Malaysian Accounting Standards Board Research Articles

Measuring Qualitative Characteristics of Internet Financial Reporting: Evidence from Malaysia

As the world economy undergoes a rapid digital transformation, Internet financial reporting (IFR) has evolved into an important platform for the dissemination of information to investors. It has also been a central topic of discussion among practitioners and researchers due to the lack of rigorous regulations to govern IFR practices, resulting in disclosures of financial reports varying across listed companies. This study aims to assess the level of compliance with the qualitative characteristics of IFR for companies listed on Bursa Malaysia. This study involves adopting 34 constructed index items based on prior literature and the use of a 5-point Likert scoring scale anchored from "very poor" (1) to "excellence" (5) to measure the fundamentals and enhance the qualitative characteristics of IFR, which is also in line with the "Revised Conceptual Framework for Financial Reporting" issued by the Malaysian Accounting Standards Board (MASB) in 2018. Non-probability purposive sampling was employed to select the companies from 11 relevant industries, comprising 160 listed companies from the main market of Bursa Malaysia. Annual reports and corporate governance statements were extracted from corporate websites for 2018. Findings suggest that most corporations that are listed in the main market of Bursa Malaysia have yet to fully comply with the MASB’s financial reporting framework, notably timeliness, which requires urgent improvement. Without strict IFR regulations, managers may also be free to act opportunistically by planning their IFR disclosure in a way that benefits both the company's reputation and their interests. This research enriches the body of literature on IFR and provides a measuring mechanism that can gauge the level of compliance with the qualitative characteristics of IFR. It acknowledges the importance of collective efforts from regulatory bodies to implement accounting reforms and the best IFR governance practices to harness information's usefulness in the Industrial Revolution era. 4.0.

Constructing a Financial Reporting Disclosure Quality Model of Listed Firms in Malaysia

The national accounting standards set by the Malaysian Accounting Standards Board (MASB) is largely converged with the International Financial Reporting Standards (IFRS). The benefit arising from this is to enable foreign investors to analyse their investments via a standardised financial reporting system in Malaysia. Financial reporting disclosure quality by the listed firms in the consumer product and service sector on Bursa Malaysia is an essential feature in the firms’ financial reporting to the public. This research evaluates the development of financial reporting disclosure quality assurance by firms listed on Bursa Malaysia, by examining financial reporting disclosure quality and subsequent compliance with the International Financial Reporting Standards. This study uses a content analysis approach to identify a financial reporting standard compliance disclosure index, based the financial statements issued by firms listed on Bursa Malaysia from 2008 – 2016. A panel regression model is utilised to construct a model of financial reporting disclosure quality of the firm, based the extent of compliance with IFRS disclosure requirements from the following perspectives: corporate governance practice, audit quality and corporate social responsibility. The sustainability of financial reporting disclosure quality by the listed firms and subsequently the Malaysian capital markets will enable the same to attain a competitive edge in the international markets. In addition, this study will discuss financial reporting disclosure quality implications relevant to the policy makers in Bursa Malaysia, and it is envisaged that such model can be utilised in the improvement of future financial reporting policies.

Maximizing Zakat Revenues in the COVID-19 Period

The Novel Coronavirus (COVID-19) pandemic has put the entire world into not only health but economic and social problems. Currently, finding a sustainable way out of the poverty caused by the pandemic had become a global concern. Unfortunately, even as poverty alleviation has for long been a key issue in the agenda of OIC member countries, the emergence of the pandemic has pushed down these countries into a poverty hole deeper than before. Islamic social finance instruments, particularly zakat, waqf and Islamic microfinance are believed to be valid instruments that could mitigate the consequences of the pandemic. Against this, the present study aims to provide a way of maximizing zakat revenues in OIC member countries through the creation of zakat accounting standards. The study found only two existing zakat accounting standards for the computation of business zakat. The first one was developed by AAOIFI in 1998 and became effective in 1999, primarily for the application by IFIs. Given the limitation and inappropriate application of AAOIFI’s zakat accounting standard in the Malaysian context, the Malaysian Accounting Standard Board developed another standard suitable for the application by Malaysian firms effective from 2016. Thus, the foregoing findings imply the need for each OIC member country to create the zakat accounting standard to adopt by its firms in order to maximize zakat revenues.

