report 2018 ("SCIENTX (4731): SCIENTEX BHD
- Annual Report", 2020)
Last but not least, Daiman Development Berhad is a property development, operation
of golf club and investment holding company. Their nature of business is to supply building
materials or substances such as roof tiles, develop and construct properties, and even property
investment. Daiman Development Bhd has fourteen 100% wholly-owned subsidiaries that
assist it to run their business operations such as Daiman Properties Sdn Bhd, Daiman Trading
Sdn Bhd, Daiman Golf Berhad and Daiman Johor Jaya Sports Complex Berhad. Throughout
the year of 2018, Daiman Development Group has gained a substantial profit before tax of
RM45.6 million. Compared to the profit before tax in 2017, Daiman Development Group has
boosted up a total of 29% of profit. The Board clarifies that the main reason for such
considerable profit is due to the realization of an investment in funds. Thus, the earning per
share of Daiman Development Bhd has increased from RM11.20 per share in 2017 to
RM19.20 per share in 2018. Besides, the excessive profits make final single-tier exempt
dividend available to distribute for the shareholders. Currently, Daiman Development Bhd is
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undergoing a challenging time as other companies in Malaysia due to the uncertain market
condition and economic recession. The Board currently consists of eight members,
comprising a Chairman(Independent Non-executive Director), Managing Director, three
Executive Directors and three Independent Non-executive Directors. The Board of Daiman
Development Group acknowledges that the exercise of good corporate governance in the
Corporate Governance Practices by referring to Main Market Listing Requirements of Bursa
Malaysia Securities Berhad in protecting shareholder value by intensified the performance of
the “Group”. Besides, the tenure of an Independent Director of the Company should not
exceed a cumulative term of nine years but three of the Independent Non-Executive Director
(Dato’ Ahmad Johari Bin Tun Abdul Razak, Mr Ong Seng Pheow and Mr Eddie Chan Yean
Hoe) have served the Board for more than 12 years. Therefore, the Board will acquire
shareholders’ approval at the 46th Annual General Meeting as the Board believe that the
independence of the three Directors have not jeopardized ("Annual Reports 2018 Daiman
Development Berhad", 2020)
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2.0 Compliance rate towards MFRS 8 among Malaysian Companies from 2016 to 2018
Table 8: Total Compliance Rate for 5 companies

(3yrs)
Yes No N/A Total
Table 1: Disclosure Objectives (5 items) 45 0 30 75
Table 2: General Information (3 items) 39 0 6 45
Table 3: Information about Profit or Loss, Assets 179 1 30 210

and Liabilities (14 items)
Table 4: Measurement (8 items) 45 0 75 120
Table 5: Reconciliation (6 items) 0 0 90 90
Table 6: Restatement of Previously Reported 1 0 29 30

Information (2 items)
Table 7: Entity Wide Disclosure (13 items) 112 0 83 195
Total 421 1 343 765
Percentage,% 55% 0% 45% 100%
In a nutshell, the company with the overall highest compliance rate is Scientex
Berhad, with compliance rate of 68.63% which remains constant throughout 3 years. Then,
the lowest compliance rate is Gas Malaysia with 45.1% for year 2016 and 2017, however it
has increased to 47.01% in 2018. Based on the overall statistics, table 2: general information
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has the highest compliance rate of 87% and the remaining 13% is not applicable to the 5
companies. Then, it is followed by table 3: Information about profit or loss, assets and
liabilities which has a total compliance rate of 85%, with remaining 14% as not applicable.
Table 5: reconciliation and Table 6: Restatement of previously reported information has the
highest not applicable rate of 100% and 97%. In short, the total compliance rate for 5
companies are 55%, and 45% are the not applicable rate. The 5 companies’ non-compliance
rate are at its’ minimum, which shows that all 5 companies are actually complying with the
relevant MFRS by having the disclosures on the relevant items.
Daiman Development Berhad
Percentage FY 2016 FY 2017 FY 2018
Compliance rate 47.06% 49.02% 49.02%
Non-compliance rate 0.00% 0.00% 0.00%
Not applicable rate 52.94% 50.98% 50.98%
Based on the checklist of Daiman Development Berhad, it can be seen that the
compliance rate has increased from 47.06% in 2016, to 49.02% for both year 2017 and 2018.
Daiman Development Berhad did not have any non-compliance on disclosure, where they
maintained 0% non-compliance rate from year 2016 to 2018. There is also a decrease in the
not applicable rate which is from 52.94% in 2016 to 50.98% in both 2017 and 2018. The
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difference between the not applicable rate and compliance rate is because Daiman
Development Berhad had disclosed the interest expense, which is MFRS 8.23(d) during year
2017 and 2018. Since they do not have any interest expense during 2016, hence it is not
applicable to disclose it.
Daiman Development Berhad has the most compliance rate on the disclosure on
information about profit or loss, asset and liabilities and also on the disclosure of general
information where they disclose all the items on the checklist for 2016 to 2018. There are a
few items that are not applicable on the disclosure of measurement, hence only MFRS 8.25,
8.26 and 8.27(a) were disclosed on the measurement part for all 3 years.
Moreover, under table 5 – Reconciliation, Daiman Development Berhad did not

