CIRCULAR MF17/2010: MIA PROVIDES GUIDANCE ON DETERMINATION OF REALISED AND UNREALISED PROFITS OR LOSSES

22 Dec 2010

Circular MF17/2010

ALL MEMBER FIRMS

MIA PROVIDES GUIDANCE ON DETERMINATION OF REALISED AND UNREALISED PROFITS OR LOSSES

The Institute has, on 20 December 2010 issued Guidance on Special Matter No. 1 "Determination of Realised and Unrealised Profits or Losses in the Context of Disclosures Pursuant to Bursa Malaysia Securities Berhad Listing Requirements" in response to the new requirements introduced by Bursa Malaysia Securities Berhad (“Bursa Malaysia”) requiring all listed corporations to disclose the breakdown of unappropriated profits or accumulated losses into realised and unrealised on group and company basis, as the case may be in quarterly reports and annual audited financial statements.

The aforementioned disclosure requirements are as detailed in the directives issued by Bursa Malaysia to all listed corporations on 25 March 2010 and 20 December 2010.

About the Guidance

Guidance on Special Matter No. 1, which provides the guiding principles in distinguishing between realised and unrealised profits or losses at individual legal entity level, is issued as part of the Institute’s initiatives to assist Bursa Malaysia in ensuring consistency and comparability in respect of the aforementioned disclosures amongst listed corporations in Malaysia.

The guiding principles contained in Guidance on Special Matter No. 1 recommend that any charge or credit to the profit or loss of a legal entity is deemed as realised when it is resulted from the consumption or depletion of resource.

As Guidance on Special Matter No. 1 is specially developed in response to the aforementioned disclosure requirements, it should be read in conjunction with the relevant Bursa Malaysia directives and it is not to be applied for any other purposes.

Please be guided accordingly.

MASB issues revised standard on related party disclosures

The Malaysian Accounting Standards Board (MASB) today issued a revised Standard on Related Party Disclosures and a new Interpretation. It also issued amendments to FRSs and Interpretations. These pronouncements are word for word to those issued by the International Accounting Standards Board (IASB). Some are already effective internationally whilst some will be effective next year.

The issuance of these pronouncements is part of MASB’s roadmap towards achieving full convergence with the International Financial Reporting Standards (IFRS) in 2012. This issuance would reduce the gap between the IFRSs and FRSs.

The pronouncements issued today are as follows:

FRSs:

• FRS 124 Related Party Disclosures
• Amendments to FRSs contained in the document entitled “Improvements to FRSs (2010)"

Interpretations:

• IC Interpretation 19 Extinguishing Financial Liabilities with Equity Instruments
• Prepayments of a Minimum Funding Requirement (Amendments to IC Interpretation 14)

About the Pronouncements

FRS 124 Related Party Disclosures

The revised FRS 124 simplifies the definition of related party, clarifies its intended meaning and eliminates inconsistencies from the definition. The changes from current practice among others include a partial exemption from disclosures for government-related entities. It requires disclosure of related party transactions between government-related entities only if the transactions are individually or collectively significant.

Prior to the issuance of the revised FRS 124, no disclosure of transactions is required in financial statements of state-controlled entities of transactions with other state-controlled entities. The partial exemption from disclosures for government-related activities as required in the revised FRS 124 are intended to put users on notice that such related party transactions have occurred and to give an indication of their extent.

Improvements to FRSs (2010)

Improvements to FRSs (2010) contain amendments to ten FRSs and one Interpretation. IASB started the annual improvements process since 2008 to cater for amendments that are considered non-urgent but necessary. The objective of the annual improvements project is to enhance the quality of existing IFRSs and this is achieved by amending existing IFRSs to clarify guidance and wordings or to correct for relatively minor unintended consequence, conflicts or oversights. In view of the IFRS convergence plan in 2012, the MASB has accelerated the due process in the issuance of the Improvements as they help to clarify the requirements of or provide further explanation to existing FRSs.

IC Interpretation 19 Extinguishing Financial Liabilities with Equity Instruments

This Interpretation addresses the accounting by an entity when the terms of a financial liability are renegotiated and result in the entity issuing equity instruments to a creditor to extinguish all or part of the financial liability. It does not address the accounting by the creditor. The amendment is as a result of request for guidance on the application of FRS 139 Financial Instruments: Recognition and Measurement and FRS 132 Financial Instruments: Presentation when an entity issues its own equity instruments to extinguish all or part of a financial liability.