FAİZSİZ FİNANSAL ARAÇLARDA ÖLÇÜM SORUNLARI

Faizsiz finansal araçların raporlanması açısından karşılaşılan en büyük zorluk farklı muhasebe standartlarında, farklı ifadelerin yer alması ve bunların sonucunda üretilen finansal tabloların karşılaştırılabilirlik, güvenilirlik ve uyum konusunda karşılaştığı zorluklardır. Geleneksel çerçevelere dayalı olarak oluşturulan mevcut standartlar, faizsiz finansal araçları açıklamakta ve ölçmekte yetersiz kalmaktadır. Tüm dünyada uygulanan tek bir İslami finansal raporlama seti olmadığı için faizsiz finansal araçlara, farklı ülkelerde farklı finansal raporlama yaklaşımları uygulandığı görülmektedir. Bu bağlamda çalışmada islami muhasebe standartlarına olan ihtiyaç değerlendirilmiş ve İslami finansal kuruluşların en fazla kullandığı finansal araçlardan Muşaraka, Mudaraba, İcara, Sukuk ve Qard için AAOIFI (İslami Finansal Kurumlar Muhasebe ve Denetimi Organizasyonu), MASB (Malezya Muhasebe Standartları Kurulu) ve IASB (Uluslararası Muhasebe Standartları Kurulu) çerçevesinde uygulanan standartlar, yorumlar ve değerlendirmelere yer verilmiştir. Ayrıca finansal araçların muhasebeleştirilmesinde ve ölçülmesinde İslami finansal kuruluşların uygulamış olduğu yöntemler belirtilmiştir.

EXPLORATION ON THE DEFINITION AND THE REAL MEANING OF CORPORATE REAL ESTATE TERM

Corporate Real Estate (CRE) is not a new term in the field of property research. In fact, disciplines of CRE research are becoming increasingly widespread nowadays. Consequently, the interpretation of CRE term has undergone a paradigm shift as time goes by. This study explored the definitions of CRE in the eyes of academicians and researchers as well as the meanings of CRE based on Malaysian Accounting Standard Board (MASB). Literatures were chosen to illustrate the breadth of knowledge available regarding the CRE definition. The broad definition of Corporate Real Estate (CRE) term (since 1983 to 2016) has been presented in the form of table. The discussion on the definition of CRE involves four phases, where each phase consists of 10 years. This allowed the researcher to see whether there were any changes or improvements to the definition of CRE in the last 40 years. Then, the CRE meaning was further examined, but from a different perspective. Therefore, content analysis of annual reports prepared by 40 Malaysian non-property public listed companies was conducted in order to identify the CRE term that has been applied in their companies. It was found that the CRE term was not adopted to represent real estate of a particular company. This study managed to identify 29 different terms that represent corporate real estate assets, of which nine (9) are used to represent “building” while six (6) are used to represent “land”. However, to understand the CRE of a company, the terms used in the company annual report are insufficient. What is more important is to recognise the information related to the CRE asset value. The information is not only intended to illustrate the wealth of company CRE assets, but also to pinpoint anything that happens to CRE such as depreciation, disposal, etc.

Diverse accounting standards on disclosures of Islamic financial transactions

Purpose Since International Financial Reporting Standards (IFRS) are not primarily meant for the accounting needs of Islamic banks, the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) was established to develop specific accounting standards for Shari’ah compliance. The purpose of this paper is to assess the de jure harmonisation between the disclosure requirements of the IFRS-based Malaysian Accounting Standards (MAS) and those of the AAOIFI. Design/methodology/approach Using Malaysia as a case study, the paper examines the extent of the de jure congruence between the IFRS-based MAS and AAOIFI’s Financial Accounting Standard No 1 (FAS1), which is considered to be one of the key disclosure standards for Islamic banks. We employ leximetrics and content analysis to analyse these accounting standards and the additional guidelines introduced by the Malaysian Accounting Standards Board (MASB) and the Central Bank of Malaysia (Bank Negara Malaysia, BNM) to identify the gaps between different tiers of MAS and FAS1. Findings The study finds that de jure congruence between the IFRS-based MAS and AAOIFI standards has improved through the introduction of additional accounting guidelines by both the MASB and the banking regulator, BNM. However, some gaps remain between the two standards. These gaps may be difficult to completely eliminate due to differences in the fundamental principles underlying the development of both standards. Originality/value While some studies have explored the de facto congruence between AAOIFI accounting standards and others, this paper is the first, to the best of the authors’ knowledge, to examine the de jure congruence between those standards with the IFRS-based MAS.