provide reconciliation for all 6 items in the checklist, and so it is not applicable to disclose it.
Same goes to table 6 - the restatement of previously reported information. It is not applicable
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because Daiman Development Berhad did not change its structure of its internal organisation
in the period of 2016-2018, that will cause the composition of its reportable segment to
change. Under table 7 : entity wide disclosure, Daiman Development Berhad only disclose
MFRS 8.31, which highlights that it still choose to disclose even it has only one reportable
segment. They also comply with MFRS 8.32 about the information about products and
services. Other items under Entity Wide Disclosure were not applicable with Daiman
Development Berhad’s current segments.
Ajiya Berhad
FY 2016 FY 2017 FY 2018
Compliance rate 50.98% 50.98% 50.98%
Based on the checklist of Ajiya Berhad, their compliance rate remain the same for all
three years which is 50.98%, hence it appears that they have a constant compliance pattern
from 2016-2018. The difference between the 3 years is on the increase of non-compliance
from previous year’s 0% to 1.96% in 2018. This is because the items are previously not
applicable during year 2016 and 2017 and so its’ not applicable rate is 49.02%, while in year
2018 it has become 47.06%. This may be due to the item is now requires disclosure but Ajiya
did not comply with it.
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The item is MFRS 8.23(h) income tax expense or income under table 3: information
about Profit or loss. It appears that its’ segment has an income tax expense however it did not
disclose it.
Ajiya Berhad has the most compliance rate on the disclosure on information about
profit or loss, asset and liabilities where they disclosed 11 out of 14 items of it,, and also on
the table 7 : entity wide disclosure part where they disclose 8 out of 13 items on the checklist
for year 2016 to 2018. There are a few items that are not applicable on the disclosure of
measurement, hence only MFRS 8.25, 8.26 and 8.27(a) were disclosed on the measurement
part for all 3 years.
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Moreover, under table 5 – Reconciliation, Ajiya Berhad did not provide reconciliation
for all 6 items in the checklist, and so it is not applicable to disclose it. Same goes to table 6 -
the restatement of previously reported information. It is not applicable because Ajiya Berhad
did not change its structure of its internal organisation in the period of 2016-2018, that will
cause the composition of its reportable segment to change. Other than that, Ajiya Berhad had
made sufficient disclose on the disclosure objective and also on general information. In short,
all of the disclosure for Ajiya Berhad remained constant except for the non disclosure of
MFRS 8.23(h) which was on year 2018.
Scientex Berhad
FY 2016 FY 2017 FY 2018
Compliance rate 68.63% 68.63% 68.63%
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Based on the checklist of Scientex Berhad, the compliance rate for all three years are
the same which is 68.63%. Same goes to their 0% non-compliance rate, and the not
applicable rate of 31.37% which remained constant for all three years. Out of all the 51 items,
Scientex Berhad had complied with 35 items, and the remaining 16 items were not applicable
to them.
Scientex Berhad has the most compliance rate on the entity wide disclosure where all
13 items are disclosed. Then, it is followed by the disclosure on the information about profit
or loss, assets and liabilities, where they disclosed 13 out of 14 items. The only item that was
not disclosed under this category is MFRS 8.23(b) because it is not applicable to Scientex
Berhad. Scientex Berhad has no revenue from transactions with other operating segments of
the same entity so they do not need to disclose it. Moreover, Scientex Berhad did disclose all
3 items from table 2: General Information, and 3 out of 5 items from disclosure objectives
which are MFRS 8.20, 8.21(a) and 8.21(b). Besides, there are a few items that are not
applicable on the disclosure of measurement, hence only MFRS 8.25, 8.26 and 8.27(a) were
disclosed on the measurement part for all 3 years.
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Additionally, under table 5 – Reconciliation, Scientex Berhad did not provide
reconciliation for all 6 items in the checklist, and so it is not applicable to disclose it. Same
goes to table 6 - the restatement of previously reported information. It is not applicable
because Scientex Berhad did not change its structure of its internal organisation in the period
of 2016-2018, that will cause the composition of its reportable segment to change.
Gas Malaysia Berhad
FY 2016 FY 2017 FY 2018
Compliance rate 45.10% 45.10% 47.06%
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Based on the checklist of Gas Malaysia Berhad, the compliance rate for year 2018 has
increased to 47.06% from the previous years’ 45.1%. This means that in year 2018 there are
additional information being disclosed. Gas Malaysia Berhad did not have any
non-compliance on disclosure, where they maintained 0% non-compliance rate from year
2016 to 2018. There is also a decrease in the not applicable rate which is from 54.9% in 2016
and 2017 to 52.94% in year 2018. The difference between the not applicable rate and
compliance rate is because Gas Malaysia Berhad had disclosed MFRS 8.29 during year 2018.
This means that in year 2018, Gas Malaysia Berhad has changed the structure of its internal
organisation in a manner that causes the composition of its reportable segments to change,
has the comparative information for earlier period, including interim periods, been restated if
it is available and the cost to develop it is not excessive.
Gas Malaysia Berhad has disclose all 3 items on the general information and the next
item with most compliance rate is on the disclosure on information about profit or loss, asset
and liabilities where they disclose 12 out of the 14 items on the checklist for 2016 to 2018. 3
out of 5 items on disclosure objectives were also complied, except for MFRS 8.21(c) and
MFRS 21. There are a few items that are not applicable on the disclosure of measurement,
hence only MFRS 8.25, 8.26 and 8.27(a) were disclosed on the measurement part for all 3
years.
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Moreover, under table 5 – Reconciliation, Gas Malaysia Berhad did not provide
reconciliation for all 6 items in the checklist, and so it is not applicable to disclose it. Same
goes to table 6 - the restatement of previously reported information. It is not applicable to Gas
Malaysia Berhad until year 2018 where it has disclosed on MFRS 8.29. Under table 7 : entity
wide disclosure, Gas Malaysia Berhad only disclose MFRS 8.31, which highlights that it still
choose to disclose even it has only one reportable segment. They also comply with MFRS
8.32 about the information about products and services. Other items under Entity Wide
Disclosure were not applicable with Gas Malaysia Berhad’s current segments.
Borneo Oil Berhad
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FY 2016 FY 2017 FY 2018
Compliance rate 47.06% 50.98% 49.02%
Based on the checklist of Borneo Oil Berhad, the compliance rate for year 2016 was
47.06%, then it has increased to 50.98% in year 2017, and finally it decrease back to 49.02%
in year 2018. Borneo Oil Berhad did not have any non-compliance on disclosure, where they
maintained 0% non-compliance rate from year 2016 to 2018. There is also some changes in
the not applicable rate which is from 52.94% in 2016 and 49.02% in 2017 to 50.98%% in
year 2018.
The difference is the results from changes in disclosure patterns on table 3:

Information about Profit of Loss, Asset and liabilities. During year 2016, MFRS 8.23(c)
Interest revenue, and MFRS 8.23(h) Income tax expenses or income, are not applicable to
Borneo Oil Berhad, but it 2017 and 2018, Borneo Oil Berhad recognized it and disclosed it
hence the compliance rate has increased. Then, for MFRS 8.23(i) material non-cash items
other than depreciation and amortisation, it was previously disclosed during year 2016 and
2017. However it is not applicable in year 2018, this may be due to there is no material non
-cash items to be disclosed that year
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Borneo Oil Berhad has disclose all 3 items on the general information and 3 out of 5
items on disclosure objectives were also complied, except for MFRS 8.21(c) and MFRS 21.
There are a few items that are not applicable on the disclosure of measurement, hence only
MFRS 8.25, 8.26 and 8.27(a) were disclosed on the measurement part for all 3 years.
Moreover, under table 5 – Reconciliation, Borneo Oil Berhad did not provide reconciliation
for all 6 items in the checklist, and so it is not applicable to disclose it. Same goes to table 6 -
the restatement of previously reported information as it is not applicable to Borneo Oil
Berhad. Under table 7: entity wide disclosure, Borneo Oil Berhad disclosed 6 items out of the
13 items and the remaining items under Entity Wide Disclosure were not applicable with
Borneo Oil Berhad’s current segments.
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4.0 Factors that lead to Compliance and Non-Compliance for MFRS 8
The MFRS 8 Operating Segments issued by the Malaysian Accounting Standards