The Interpretation was issued by the IFRS Interpretations Committee as there were diversities in practice on how entities measured the equity instruments issued to extinguish a financial liability. Some recognised the equity instruments at the carrying amount of the financial liability and do not recognised any gain or loss in profit or loss. Others recognised the equity instruments at the fair value of either the liability or the equity instruments issued and recognised any difference between that amount and the carrying amount of the financial liability in profit or loss.

IC Interpretation 19 will standardise practice among debtors applying FRSs to a debt for equity swap. It clarifies that the entity’s equity instruments issued to a creditor are part of the consideration paid to extinguish the financial liabilities.

Prepayments of a Minimum Funding Requirement (Amendments to IC Interpretation 14)

The Amendments to IC Interpretation 14 apply in the limited circumstances when an entity is subject to minimum funding requirement and makes an early payment of contributions to cover those requirements. The amendments permit the entity to treat the benefit of such early payment as an asset.

The new pronouncements are available from MASB website (http://www.masb.org.my) or can be purchased in booklet form from MASB office.

Click here for the Notice of Issuance.

END

For enquiries, please contact:
Malaysian Accounting Standards Board
Wisma UOA Pantai
Suites 5.02, Level 5
No. 11, Jalan Pantai Jaya
59200 Kuala Lumpur
Tel: 03-2240 9200
Fax: 03-2240 9300
Email: masb@masb.org.my This e-mail address is being protected from spambots. You need JavaScript enabled to view it

http://www.masb.org.my/index.php?option=com_content&view=article&id=1536:masb-issues-revised-standard-on-related-party-disclosures-1-new-interpretation-and-amends-frss-a-interpretations-30-november-2010&catid=59:press-release-2010&Itemid=37

CIRCULAR MF16/2010: REVISED BY-LAWS ON PROFESSIONAL ETHICS PURSUANT

08 Dec 2010

Circular MF16/2010

TO ALL MEMBER FIRMS

MALAYSIAN INSTITUTE OF ACCOUNTANTS ISSUES REVISED BY-LAWS ON PROFESSIONAL ETHICS PURSUANT TO THE REVISED CODE OF ETHICS FOR PROFESSIONAL ACCOUNTANTS BY THE INTERNATIONAL ETHICS STANDARDS BOARD OF ACCOUNTANTS PUBLISHED BY THE INTERNATIONAL FEDERATION OF ACCOUNTANTS

The Council of the Malaysian Institute of Accountants (MIA) has approved the issuance of the revised By-Laws on Professional Ethics pursuant to the revised Code of Ethics for Professional Accountants by the International Ethics Standards Board of Accountants (IESBA) published by the International Federation of Accountants (IFAC).

As part of the Institute's membership obligations, the By-Laws have incorporated the provisions of the revised Code of Ethics for Professional Accountants issued by IESBA with appropriate modifications to suit the Malaysian regulatory, legislative and professional environment. The By-Laws also contain suitable amendments and certain provisions of the Institute's By-Laws (On Professional Ethics, Conduct and Practice) issued January 2007.

As a member body of IFAC, the Institute is committed to adopting the provisions issued by IFAC, in so far as the provisions are not inconsistent with national laws and requirements. The Revised By-Laws will come into effect in January 2011.

The Revised By-Laws have been updated in the MIA Handbook. Members can download a copy of it at http://www.mia.org.my/handbook/bylaws_new or visit the Institute's website at www.mia.org.my under Ethics.

MIA staff has prepared an attachment below of the summary of comparison between IESBA's revised Code of Ethics for Professional Accountants and MIA's revised By-Laws on Professional Ethics. Members can also refer to http://www.ifac.org/Ethics/Resources.php which is prepared by IESBA for further information on the revised Code of Ethics for Professional Accountants.

Please be guided accordingly.


HO FOONG MOI (MS)
Executive Director
On behalf of the Registrar

Click HERE and select 'Save Target As' to download By-Law (revised Jan 2011).

Click HERE and select 'Save Target As' to download Tracking Modifications to IESBA Code.