Earnings Management in Malaysian Companies during the Global Financial Crisis and the Coincidental Effect of IFRS Adoption

Purpose: This research examines earnings management (EM) behavior during the 2008 financial crisis in Malaysia. Both magnitude and direction of EM are studied and compared with EM during the pre-crisis period. In the case of Malaysia, the Malaysian Accounting Standards Board (MASB) adopted the international accounting standards, i.e. the International Financial Reporting Standards (IFRS) just two years prior to the crisis period. These standards could have some influence on EM during the global financial crisis period in Malaysia, thus are also taken into consideration in this study. Methodology: Data were collected from the Bloomberg database, and the proxy for EM was discretionary accruals (DA), which were measured using two models, namely the modified Jones model by Dechow et al. (1995) and the modified Jones model by Kothari et al. (2005). Findings: The empirical findings of paired-sample T-tests for 1,189 firm-years revealed that EM practices in the Malaysian companies were income decreasing during the crisis period (2008 and 2009), compared to the pre-crisis period (2005 and 2006) when the practices were income-increasing. The findings of this study are consistent with big bath theory. Furthermore, simple multivariate regressions support the findings that EM is significantly more negative or less positive during the crisis period. Nevertheless, the adoption of IFRS seems to suggest some deterring influence on EM practices of Malaysian companies. Research Limitation: The limitation of this study is that it uses rudimentary measures to proxy crisis period and IFRS in the regressions. Moreover, this study includes only one control variable (company size). Practical implication: the findings of this study would inspire more research on EM during abnormal periods, such as a financial crisis period, whilst taking accounting regulation into consideration, particularly in Asian countries. In addition, the policy makers might give more attention to ensure the enhancement of the adherence of IFRS adoption. Originality: The paper addressed a practical issue of EM during crisis period using two different proxies. In addition, the paper applied the integrated variable CriIFRS, which reflects the crisis period, taking into consideration IFRS adoption. Albeit preliminary, this is considered the main originality and novelty of the current study.

Concept of Revenue, Expenses and Liabilities in Accounting for Zakat, Waqf and Baitulmal in Malaysia: An Analysis from Shariah Perspective

Revenue, expenses and liabilities are an important concept in current accounting practices. These concepts are applied in accounting standards where this standard serves as a guideline for a company or organization in preparing and presenting income, expenses, assets and liabilities in accordance with the standards set by the International Accounting Standards Board (IASB). The accounting standards issued by this international body refer to conventional accounting standards. In Malaysia, the State Islamic Religious Council (MAIN) as the trustee for Zakat, Waqf and Baitulmal uses standards issued by the Malaysian Accounting Standards Board, Private Entity Reporting Standards (PERS) and best practice guidelines by the National Audit Department (Malaysia) (JANM). These two documents are used as references in the preparation of financial reporting for MAIN. However, there are problems in terms of implementing these concepts for Zakat, Waqf and Baitulmal with current accounting standards. This is because current accounting practices are different from the concepts of revenue, expenses and liabilities adopted by Zakat, Waqf and Baitulmal according to Islamic law. This study aims to analyze the concept of revenue, expenses and liabilities in Zakat, Waqf and Baitulmal accounting from Shariah perspective. The design of this study is qualitative. The method of content analysis was used to analyze data from sources such as classical Fiqh books. The findings show that there is a difference between the concept of revenue, expenses and liabilities in Zakat, Waqf and Baitulmal accounting in the Islamic context. The study is expected to help the parties involved to develop accounting standards for zakat, waqf and baitulmal which are compliant with Shariah.