Board (MASB) in November 2011 has stepped in to enhance the information provided to
financial statements users regarding the financial results and position of the most important
operating segments of a company, so that more informed judgements and decisions can be
made, as the information is presented in a divisional way that enables more accurate analysis
to be done. The relevance and usefulness of financial statements are enhanced so that
investors and analysts understand how the various components of a diversified firm behave
economically (Alfaraih and Alanezi, 2011). However, reporting entities do not always assure
the inherent potential of segment reporting (Amado, Albuquerque, and Rodrigues, 2018).
According to Amado, Albuquerque and Rodrigues (2018), with this standard intrinsically
contemplates a “management approach” that has been the subject of some criticisms, since in
the genesis not all entities substantially disclose the information by segments, namely on
geographical areas. This may lead to non-disclosure of all the information required by MFRS
8 by some entities. Also, with the introduction of MFRS 8, entities started to disclose more
segments, but less information items by segment, in addition, geographic areas are also
becoming more specific, but there seems to be lesser information released for each of these
types of segments (Amado, Albuquerque, and Rodrigues, 2018). Firms respond to segment
reporting disclosure but do not wholly embrace it, which results in substantial
non-compliance (Alfaraih and Alanezi, 2011). This discussion will highlight some of the
factors that lead to compliance and non-compliance of MFRS 8 Operating Segments.
Firstly, ownership diffusion, which is measured by the ratio of the number of shares
owned by outsiders to the number of outstanding shares, is identified as a factor to influence
the compliance and non-compliance of operating segments reporting. By applying the agency
theory, problems arise when there is a conflict of interest between the principals
(shareholders) and agents (managers) due to the separation of ownership and control. This
can happen when managers act in the best interests for themselves rather than for the
shareholders, resulting in rising agency costs. In other words, agency costs arise because the
principal cannot directly observe the agent, and therefore they must incur costs to monitor the
activity of the agent (Herrmann and Thomas, 1996). To avoid conflicts of interest between the
two parties and reduce agency costs, managers can reduce information asymmetry by
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disclosing more information about their operating segments. Information asymmetry can
increase firm’s capital cost because imperfect information can lead to adverse selection
between buyers and sellers of a firm’s securities, and this adverse selection will reduce the
liquidity of a firm’s securities (Alfaraih and Alanezi, 2011). Hence, the ownership diffusion of
an entity will have an impact on the compliance of MFRS 8.
The size of a company may affect the number of segments and the required items to
be reported under MFRS 8 in which larger entities tend to disclose more than small entities.
The size may proxy for a number of firm attributes including information production costs,
competitive costs, and vulnerability to political costs as such factors may influence the quality
of segment reporting (Herrmann and Thomas, 1996). This is related to the resources that
large entities possess that enable them to have more exposure to markets, hence they are able
to incur lower costs to produce and disseminate information by using the advanced systems
that they have. As they are more complex, diversified and have more capital, they are able to
protect themselves from their competitors’ actions, and to avoid facing high costs of agency
and politicians such as unions, government regulators and tax authorities (Amado,
Albuquerque, and Rodrigues, 2018). Again, larger entities are more politically visible and
sensitive, and they are exposed to more litigation and government intervention as they need to
comply with more statutory requirements, all these may influence the management’s choice
of accounting policy. Therefore, to enhance the corporate image, they will tend to disclose
information to reduce political costs and mitigate litigation and government intervention
(Herrmann and Thomas, 1996). For instance, large companies are believed to have sufficient
professionals and experts to improve their compliance towards the standards, hence they can
avoid non-compliance penalties and fines. On the other hand, companies in small sizes will
require more resources in terms of human and finance capital to increase their compliance
towards MFRS 8, for example, they need to hire professionals or provide training for their
accounting personnel. In short, smaller companies will be less likely to comply with MFRS 8
due to its insufficient capabilities and resources.
Besides that, to some extent, companies that are listed in several capital markets tend
to disclose more information regarding their operating segments than listed entities
exclusively in the local one (Amado, Albuquerque, and Rodrigues, 2018). Operating
segments reporting aims to enhance the transparency and usefulness of the financial
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statements. Users like analysts, potential investors, shareholders and other stakeholders need
complete information in order to evaluate the sustainability and growth of a company, as well
as to monitor the performance of its management, before they make any investment decisions.
According to Alfaraih and Alanezi (2011), in the absence of disclosure, investors have no
choice but to obtain data from other sources, and they will incur costs in doing so. Due to a
lack of information, investors lower the price that they are willing to pay for a firm’s stock.
Hence, companies are motivated to disclose all relevant information to avoid undervaluation.
Firms listing on several capital markets will also have more shareholders, they will incur
higher monitoring cost than firms listing only in the local capital market, thus they will make
additional disclosure in the financial statements to generally reduce agency costs. Also, to
attract a high level of capital from foreign investors, companies listed in several capital
markets will have better compliance towards MFRS 8 to satisfy the information needs of
international investors and creditors (Alfaraih and Alanezi, 2011). Other companies may also
disclose the information of their operating segments, but they may disclose the information
only up to the extent required by the standards.
Moreover, the age of an entity can influence the compliance and non-compliance
towards segmental reporting. In accordance with Alfaraih and Alanezi (2011), they stated that
younger entities tend to pay more attention to the product and market development rather
than accounting practices when establishing their businesses. Additionally, younger entities
may have insufficient human and money capital in which their accounting systems tend to be
inadequate and the managers are less experienced in running the business operation, which
resulting in lower quality accounting and lesser disclosures. Conversely, older entities tend to
disclose more as they have more advanced accounting systems and their management
personnel are more experienced, so they can produce higher quality accounting and
disclosures. In addition, disclosing more information in line of business or by geographical
area of business will put firms at a competitive disadvantaged position especially for younger
firms as compared to older ones who are more able to protect themselves from the
competitive disadvantages with the experience, knowledge and maturity they have obtained
from their long establishments. In short, older entities will have better compliance towards
segmental reporting.
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The influence of auditors also plays an important part in the compliance and
non-compliance of MFRS 8. Entities audited by large professional accounting firms like Big
4 such as Ernst & Young, KPMG, Deloitte and PWC will tend to disclose more than entities
not audited by them or audited by a local entity (Amado, Albuquerque, and Rodrigues, 2018).
This may be due to large professional accounting firms have well established reputations, are
more experienced to exert high level of quality of auditing, therefore they have more to lose if
they fail to report a discovered breach or make error or misrepresentations in their clients’
corporate reports, as compared to auditors in other firms. Thus, they will put more pressure
on their clients to improve and meet the disclosure requirements so as not to lose or gain even
more reputation (Alfaraih and Alanezi, 2011). On the contrary, due to the economic
consequences of losing a client and their survival mainly depends on one or a few clients,
smaller or local auditing firms are more sensitive to clients’ demands, and because of this,
they are less likely to demand greater disclosure in their clients’ financial statements when
their clients are not willing to do so. As a result, companies audited by smaller or local
auditing firms will tend not to comply with MFRS 8.
Profitability and growth rate of an entity can both positive and negative relationship
with the compliance of MFRS 8. Amado, Albuquerque, and Rodrigues (2018) stated that
entities with high returns or high growth rates or both may choose to disclose less
information or conceal sensitive information so that they do not face high competitive
disadvantage costs. In order to maintain a strategic distance from conceivable contribution of
rivals in business activities or geographical areas, a company prefers to disclose a segment
that conveys less economic information when a company is doing well (Benjamin,
Muthaiyah, Marathamuthu, and Murugaiah, 2010). This is because by disclosing more
information about the operating segments, they may be at a disadvantaged position when their
corresponding competitors disclose lesser information. Also, potential competitors may use
the information and take advantage of new business opportunities in growing markets and
profitable new markets, which will be detrimental to their positions in the market. On the
contrary, Alfaraih and Alanezi (2011) claimed that high earning entities tend to comply
MFRS 8 by making disclosure in higher level because managers need to prove their ability to
maximize shareholders’ value to avoid undervalued stocks. Then, managers can assure their
positions in the company and receive their awards like bonus when they achieve good
22
financial performance and bring profits to the company. More than that, managers of
profitable firms may feel proud of their success and disclose more information to the public to
promote a positive impression of their performance. Alfaraih and Alanezi (2011) also claimed
that low-profitable entities may disclose less information to hide reasons for poor
performance or losses and to prevent adverse market reactions. For instance, managers
disclose more detailed information to the market due to better performance, and they disclose
less at times of bad performance to prevent their shares from being undervalued.
Verrecchia (1983) claimed that the benefits of disclosure are limited by a “proprietary
cost”, which is a cost results from the reduction in future cash flows that are attributable to
disclosure. The release of more information about a firm, either favourable or unfavourable, is
useful to competitors, investors, and employees in ways that could threaten the firm’s
prospects and competitive position (Verrecchia, 1983). In relation to proprietary cost, segment
profitability is the most important piece of information managers may wish to withhold from
competitors and investors because revelation of abnormal profits would attract unnecessary
attention and hence in future reduce the abnormal profits of segments (Benjamin, Muthaiyah,
Marathamuthu, and Murugaiah, 2010). On the other hand, the revelation of a segment that
earns low abnormal profit would then expose unresolved agency problems and lead to
heightened external monitoring (Benjamin, Muthaiyah, Marathamuthu, and Murugaiah,
2010). Consequently, to maintain future cash flows, companies will tend to limit the
disclosure levels when proprietary costs arise. Even though not disclosing information will
definitely increase the cost of raising additional equity, cost of agency and cost of information
asymmetry as mentioned earlier, referring to Alfaraih and Alanezi (2011), in case of rising
proprietary costs, companies will have an incentive not to disclose information that could
possibly weaken their competitive position, leading to non-compliance of MFRS 8.
Furthermore, firms with high leverage are generally expected to comply with MFRS 8
to satisfy the information needs of creditors. In other words, firms with proportionally higher
levels of debt in their capital structure are prone to higher agency costs, thus managers have
an incentive to reduce these agency costs (Alfaraih and Alanezi, 2011). By disclosing more
information, it not only satisfies the needs of debenture holders, but also to assure creditors
that they are less likely to bypass their covenant claims. It is argued that high leverage firms
have a greater obligation to satisfy the informational needs of their long-term creditors and,
23
thus may provide more detailed information in their annual reports than low-leverage firms.
Through this, firms can maintain long-term trust with creditors and continue to get more
funding from them. In sum, firms with high leverage will tend to comply with MFRS 8.
Last but not least, according to Herrmann and Thomas (1996), they claimed that the
nature of an industry in which the firm is operating will affect the compliance and
non-compliance of segmental reporting. In general, firms in the same industry face similar
levels of competition, risk, and growth opportunities, resulting in similar disclosure practices
within industries. The higher the degree of industry concentration, the greater the fear of
disclosing strategic information, the more likely it is to discourage the disclosure of
confidential information because the costs of disclosure begin to exceed its benefits
(Benjamin, Muthaiyah, Marathamuthu, and Murugaiah, 2010). Competition varies across
industries due to the differences in the barriers of entry as well as the existing rivalry within
the industry (Verrecchia, 1983). Firms in industries with low barriers to entry contend with
potential as well as present competitors, while firms in industries with high barriers to entry
contend almost exclusively with present competitors. Disclosing proprietary segment
information can greatly diminish the short-term profits of firms in highly competitive
industries, as present and potential competitors will likely respond to segment disclosures that
reveal highly profitable operations (Herrmann and Thomas, 1996). Similar to some factors
that applied to firm itself as mentioned earlier, factors like growth rates, financial leverage and
operating leverage can also be applied to the context of industries with different risk and
return prospects. The earnings of firms in industries with lower growth rates and higher risk
are valued less by the market, therefore high risk industries have additional incentives to
disclose segment information (Herrmann and Thomas, 1996). By doing so, to some extent,
this can reduce investors’ uncertainties as to the timing and amount of future cash flows, thus
reducing the firm’s cost of capital. In sum, industries with high barriers to entry and exposure
to high risk will lead the firms to have better compliance towards MFRS 8.
24
5.0 Costs and Benefits of Complying MFRS 8
On 1st January 2009, Malaysian Accounting Standards Board (MASB) has adopted
MFRS 8 Operating Segments. This standard is also known as IFRS 8 and is issued by US
Financial Accounting Standards Board (FASB) and the International Accounting Standards
(IASB). MFRS 8 could have an effect on Malaysian firms, as it was envisaged that no public
listed firms would be able to avoid providing segment disclosures based on the requirements
of the new standard (Johari, 2017). Reporting entities can analyse the segment reporting from
the perspective of voluntary disclosure. Voluntary disclosure is the provision of information
by a company’s management beyond the requirements of the standards that are issued by
MASB in Malaysia. There are some of the costs and benefits for the entity to comply MFRS
8 during the preparation of the consolidated financial statements.
According to the Segment Reporting Practices and Determinants: Evidence from