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Raise in Minimum Taxable Income

THE Finance Ministry will consider raising the minimum taxable joint income for married couples from RM3,151 to RM4,000 a month, says deputy minister Datuk Donald Lim Siang Chai.

He said this to a supplementary question by Datuk Bung Mokhtar Radin (BN-Kinabatangan) who wanted to know if the Government planned to increase the minimum taxable salary so that workers could have more money to provide for their families.

Lim also revealed that a total of RM15.5bil in income tax was collected from about 2.2mil individuals last year.

Lim added that the actual figures for this year could not be obtained yet as the numbers would only be finalised on Dec 31.

IRB updates Office Numbers Nationwide

KUALA LUMPUR, Dec 15 (Bernama) -- The Inland Revenue Board of Malaysia (IRB) is in the process of updating its general telephone lines for all its offices nationwide.

So far, nine branch offices have had their lines updated and will be using new telephone numbers for their general line, IRB said in a press statement here Wednesday.

In Sarawak, the new number for the Kuching branch is now 082-223400 which came into effect on December 14, while for Bintulu the new number is 086-854500 effective today. For Miri, the number is 085-462400 effective December 18.

In Sabah, the Keningau branch office general line will be 087-313600 effective December 20, IRB said.

The number in Penang is 04-2552000 (effective December 14) while for Bukit Mertajam, the general line number is 04-5487000 (effective December 13) and the Teluk Intan (Perak) general line number will be 05-6296200 effective December 18.

The Taiping (Perak) branch number, 05-8296200, will be effective December 16 while the new number in Kangar (Perlis) is 04-9739100 effective December 11.

Further information can be obtained by calling 1-300-88-3010 or visiting IRB's official website at www.hasil.gov.my.

Service Tax (Amendment) Regulations 2010

The Regulations will come into operation on 1 January 2011. The Regulations amend the second schedule of the Service Tax Regulations 1975 [P.U. (A) 52/1975] under the heading of Group G in column “Taxable Service”, by substituting item “b.” with the following item: “b. Provision of — (i) telecommunication services in the form of telephone, facsimile, telemail, pager, cellular phone, telex, bandwidth service or value added services; and (ii) paid television broadcasting services.”

Service Tax (Rate of Tax) (Amendment) Order 2010

The Order will come into operation on 1 January 2011.

The Order amends the Service Tax (Rate of Tax) Order 2009 [P.U. (A) 468/2009] in subparagraph 3(a) by substituting for the words “5%” the words “6%”.

IRB projects 20 Percent More New Taxpayers Next Year

GENTING HIGHLANDS, Dec 14 (Bernama) -- The Inland Revenue Board is projecting a 20 per cent growth in the number of new taxpayers next year compared with an average growth of 10 per cent seen in the previous years. Deputy Director General (Compliance) Datuk Dr Mohd Shukor Mahfar said the rise was seen with the improvement in the agency's online services. "This improvement is in line with the changing information technologies and current trends where most of the transactions are made online," he told reporters after a closing ceremony for IRB's workshop on its e-Ledger and Electronic Funds Transfer (EFT) system together with the Media, on Tuesday. He said among the improvements are the introduction of two applications online by IRB which is the electronic tax ledger for taxpayers or e-Ledger and the EFT. These applications would make it easier for taxpayers to carry out their responsibilities without having to come to the tax office. On the EFT, he said IRB would be expanding the use of EFT among taxpayers to make it easier for taxpayers to get any tax refunds. Through the EFT, taxpayers who had overpaid would get their tax refunds not more than three days after tax payments had been made compared with the present practice where cheques are issued after a longer period and which is also more risky. With the EFT, IRB would be able to also minimise the problems arising from tax refunds made through cheques where there are instances that these cheques are not received by taxpayers, cheating cases involving cheques and also expired cheques. The use of EFT in fact will bring about cost savings for the tax department such as the cost of issuing cheques, maintenance of cheque machines and the delivery of cheques. In 2009 alone, the IRB issued more than 671,000 cheques for tax refunds. The EFT is an online tax payback application developed by IRB to facilitate and speed up refunds to taxpayers.