International financial reporting standards and conservatism in the Association of Southeast Asian Nations countries

Purpose The purpose of this paper is to investigate whether the convergence of IFRS in ASEAN countries resulted in an improvement in financial-reporting quality, and in particular with regards the degree of conditional conservatism of financial reporting. Then, the authors investigate whether the convergence to IFRS and the degree of conditional conservatism is influenced by corruption as a proxy for the strength of ASEAN jurisdiction legal and enforcement systems. Design/methodology/approach The sample of this study is based on 22,085 firm-year observations from three ASEAN countries, namely, Malaysia, Thailand and Singapore from 2008 to 2014. This study employs a panel least square regression to test the effect of IFRS on two measures of conservatism which are asymmetric timeliness and accrual-based loss recognition. The conservatism data are extracted from ORBIS, while data for corruptions are extracted from Corruption Perception Index (CPI) that was released by Transparency International. Findings This study finds Convergence of IFRS enhance conditional conservatism. The findings are robust for two measures of conservatism which are asymmetric timeliness and accrual-based loss recognition. The result on unconditional conservatism finds that IFRS reduce unconditional conservatism, which supports that the code-law structures of the ASEAN countries as characterized by unconditional conservatism is reduced after IFRS convergence. A further test indicates that corruption reduces conditional conservatism in more corrupt countries. Research limitations/implications This study focused on three ASEAN countries only, as they have consistent convergence dates to the IFRS. Therefore the result may not be generalized to other ASEAN countries. Practical implications The study provides implications to the regulators that IFRS enhance financial-reporting quality and reduce the randomness of decisions that are based on financial information as has been introduced by unconditional conservatism. Therefore it is important for the regulators to incorporate IFRS compliance into laws and regulations. Currently, IFRS compliance is not incorporated into laws and regulations for ASEAN countries, except for Malaysia. In Malaysia, Section 7 of the Financial Reporting Act 1997 (FRA) empowers the Malaysian Accounting Standards Board (MASB) to issue approved accounting standards for application in Malaysia. Under section 26D of the FRA, financial statements that are prepared or lodged with the Central Bank, Securities Commission or Registrar of Companies must comply with the standards issued by the MASB. Originality/value This paper extends the literature on the effect of IFRS on conservatism as it provides robust effect of IFRS on both conditional and unconditional conservatism. In addition, this study extends the literatures on the effect of corruptions in the relationship between IFRS and conditional conservatism.

Exploring the effects of corporate governance and human governance on management commentary disclosure

PurposeThe purpose of this study is to investigate the influence of corporate governance and human governance on management commentary disclosure among Malaysian Public Listed in the Main Market, Bursa Malaysia.Design/methodology/approachThe annual reports of 150 companies listed on the main market, Bursa Malaysia, for the year ended 2014, are examined to analyze the company’s management commentary disclosure using content analysis. A management commentary disclosure index was developed based on the five elements that had been established by the Malaysian Accounting Standards Board (MASB) in Practices of Management Commentary’s framework. The study considers four corporate governance mechanisms such as board composition, board size, board’s education and ownership structure. Structural equation modeling (SEM -PLS), partial least squares (PLS) and SmartPLS software were used to measure the impact of corporate governance and human capital on management commentary disclosure.FindingsThe results reveal that most of the information disclosure by Malaysian Listed companies was not presented in a complete and balanced manner and not providing an insight because they are more focused on describing the process. Besides, there was no clear link between companies’ strategies and performance measure. Consequently, the reporting is not balanced and cannot assist the shareholders in understanding the opportunities and risk associated with the business. The results, based on a structural model, indicated that only two variables, namely, board size and board independence, showed a positive and significant influence on the degree of disclosure information of management commentary. Board independence is the most significant variable that influences the degree of corporate governance and human capital on management commentary disclosure.Originality/valueThe study contributes to the information disclosure literature as it presents in empirical evidence proving that governance mechanism affects the management commentary disclosure of information by companies. This study also provides additional information which is expedient to other researchers since there is lack of studies in management commentary which relates the attributes of corporate and human governance mechanisms as key drivers in providing management commentary information. Importantly, this study will stimulate the interest of academics in research activities concerning the attributes of governance mechanisms and corporate and human governance on management commentary activities.