Malaysian Public Listed Companies, authors had claimed that the adoption of MFRS 8
which focuses on the management approach to segment reporting will provide greater
opportunity to the users of financial statements in examining the performance from the
senior managements’ perspective (Mutalib, F. A., Jaafar, H, 2019). A clear-cut segment
reporting able to help the users of financial statements to inquire and analyse the way of the
top management to control the entity (Mutalib, F. A., Jaafar, H, 2019). Investors are able to
identify the risks of the entity takes on and to gauge the return they are making from those
business segments. Crawford, L., Extance, H., Helliar, C., & Power, D. (2012) had shown the
segmental reporting provides more insight and facilitates a more granular view as to the
organisation’s long-term performance. Those segment data enable users of financial reports to
value their business (Crawford, L., Extance, H., Helliar, C., & Power, D., 2012).
A chief operating decision maker (CODM) will be identified when complying the
MFRS 8. The CODM is responsible for allocating resources and assessing the performance of
the entity’s business. The segment reporting is able to help CODM for reviewing and
analysing the performance of disaggregate business segments. The effectiveness for the
CODM to allocate resources to each business segment able to improve. For instance, CODM
is able to recognize non-profitable business segments easily and to gauge whether to continue
operating or close down the respective segment according to the segment reporting. Some of
the educated investors may want to study the business segments separately instead of only
25
looking at income statement and statement of financial position. The disaggregate business
segments may have variance profit potentials, growth opportunities, capital needs and
degrees and risk (Mantziou, 2013).
Equity market benefits to disclosure of geographic segment information: An

argument for decreased uncertainty (1995) shows that the increase of geographic segment
information disclosed can lead to an increase in a company’s equity market returns
(Conover T. and Wallace W., 1995). Entity disclose geographic segments can indicate the
company’s international diversification. This is a good signal to investors about the entity’s
business potentials. As the company expands their international market, this could lead to
increased profits and considerable dividend paid to stakeholders. Hence, investors increase
their chances of finding the next dividend gem for their portfolios (Investor, 2013). The
increasing funding invested by the investors allows the company to use that money to build
and grow their business.
The MFRS 8 issued by the MASB is helpful for investors to evaluate the nature and
economic environments which it operates. Implementation of MFRS 8 among the public
listed companies will contribute and improve the transparency and reliability of the financial
statement of the company. When the entity disclose important and transparent financial
statements will make the investors confident to bring funds to the respective company. This is
because of the reduction of information asymmetry among management and outsiders. The
best way to analyse the profits and losses for decentralized business is through the segmental
reporting. Although the financial analyst does not praise or criticise a company itself, that
information can be remarked on the leadership for that particular sector’s leader. Investors are
able to analyse and identify the strategic management that is adopted by the company.
Segmental reporting allows the investors obtain the company’s financial performance in the
different business segment. A high quality of segment reporting disclosure will attract the
sight of public investors to invest into the company who adopt MFRS 8. This is because
segment reporting helps investors to see a full picture of a company. An educated investor
will collect and analyse that information to look for the business potential that will be
obtained by the investees in the future.
Segment information is useful to reduce information asymmetries between the

