Compliance Factors of Malaysian Private Entity Reporting Standard (MPERS) by Small Medium Enterprises (SMEs)

Nurul Nazlia Jamil,Ainulashikin Marzuki,Nurul Nadiah Ahmad,Nathasa Mazna Ramli

doi:10.5430/ijfr.v12n3p149

Nurul Nazlia Jamil, Ainulashikin Marzuki + Show 2 more

Open Access

https://doi.org/10.5430/ijfr.v12n3p149

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Abstract

The study objectively reports the findings on a questionnaire survey when examining the factors affecting Malaysian Private Entity Reporting Standard (MPERS) compliance in Malaysia by small and medium enterprises (SMEs). The study is based on a professional accountant questionnaire survey involving a sample of 176 respondents who are currently involved in the implementation of MPERS. The result reveals that the main factors affecting the SMEs' compliance with MPERS were the legal limitations and requirements. The study also finds that the perception, size of entities, management and accounting skills of the external user, and consideration of costs and benefits, have little impact on MPERS compliance. Furthermore, the study contributes to the literature of the financial reporting standard for SMEs by providing empirical from Malaysia's local context that uses MPERS and how the theses affect reporting practices. To adopt the 'true and fair view' financial reporting standard when explaining the firm's financial performance and financial position, this study should be the interest of regulatory authority, standard setters, and owners of SMEs themselves.

Highlights

Small and medium enterprises (SMEs) in Malaysia adopting the Malaysian Private Entity Reporting Standard (MPERS) from 1st January 2016
This study aims to examine factors influencing compliance of small and medium-sized enterprises (SMEs) with MPERS in the setting in Malaysia
This study aims objectively to investigate factors affecting MPERS compliance by SMEs in the setting of Malaysia

Summary

Introduction

Small and medium enterprises (SMEs) in Malaysia adopting the Malaysian Private Entity Reporting Standard (MPERS) from 1st January 2016. Given the significant role of small and medium-sized enterprises (SMEs) in economic development, a private entity would benefit from a quantum leap in matching its financial reporting with current global financial reporting, in addition to other advantages such as standardized treatment and presentation, accounting policy choices and less rule-based specifications (Salin, 2017). Jamil et al (2020) found that the market, especially small and medium-sized enterprise owners, does not have enough time to make for adoption until it becomes mandatory. It creates difficulties in avoiding the penalties for any incompliance. This is supported by the result that the accountants or auditors have recognized the need to adopt MPERS, while the long-term benefits or results of compliance with MPERS remain unclear (Aziz et al, 2019)

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