Mitigating Earnings Management: Adoption of IFRS and Corporate Governance Practices in Malaysia

This study examines the effects of IFRS adoption and corporate governance practices on the qualities of financial reporting in Malaysia. The sample comprises a balanced panel of 360 firmyear observations of Construction firms under the Main Board of Bursa Malaysia from 2013 to 2016. This study accesses the effectiveness of effort by the Malaysian Accounting Standard Board (MASB) to improve the financial reporting by the revision process of the standard and their mandatory application. In addition, this study measures the relationship between of board of directors and the level of earnings management. The composition of board of directors is an important corporate governance mechanism in mitigating earnings management. The Malaysian Code of Corporate Governance (MCCG) has been issued in year 2000 and was revised in 2007 and the latest revision is in 2012 in order to enhance good governance by corporation. Besides MCCG, the year witnessed the full convergence of IFRS effective starting from 1st January 2012. One of the standards of MFRS 111 Construction Contracts focuses on construction companies. Therefore, this study is to examine the impact of IFRS adoption and corporate governance practices on the level of earnings management of Malaysian Construction companies. The results show that there is a significant relationship between the characteristics of board of directors with the level of earnings management during the years after the adoption of IFRS in Malaysia. This suggests the adoption of IFRS and corporate governance practices by that Malaysian construction companies contribute to higher accounting qualities. Thus, the results of this study are expected to provide early evidence of the impact of adopting IFRS and corporate governance practices and give further direction for the regulatory bodies regarding the accounting standards and financial reporting practices in Malaysia. Future research perhaps could analyze the relationship of the characteristics of audit oversight board in mitigating earnings management.

A DESCRIPTIVE ANALYSIS OF FINANCIAL RESTATEMENTS IN MALAYSIA

This study provides an overview of the issue of financial restatements among Malaysianpublic listed companies by investigating the trend and reasons for financial restatementsfor the period beginning 2005 through to 2014. Based on the Thompson Reuters DataStream database which provides restatement data for 915 Malaysian companies (9,150 company-year observations), detailed analysis shows that there is a total of 1,945 (21.26%) restatements occurring during the period. The highest number of restatement occurrences was in 2010 with 342 cases (17.58%) while the lowest was in 2008 with 41 cases (2.11%). The majority of restatement cases occurred due to changes in accounting policies with more than 75% of financial restatement cases found within four sectors: industrial products, trading and services, consumer products, and technology. The results of the study will be useful to regulating bodies such as Bursa Malaysia, Securities Commission and Malaysian Accounting Standard Board in as much as they highlight the trend and reasons for financial restatements among Malaysian public listed companies. Further investigation could be conducted for companies that regularly change their accounting policies.

Accounting Conceptual Frameworks: Masb vs. Aaoifi

This paper aims to present comparison of conceptual frameworks issued by the Malaysian Accounting Standards Board (MASB) (fully converge to the standards issued by the International Accounting Standards Board) and the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI). The research is motivated by the introduction of accounting standards by the AAOIFI in the 1990s to fulfil the financial reporting needs of Islamic finance industry. This is stem from the fact that the Islamic financial institutions offer products and services that are complied with Shariah principles which the fundamental objective is significantly differ than their conventional counterpart. Some scholars proposed that these different breed of organizations require different sets of accounting standards to serve their user’s unique financial information needs. However, only limited number of countries accepted and make the application of the AAOIFI accounting standards mandatory for their Islamic financial institutions. On the other hand, more than 120 countries set out that Islamic financial institutions (IFIs) in their countries to use accounting standards issued by the IFRS. The key different of both conceptual framework lies on their objective financial reporting. The objective of financial reporting for MASB is to provide useful financial information for existing and potential investors, lenders and other creditors. The AAOIFI divided the objective of financial reporting into two, namely, objective of financial accounting and objective of financial reports. Consistent with Shariah requirements, the objective of financial reporting focus on determining of rights and obligations of all interested parties, to ensure all activities are in compliance with Shariah principles and to provide useful financial information to all stakeholders of Islamic financial institutions. Further analysis reveals that most of accounting principles outlined in the conceptual framework of the MASB are replicated in the AAOIFI’s conceptual framework. The AAOIFI add further principles which is associated with Shariah requirements. In the Malaysian Islamic finance industry perspective, though the regulator requires the IFIs to apply the IFRS, the Bank Negara Malaysia (i.e. Central Bank) issued relevant regulations as a guide for IFIs financial reporting and to close the gap.