company owners and managers, and therefore lowers the cost of equity capital (Yoo, J. &
26
Semenenko, I., 2012). MFRS 8 has introduced a management approach to supply useful
information to the users of financial statements. By using the management approach, the
result of the entity will be explained through the eyes of management. Furthermore, this
standard allows those entities to report in a similar way as they manage the business. The
preparer who adopts MFRS 8 is able to reduce the cost of preparing the information on
reportable segments because those information is already to be used internally by the
management and readily available on a timely basis (Mutalib, F. A., Jaafar, H, 2019). The
cost of preparer to provide disaggregated information may reduce as the segment information
that requires disclosure already generated for management’s use.
Generally, the incremental cost of applying MFRS 8 was low. This standard has
introduced management reporting approach to identifying and measuring the results of
reportable operating segments. There are some preparers who claim that the significant
on-going costs savings as the increasing efficiency in merging internal and external processes
and systems. The company’s internal control and the effectiveness of management will be
improved and contribute to the cost saving. Companies will gain more profits and use the
cash to expand the business market. On the other side, there are some companies that
complained that they had incurred additional costs in strengthening controls over internal
reporting to ensure they could report surely, provide workshops to train staff and educate
investors.
Although there are many benefits to comply with MFRS 8, there are some cost and
arguments against the disclosure of segment information should be considered by reporting
entities. One of the other important costs to consider during the adoption of MFRS 8 is the
competitive harm. Competitive harm is an influence for lower segment disclosure under
MFRS 8 (Pedro Nuno Pardal, Ana Isabel Morais, José Dias Curto, 2015). When a
company improves inside view to how the company’s activities contribute to globalization,
these companies will face higher exposure to competitors. Under this standard, the segment
reporting should be similar to the internal report structure that is reviewed by the CODM.
This approach would build up the competitors to examine the company’s performance
through the eyes of management. The competitive advantage of the company will be
threatened. There are some of the companies faced competitive harm due to the risk of
disclosing sensitive information to stronger rivals, which may reduce their market share and
profitability (Harris, 1998). Especially the industries with few competitors, there is a risk of
27
competitive harm due to the exposure of performance. This is because of the imperfect
competition that is caused by the higher dispersion between firm’s sizes.
The requirements of the standards would place small listed companies at a

disadvantage to non-listed companies, which are outside the scope of the MFRS. The
disclosure of proprietary information may cause the loss of competitiveness. A high-quality
segment disclosure may involve some confidential information to the prepares. Breaking out
the large operating segments would provide additional insights into operation margins and
other business performance information. The contract negotiations to the detriment of the
company would be affected when the new information discloses to the competitors and
stakeholders, such as employees, suppliers and customers. Although the competitors in the
same sectors would be similarly affected, not all public listed companies will use the
aggregation criteria. Some of the companies believe that complying to MFRS 8 may harm
users through diminished returns. However, most of the companies were less concerned about
the competitive harm when the synthetic of the operating segments consist a diverse mix of
products or services. This is because the preparers find it difficult to assign an operating
profit margin to a specific brand or property.
In addition, data reported under IFRS 8 are more prone to manipulation (Gaëlle
Lenormand, Lionel Touchais, 2014). Under the MFRS 8, the component of the business
segment is regularly identified and reviewed by the CODM. CODM can be an individual or a
group of people. They can take advantage of the standard’s flexibility by improving the
quality of segmental information. For instance, the CODM may raise the number of segments
and measures reported. There are some managers who only send the desired information to
stakeholders due to their individual motivation. The CODM might decide to combine the
division that faced losses together with an unrelated profitable business unit to show a better
picture of performance.
The information in the segment reporting might lead to management manipulation or