BNM may increase Interest Rates if CPI rises to 3.3 Pct in 2011

KUALA LUMPUR, Dec 14 (Bernama) -- A rise in consumer price index (CPI) may impel Bank Negara Malaysia (BNM) to resume increasing interest rates, by 25 basis points each in the second and third quarter of 2011, respectively.

The central bank, however, is expected to keep its monetary policy on hold in the first quarter of 2011 until there was more clarity on the global picture and given its "moderate inflation" projection through 2011.

"We are more concerned about CPI inflation, expecting it to rise to 3.3 per cent in 2011. This should impel BNM to resume raising rates, with 25 basis point hikes each in quarter two and three of 2011," Nomura Securities International Inc said in its 2011 Global Economic Outlook released on Tuesday.

Monetary conditions tightened in 2010 via real effective exchange rate appreciation and three 25 basis points rate hikes bringing the overnight policy rate to 2.75 per cent.

Monetary conditions should also tighten through further ringgit appreciation, given the large current account surplus and potential for larger capital inflows, said Nomura.

"We do not expect Malaysia to impose controls on inflows in the near future," it added.

BNM recently further liberalised the capital account and set a 70 per cent loan-to-valuation ratio cap on third mortgages in a bid to curb property market speculation.

More macro-prudential measures are likely, it said.

Monthly Tax Deduction (MTD) online payment

The Inland Revenue Board has launched the e-PCB and e-Data PCB systems for use by employers. Employers may check the format and upload the CP 39 text file online, and make PCB payments online, using Financial Process Exchange (FPX)

Members may view the details at http://www.hasil.gov.my/index.php?lgv=2&chg=1

Procedure On Submission Of Amended Return Form (GPHDN 01/2010)

The Inland Revenue Board (IRB) has issued the Operational Guidelines on 30 November 2010 with respect to the Procedure on Submission of Amended Return Form (GPHDN 01/2010). Some of the salient points clarified are as follows:

i) Where the Amended Return Form or Borang Nyata Terpinda (BNT) is submitted on or before the filing due date of the original Income Tax Return Form or Borang Nyata Cukai Pendapatan (BNCP), it will be treated as normal appeal (Paragraph 3.1).

ii) Self-amendment is only allowed once for a taxpayer who has filed the BNCP on or before the filing due date (Paragraph 3.2).

iii) Self-amendment is only available to understatement or underdeclaration of income, expenses/claims overstated and capital allowances/incentives/reliefs overclaimed (Paragraph 3.3).

iv) Submission of BNT will be regarded as voluntary disclosure for understatement of income and penalty will be imposed in accordance with the rates as stated in the Tax Audit Framework.

v) Any tax payable, including penalties, must be settled on the date the BNT is submitted, failing which penalties will be imposed.

Members may view the Operational Guidelines at the website of the Institute at http://www.ctim.org.my/technical_techdev_direct.asp or at the website of the IRB at http://www.hasil.gov.my/pdf/pdfam/GPHDN1_2010.pdf.

CIRCULAR MF16/2010: MALAYSIAN INSTITUTE OF ACCOUNTANTS ISSUES REVISED BY-LAWS

CIRCULAR MF16/2010: MALAYSIAN INSTITUTE OF ACCOUNTANTS ISSUES REVISED BY-LAWS ON PROFESSIONAL ETHICS PURSUANT TO THE REVISED CODE OF ETHICS FOR PROFESSIONAL ACCOUNTANTS BY THE INTERNATIONAL ETHICS STANDARDS BOARD OF ACCOUNTANTS PUBLISHED BY THE INTERNATIONAL FEDERATION OF ACCOUNTANTS

08 Dec 2010

Circular MF16/2010

TO ALL MEMBER FIRMS

MALAYSIAN INSTITUTE OF ACCOUNTANTS ISSUES REVISED BY-LAWS ON PROFESSIONAL ETHICS PURSUANT TO THE REVISED CODE OF ETHICS FOR PROFESSIONAL ACCOUNTANTS BY THE INTERNATIONAL ETHICS STANDARDS BOARD OF ACCOUNTANTS PUBLISHED BY THE INTERNATIONAL FEDERATION OF ACCOUNTANTS

The Council of the Malaysian Institute of Accountants (MIA) has approved the issuance of the revised By-Laws on Professional Ethics pursuant to the revised Code of Ethics for Professional Accountants by the International Ethics Standards Board of Accountants (IESBA) published by the International Federation of Accountants (IFAC).