Carbon Emission Disclosure and the Cost of Capital: An Analysis of Malaysian Capital Market

The main purpose of this study is to examine the relationship between voluntary disclosure and cost of capital by exploring the impact of voluntary carbon emission disclosure (VCED) on the firm’s weighted-average cost of capital. A carbon disclosure index is used to evaluate the quality of carbon emission disclosure in 2013 and 2014 annual reports of 247 Malaysian public listed companies. By using content analysis, the result highlights a significant increase in the level and quality of carbon emission disclosure practice from 2013 to 2014. In addition, the finding from regression analysis indicates insignificant relationship between VCED quality and weighted-average cost of capital. Overall, our findings suggest that the carbon emission disclosure is still low, as such, the quality of VCED do not have an impact on firm’s cost of capital. The results of the study allow the government to measure progress toward achieving its target to reduce carbon emission and will add weight to the call by accounting regulation body such as Malaysian Accounting Standard Board for a specific standard on carbon reporting.

The formulation of financial, governance and social index of Malaysian Islamic banks: An integrative approach

The study proposes and discusses the development of an index of Islamic Financial and Social Reporting (IFSR) for Islamic banks. The index of IFSR is carefully developed based on the relevant and applicable standards, guidelines and literature from an Islamic perspective such as the Malaysian Accounting Standards Board (MASB), Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI), Islamic Financial Services Board (IFSB), Bank Negara Malaysia (BNM) and Islamic social reporting literature. The index is developed in three parts, namely, financial, social, and auditing and governance. The items within the finance section are developed to ensure that the Islamic banks disclose relevant financial information. The items for the social part aim to ensure that the Islamic banks provide the relevant information regarding social and environment. The items within the auditing and governance part are developed to ensure that the Islamic banks provide relevant information regarding the monitoring and supervising activities that the Islamic banks have undertaken. The IFSR index may be lacking in terms of its usage generalisability as it is specifically developed for IFIs. The developed index of IFSR aims to promote a more appropriate level of disclosure among the Islamic banks. The need for the index is motivated by the growing importance of Islamic banks, not only from the economic perspective but also from the social perspective.

Pension accounting disclosures and stock market reactions

The Malaysian Accounting Standard Board ‘MASB’ issued FRS 119 ‘Employee Benefits’ which became effective for periods beginning on or after 1 January 2010. This standard is further superseded by MFRS 119 (i.e. as amended by IASB in June 2011) with effect from 1 January 2013. Hence, the present study provides evidence on the practice of pension accounting disclosures after the implementation of FRS 119 ‘Employee Benefits’ and their stock market reactions ‘cumulative market adjusted return’. The study reveals that seventy (70) companies have adopted Defined Benefit (DB) pension schemes based on the annual reports for the year 2009. Among these companies, seven (7) companies have pension assets disclosures while another 63 companies pension liabilities disclosures. The pension accounting disclosures related to actuarial gains and losses are only provided by 29 Malaysian companies. In addition, multivariate analysis provides interesting results that indicate pension liabilities disclosures are significant variables in relation to CMAR. These findings may suggest that DB pension schemes with high disclosures of pension liabilities are less likely contributing to high value of CMAR. In this context, the users of corporate financial statements could be expected (1) to value the amount of pension liabilities more than amount of pension assets among DB pension schemes adopters; and (2) higher amount of pension liabilities may result in lower CMAR among DB pension schemes adopters in Malaysia. On the other hand, pension assets disclosures which are positively and significantly associated to CMAR indicate that the higher of pension assets disclosed in by DB pension adopters in the financial statements, the higher of CMAR will be offered by Malaysian listed companies. These disclosures of pension asset could help the aging population in planning the retirement needs in the future. In addition, users of financial statements may be worth to be attentive and wacthful in relation to the amount of pension assets which are disclosed in the annual reports in order to make decision on buying and selling of company securities.