inconsistency due to the vagaries of management fads. CODM has the rights and freedom to
identify and decide the component that is used to disclose for segment reporting under MFRS
8. In this situation, the agency problems may arise. This will decrease with the increase of
the amount and the quality of accounting information available to shareholders. Nowadays,
28
most of the shareholders companies are not the members of the management of a company
and the information asymmetry issues come in.
There are some cases managers may have incentives to manipulate the earnings
through presenting inaccurate accruals (Mantziou, 2013). They may want to hide the low
profitability of some operations through aggregation in an attempt to mask moral hazard
problems. The shareholders have appointed the directors and manager to manage and control
the company. The responsibilities of the management are to oversee the company and ensure
the company runs smoothly. By complying to MFRS 8, CODM has the opportunity to hide
the bad sign performance in the segment reporting to paint a good picture to the shareholders.
The motivation for the CODM to do so may be due to the self-interest or conceal the
dereliction of duty in the business operation.
In a nutshell, the company must consider the cost and benefit to complying MFRS 8.
The adoption of this standard will contribute to the improvement of the user’s understanding
of the company’s operation performance and lower the cost of the equity capital. On the other
hand, the competitive harm and the opportunities of the CODM to manipulate the information
must be considered by the company. During the complying to this standard, the CODM must
carry out ethical action and work on behalf of the shareholders. The management of the
reporting entity must be aware to those costs and benefits for this standard in order to
maximize the shareholder wealth. The complying entity will gain benefit if the process of
standard implementation has been carefully administered.
6.0 References
AJIYA Group Of Companies -"To Build Trust And Commitment Together". (2020). Retrieved
4 March 2020, from https://www.ajiya.com/annual-reports/
Announcement details. (2020). Retrieved 3 March 2020, from
https://www.bursamalaysia.com/market_information/announcements/company_annou
ncement/announcement_details?ann_id=2900907
29
Annual Reports 2018 Daiman Development Berhad. (2020). Retrieved 4 March 2020, from
http://www.daiman.com.my/annual-reports-18.aspx
Alfaraih, M. M., & Alanezi, F. S. (2011). What explains variation in segment
reporting?
Evidence from Kuwait. International Business & Economics Research Journal
(IBER), 10(7), 31-46.
Amado, P., Albuquerque, F., & Rodrigues, N. (2018). The explanatory factors of
segments
disclosure in non-financial entities listed in European markets. Contaduría y
administración, 63(2), 10.
Benjamin, S. J., Muthaiyah, S., Marathamuthu, M. S., & Murugaiah, U. (2010). A
study of
segment reporting practices: a Malaysian perspective. Journal of Applied Business
Research (JABR), 26(3).
Borneo-oil.com.my. (2020).Retrieved from:
http://www.borneo-oil.com.my/clients/borneo-oil/Downloads/Bornoil_-_Annual_Rep
ort_201810312018101203AM1.pdf [Accessed 3 Mar. 2020].
Conover T. and Wallace W. (1995). Equity Market Benefits to Disclosure of. Journal of
International Accounting Auditing & Taxation, 101-112.
Crawford, L., Extance, H., Helliar, C., & Power, D. (2012). Operating segments: the
usefulness of IFRS 8. . The Institute of Chartered Accountants of Scotland.
Gaëlle Lenormand, Lionel Touchais. (2014). IFRS 8 versus IAS 14 – The management
approach to segment information: effects and determinants. Comptabilite - Control-
Audit, 93-119.
Gas Malaysia (2018). Retrieved 3 March 2020, from
https://www.gasmalaysia.com/images/download/annual-report/Gas_Malaysia_AR201
8-min_compressed_compressed_reduce.pdf
Harris, M. (1998). The Association Between Competition and Managers’ Business Segment
Reporting Decisions. Journal of Accounting Research 36(1), 111-128.
Herrmann, D., & Thomas, W. (1996). Segment reporting in the European Union:
Analyzing
the effects of country, size, industry, and exchange listing. Journal of International
Accounting, Auditing and Taxation, 5(1), 1-20.
30
Conover T. and Wallace W. (1995). Equity Market Benefits to Disclosure of. Journal of
International Accounting Auditing & Taxation, 101-112.
Crawford, L., Extance, H., Helliar, C., & Power, D. (2012). Operating segments: the
usefulness of IFRS 8. . The Institute of Chartered Accountants of Scotland.
Gaëlle Lenormand, Lionel Touchais. (2014). IFRS 8 versus IAS 14 – The management
approach to segment information: effects and determinants. Comptabilite - Control-
Audit, 93-119.
Harris, M. (1998). The Association Between Competition and Managers’ Business Segment
Reporting Decisions. Journal of Accounting Research 36(1), 111-128.
Investor, D. G. (2013, November 21). Pros And Cons Of International Diversification.
Retrieved from Seeking Alpha:
https://seekingalpha.com/article/1854811-pros-and-cons-of-international-diversificati
on
Johari, J. (2017). Post-implementation of MFRS 8 “Operating. SHS Web of Conferences.
Mantziou, S. (2013). The effectiveness of IFRS 8: Operating Segments. General Finance
[q-fin.GN].
Mutalib, F. A., Jaafar, H. (2019). Segment Reporting Practices and Determinants: Evidence
from. International Journal of Academic Research in Accounting, Finance and
Management Sciences, 264-273.
Pedro Nuno Pardal, Ana Isabel Morais, José Dias Curto. (2015). Competitive Harm And
Business Segment Reporting Under Ifrs 8: Evidence From European Union Listed
Firms.
SCIENTX (4731): SCIENTEX BHD - Annual Report. (2020). Retrieved 4 March
2020, from https://klse.i3investor.com/servlets/stk/annrep/4731.jsp
Verrecchia, R. E. (1983). Discretionary disclosure. Journal of accounting and
economics, 5,
179-194.
Yoo, J. & Semenenko, I. (2012). Segment information disclosure and the cost of equity
capital. . Journal of Accounting, Business & Management, 103-123.
31
APPENDIX
Summary of Checklist
Compliance rate towards MFRS 8 among Malaysian Companies from 2016 to 2018
Table 1: Disclosure Objectives (5 items)
32
Paragrapgh Yes No N/A Total
MFRS 8.20 15 0 0 15
MFRS 8.21(a) 15 0 0 15
MFRS 8.21(b) 15 0 0 15
MFRS 8.21(c) 0 0 15 15
MFRS 21 0 0 15 15
Total 45 0 30 75
Percentage, % 60% 0% 40% 100%
Table 2: General Information (3 items)
33
Paragraph Yes No N/A Total
MFRS 8.22(a) 15 0 0 15
MFRS 8.22(aa) 12 0 3 15
MFRS 8.22(b) 12 0 3 15
Total 39 0 6 45
Percentage, % 87% 0% 13% 100%
Table 3: Information about Profit or Loss,

Assets and Liabilities (14 items)
34
MFRS 8.23 15 0 0 15
MFRS 8.23 15 0 0 15
MFRS 8.23(a) 15 0 0 15
MFRS 8.23(b) 9 0 6 15
MFRS 8.23(c) 14 0 1 15
MFRS 8.23(d) 14 0 1 15
MFRS 8.23(e) 15 0 0 15
MFRS 8.23(f) 15 0 0 15
MFRS 8.23(g) 9 0 6 15
MFRS 8.23(h) 13 1 1 15
MFRS 8.23(i) 11 0 4 15
MFRS 8.23 15 0 0 15
MFRS 8.24(a) 10 0 5 15
MFRS 8.24(b) 9 0 6 15
Total 179 1 30 210
Percentage,% 85% 0% 14% 100%
35
Table 4: Measurement (8 items)
MFRS 8.25 15 0 0 15
MFRS 8.26 15 0 0 15
MFRS 8.27(a) 15 0 0 15
MFRS 8.27(b) 0 0 15 15
MFRS 8.27(c) 0 0 15 15
MFRS 8.27(d) 0 0 15 15
MFRS 8.27(e) 0 0 15 15
MFRS 8.27(f) 0 0 15 15
Total 45 0 75 120
Percentage,% 38% 0% 63% 100%
Table 5: Reconciliation (6 items)
36
MFRS 8.28(a) 0 0 15 15
MFRS 8.28(b) 0 0 15 15
MFRS 8.28(c) 0 0 15 15
MFRS 8.28(d) 0 0 15 15
MFRS 8.28(e) 0 0 15 15
MFRS 8.28 0 0 15 15
Total 0 0 90 90
Percentage,% 0% 0% 100% 100%
Table 6: Restatement of Previously
37
Reported Information (2 items)
MFRS 8.29 1 0 14 15
MFRS 8.30 0 0 15 15
Total 1 0 29 30
Percentage,% 3% 0% 97% 100%
Table 7: Entity Wide Disclosure (13 items
MFRS 8.31 15 0 0 15
MFRS 8.32 12 0 3 15
MFRS 8.33(a)- i 8 0 7 15
38
MFRS 8.33(a)- ii 6 0 9 15
MFRS 8.33(a)- iii 6 0 9 15
MFRS 8.33(a)- iv 6 0 9 15
MFRS 8.33(b)- i 6 0 9 15
MFRS 8.33(b)- ii 6 0 9 15
MFRS 8.33(b)- iii 6 0 9 15
MFRS 8.33 11 0 4 15
MFRS 8.34- i 10 0 5 15
MFRS 8.34- ii 10 0 5 15
MFRS 8.34- iii 10 0 5 15
Total 112 0 83 195
Percentage,% 57% 0% 43% 100%
Daiman Development Berhad
FY 2016 FY 2017 FY 2018
Total number of compliance - "1" 24 25 25
Total number of non-compliance - "0" 0 0 0
Not Applicable - "2" 27 26 26
total 51 51 51
Total number of compliance - "1"
FY 2016 FY 2017 FY 2018
Table 1: Disclosure Objectives (5 items) 3 3 3
39
Table 2: General Information (3 items) 3 3 3
Table 3: Information about Profit or Loss, 13 14 14