As part of the Institute's membership obligations, the By-Laws have incorporated the provisions of the revised Code of Ethics for Professional Accountants issued by IESBA with appropriate modifications to suit the Malaysian regulatory, legislative and professional environment. The By-Laws also contain suitable amendments and certain provisions of the Institute's By-Laws (On Professional Ethics, Conduct and Practice) issued January 2007.

As a member body of IFAC, the Institute is committed to adopting the provisions issued by IFAC, in so far as the provisions are not inconsistent with national laws and requirements. The Revised By-Laws will come into effect in January 2011.

The Revised By-Laws have been updated in the MIA Handbook. Members can download a copy of it at http://www.mia.org.my/handbook/bylaws_new or visit the Institute's website at www.mia.org.my under Ethics.

MIA staff has prepared an attachment below of the summary of comparison between IESBA's revised Code of Ethics for Professional Accountants and MIA's revised By-Laws on Professional Ethics. Members can also refer to http://www.ifac.org/Ethics/Resources.php which is prepared by IESBA for further information on the revised Code of Ethics for Professional Accountants.

Please be guided accordingly.

CIRCULAR MF15/2010: PROPOSED INTERNATIONAL AUDITING PRACTICE STATEMENT 1000

01 Dec 2010

Circular MF15/2010

TO ALL MEMBER FIRMS

1. PROPOSED INTERNATIONAL AUDITING PRACTICE STATEMENT 1000
2. PROPOSED INTERNATIONAL STANDARD ON RELATED SERVICES 4410

The Institute is pleased to inform members that the Council has approved the release of the exposure draft on International Auditing Practice Statement ("IAPS") 1000, Special Considerations in Auditing Complex Financial Instruments and International Standard on Related Services ("ISRS") 4410, Compilation Engagements for distribution to members, regulatory bodies and other interested parties for comment.

The exposure draft is drawn primarily from the pronouncement issued by the International Auditing and Assurance Standards Board ("IAASB") of the International Federation of Accountants.

PROPOSED INTERNATIONAL AUDITING PRACTICE STATEMENT 1000, SPECIAL CONSIDERATIONS IN AUDITING COMPLEX FINANCIAL INSTRUMENTS

The proposed IAPS 1000 highlights practical considerations for auditors when dealing with complex financial instruments. The proposed IAPS 1000 gives particular emphasis to auditing considerations relating to valuation and disclosure issues for financial statement items measured at fair value.

Along with the proposed IAPS 1000, the IAASB is also exposing for comment proposed changes to the current Preface to the International Standards on Quality Control, Auditing, Review, Other Assurance and Related Services which explains the authority of this and future IAPSs.

		Deadline for comment
ED Preface/2010, ED IAPS 1000/2010	Proposed Amendments to the Preface to the International Quality Control, Auditing, Review, Other Assurance, and Related Services Pronouncements IAPS 1000 Special Considerations in Auditing Complex Financial Instruments Click HERE to download ED Preface /2010 and ED IAPS 1000/2010.	31 Dec 2010

PROPOSED INTERNATIONAL STANDARD ON RELATED SERVICES 4410, COMPILATION ENGAGEMENTS

The proposed ISRS 4410 is the first step in the IAASB's work to create robust standards for services that can be used by entities that are either not required or do not elect to be audited to meet their business reporting needs. Through a compilation engagement, practitioners can provide significant benefit by applying their expertise in accounting and financial reporting. This expertise is applied to assist the management of an entity in preparing and presenting historical financial information for use by the entity’s internal or external stakeholders.

		Deadline for comment
ED ISRS 4410/2010	ISRS 4410 Compilation Engagements Click HERE to download ED ISRS 4410/2010.	31 Jan 2011

Comments may refer to any specific principles, paragraphs or group of paragraphs and suggestion for alternative solution or wording with supporting reasons. These comments will be collated and, where appropriate, incorporated into the proposed exposure drafts before being issued in final form.

Comments should be submitted in writing and are to be received by the deadline.

Members can download the said exposure draft from our website at http://www.mia.org.my under the Technical-Auditing-Circulars link.

Please be guided accordingly.


HO FOONG MOI (MS)
Executive Director
On behalf of the Registrar