Phantasmagoric Accounting in Malaysia: A Case Study of ‘The Triumph of Hope over Experience’?

With the aim of detailing issues and problems that confronted accounting in Malaysia during the forty year period beginning from independence in 1957 and ending just before the onset of the Asian Financial Crisis 1997-98 and where the data came in the form of published and unpublished documents and interview findings, the study has found that there were confusion over the identity of the accounting bodies the Malaysian Institute of Accountants (MIA) and the Malaysian Association of Certified Public Accountants (MACPA), accountants shortage, the presence of bogus accountants, disciplinary quagmire and accounting standards confusion. To explain the goings-on, the view of accounting as a social practice imbedded in a socio-historical context is taken up. This leads to the conclusion that the elite group had played quite an important role in shaping accounting in Malaysia to be nothing more than the repeated case of ‘the triumph of hope over experience’. Their (mis)conduct is apparent in regard to the MIA being inactive for two decades, the brouhaha surrounding goodwill accounting standards and the formation of the Malaysian Accounting Standards Board (MASB).

How Do Malaysian ACE Market Companies Report Comprehensive Income

In Nov 2009, the Malaysian Accounting Standards Board (MASB) released FRS 101, Presentation of Financial Statements, effective for fiscal years beginning on or after 1 January, 2010. This statement established certain standards for reporting and presenting comprehensive income in the general-purpose financial statements. In accordance with the definition provided by FRS 101, total comprehensive income is the change in equity during a period resulting from transactions and other events, other than those changes resulting from transactions with owners in their capacity as owners. Data were collected from 84 non-financial companies of the ACE market listed on the Bursa Malaysia (Malaysian Stock Exchange). The study showed that 82 companies used a first format which combined the statement of net income and comprehensive income (using a single statement of comprehensive income), while only 2 companies used the second format which separated the income statement from the statement of comprehensive income. Only 51 companies reported items that fall under the Other Comprehensive Income (OCI) category. Foreign currency translation adjustment was the most prominent item in the OCI, followed by gains and losses on re-measuring available-for-sale financial assets. Almost half of the companies that reported OCI were negatively affected by the foreign currency translation adjustment. Further, the paper also discusses some ancillary findings pertaining to the presentation of the details of comprehensive income.

Mandatory compliance by publicly listed companies in Malaysia

The purpose of this study is to examine the accounting standards compliance level among the public listed companies in Malaysia. It also investigates the corporate attributes (profitability, leverage ratio, type of industry, size of company and nature of external auditors) and corporate governance characteristics (number of audit committee meetings, percentage of independent directors in audit committee and size of audit committee) that have a significant influence on the level of mandatory compliance to Malaysian Accounting Standards Board (MASB). One hundred and one annual reports of public companies listed on the main board of Bursa Malaysia were examined. A checklist of 252 items covering MASB1 to MASB 30 was prepared as an instrument to measure the level of MASB compliance using the unweighted approach. The study found that corporate annual reports were prepared in compliance with MASB requirements. However, standards-wise analysis indicated that some standards have a compliance level of less than 50...

Deferred tax and earnings management under MASB 25

This paper investigates whether Malaysian publicly listed companies in 10 sectors use deferred tax and discretionary accruals as tools to manage earnings in order to meet earning targets: 1) to avoid an earning decline and 2) to avoid a loss. This research examines financial statements prepared during the period 2003 to 2005 when the Malaysian Accounting Standard Board (MASB) 25 Accounting for Income Taxes was in place. This study uses Burgstahler and Dichev's approach to identify earnings management firms. Healy's model and a modified Jones model are also employed to identify and separate accruals. The results show no evidence that deferred tax has been used by firms as a tool to manage earnings during the period of study. The finding suggests that the implementation of the MASB 25 (now known as Financial Reporting Standard (FRS) 112), which is more comprehensive and specific than lAS 12, has reduced the use of deferred tax by firms in managing their earnings. In contrast, the findings of this study provide evidence that firms use discretionary accruals to avoid reporting losses. The results ofthis study may be of use to researchers studying earnings management behavior and for standard setters with regard to establishing and monitoring standards.