Table 4: Measurement (8 items) 3 3 3
Table 5: Reconciliation (6 items) 0 0 0
Table 6: Restatement of Previously 0 0 0

Table 7: Entity Wide Disclosure (13 items) 2 2 2
Total number of non compliance - "0"
2016 2017 2018
Table 3: Information about Profit or Loss, 0 0 0

Table 6: Restatement of Previously Reported 0 0 0

Information (2 items)
Not Applicable - "2"
2016 2017 2018
40
Table 3: Information about Profit or 1 0 0

Loss, Assets and Liabilities (14 items)

Table 7: Entity Wide Disclosure (13 11 11 11

items)
Ajiya Berhad
total 51 51 51
2016 2017 2018

41

items)
2016 2017 2018
Table 3: Information about Profit or Loss, Assets and 0 0 1

Liabilities (14 items)
Table 6: Restatement of Previously Reported 0 0

Information (2 items) 0
2016 2017 2018

42


items)
Scientex Berhad
FY 2016 FY 2017 FY 2018
total 51 51 51
2016 2017 2018


43
items)
2016 2017 2018



items)
2016 2017 2018

44

items)
Gas Malaysia Berhad
FY 2016 FY 2017 FY 2018
total 51 51 51
2016 2017 2018



items)
45
2016 2017 2018



items)
2016 2017 2018



items)
Borneo Oil Berhad
46
FY 2016 FY 2017 FY 2018
total 51 51 51
2016 2017 2018



items)
2016 2017 2018
47


items)
2016 2017 2018



items)
48

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TABLE OF CONTENTS

NO. PARTICULARS PAGE

1.0 Explanations on Chairman Duality Roles, Composition of

Independence Directors, Percentage of Directors, Number of

Women Directors on Board, Foreign Directors, Institution

Ownership and Name of Auditor(s) of each Company Selected

2.0 Compliance Rate towards MFRS 8 among Malaysian Companies

from 2016 to 2018

3.0 Compliance Rate Pattern during 2016 to 2018

4.0 Factors that Lead to Compliance and Non-Compliance for MFRS 8

5.0 Costs and Benefits of Complying MFRS 8

First of all, Borneo Oil Berhad is a Malaysia-based investment holding company. It

Thirdly, Ajiya Bhd was developed and expanded as a manufacturer of Industrialised

Scientex Berhad is one of Malaysia's top manufacturers of flexible plastic packaging

Table 8: Total Compliance Rate for 5 companies

Yes No N/A Total

Table 1: Disclosure Objectives (5 items) 45 0 30 75

Table 2: General Information (3 items) 39 0 6 45

Table 3: Information about Profit or Loss, Assets 179 1 30 210

Table 4: Measurement (8 items) 45 0 75 120

Table 5: Reconciliation (6 items) 0 0 90 90

Table 6: Restatement of Previously Reported 1 0 29 30

Table 7: Entity Wide Disclosure (13 items) 112 0 83 195

Total 421 1 343 765

Percentage,% 55% 0% 45% 100%

3.0 Compliance Rate Pattern during 2016 to 2018

Daiman Development Berhad

Percentage FY 2016 FY 2017 FY 2018

Compliance rate 47.06% 49.02% 49.02%

Non-compliance rate 0.00% 0.00% 0.00%

Not applicable rate 52.94% 50.98% 50.98%

Moreover, under table 5 – Reconciliation, Daiman Development Berhad did not

FY 2016 FY 2017 FY 2018

Compliance rate 50.98% 50.98% 50.98%

Non-compliance rate 0.00% 0.00% 1.96%

Not applicable rate 49.02% 49.02% 47.06%

FY 2016 FY 2017 FY 2018

Compliance rate 68.63% 68.63% 68.63%

Not applicable rate 31.37% 31.37% 31.37%

Gas Malaysia Berhad

FY 2016 FY 2017 FY 2018

Compliance rate 45.10% 45.10% 47.06%

Non-compliance rate 0.00% 0.00% 0.00%

Not applicable rate 54.90% 54.90% 52.94%

Borneo Oil Berhad

Compliance rate 47.06% 50.98% 49.02%

Non-compliance rate 0.00% 0.00% 0.00%

Not applicable rate 52.94% 49.02% 50.98%

The difference is the results from changes in disclosure patterns on table 3:

The MFRS 8 Operating Segments issued by the Malaysian Accounting Standards

According to the Segment Reporting Practices and Determinants: Evidence from

Equity market benefits to disclosure of geographic segment information: An

Segment information is useful to reduce information asymmetries between the

The requirements of the standards would place small listed companies at a

The information in the segment reporting might lead to management manipulation or

Table 1: Disclosure Objectives (5 items)

Percentage, % 60% 0% 40% 100%

Table 2: General Information (3 items)

Percentage, % 87% 0% 13% 100%

Table 3: Information about Profit or Loss,

Total 179 1 30 210

Percentage,% 85% 0% 14% 100%

Paragraph Yes No N/A Total