Wednesday 29 June 2011

CIRCULAR MF15/2011: MASB EXPOSES IFRS-COMPLIANT FINANCIAL REPORTING STANDARDS

29 June 2011 Circular MF15/2011

ALL MEMBER FIRMS

MASB EXPOSES IFRS-COMPLIANT FINANCIAL REPORTING STANDARDS


The Malaysian Accounting Standards Board (“MASB”) has, on 28 June 2011, issued MASB Exposure Draft 75 “IFRS-compliant Financial Reporting Standards” (“MASB ED 75”), which proposes to replace the existing Financial Reporting Standards (“FRS”) in conjunction with the plan to fully converge with International Financial Reporting Standards (“IFRS”) on 1 January 2012.

At present, MASB tentatively decided that the new IFRS-compliant FRS framework shall be applicable in the financial reporting by an entity that does not meet the definition of a “private entity”, and the definition of a “private entity” is as defined in the Notice of Amendment of MASB Approved Accounting Standards for Entities Other Than Private Entities released on 23 February 2006. When the proposals in MASB ED 75 are put in place for adoption in 2012, the FRS framework in Malaysia will be recognised as being IFRS-compliant, hence the financial statements that are drawn up in accordance with the new IFRS-compliant FRS framework will be equivalent to the financial statements prepared in accordance with IFRS. Therefore, entities adopting the new IFRS-compliant FRS framework for the first time in the accounting periods beginning on or after 1 January 2012 are required to apply FRS 1 “First-time Adoption of Financial Reporting Standards” to enable such entities to assert full compliance with IFRS as issued by the International Accounting Standards Board .

Whilst significant impact arising from full convergence with IFRS is not expected, MASB has also indicated the intention to deal with entities affected by FRS 141 “Agriculture” and IC Interpretation 15 “Agreements for the Construction of Real Estate” separately.

In conjunction with the issuance of MASB ED 75, MASB would like to hear the views regarding the proposed IFRS-compliant FRS framework and the possible implementation issues in complying with the standards under the new IFRS-compliant FRS framework. The said exposure draft is available for download on the MASB website at http://www.masb.org.my.

Members are encouraged to study the exposure draft and provide feedback to the Institute at technical@mia.org.my by 22 July 2011 for onward submission to MASB.

We look forward to receiving your comments.

Wednesday 8 June 2011

Taxpayer Service Month 2011

The IRB has on 31 May 2011 announced that the second session of 2011 Taxpayer Service Month Programme (TSMP 2011) will continue until 30 June 2011.  The TSMP will focus on taxpayers with income from business sources who will be submitting their income tax return forms for the year of assessment 2010 (Form B 2010).  This category of taxpayers must submit their Form B 2010 and settle any amount of tax payable on or before 30 June 2011 to avoid penalties being imposed on late submission and/or on late payment. 

To facilitate online submission of Form B 2010 and payment of tax, additional counters for e-Filing and e-Payment will be opened at all 36 IRB branches throughout the country. Taxpayers may also use the e-Filing and e-Payments via direct access to the following official website:-

Electronic services
URL address
e-Filing
e-Payment
or can also access via the IRB website www.hasil.gov.my
Taxpayers who have not used e-Filing before must apply for a e-Filing PIN (personal identification number) by email to pin@hasil.gov.my  or call 1-300-88-3010.  Users of e-Filing who have forgotten their password may reset the password by following the steps below:

1.                Click on the ‘e-Filing’ icon on the website www.hasil.gov.my
2.                Click the ‘Forgot Your Password’ button
3.                Enter identity card number
4.                Select a question for the password guidance
5.                Enter answer for the password guidance and click ‘Submit’
6.                Enter the new password, confirm and click the ‘Submit’
7.                Login e-Filing
8.                Complete the Income Tax Return Form (e-B) and ‘Submit’

E-Filing users who have forgotten the password guidance are advised to contact the e-Filing helpline at 03-4289 3535 (local call) and +603-4289 3500 (international calls) or 1-300-88-3010.

Members may view the media release at the IRB’s website at http://www.hasil.gov.my/pdf/pdfam/SesikeduaBPPCborangB2010.pdf

New Public Rulings issued on 16 May 2011 Residence Status of Companies and Bodies of Persons (Public Ruling 05/2011) Residence Status of Individuals (Public Ruling 06/2011)

The Inland Revenue Board (IRB) has issued the above Public Rulings (PR) on 16 May 2011.  Members are encouraged to review the PR and forward the comments, if any, to the Institute so that clarification can be sought from the IRB.  Members may view the PRs at the website of the IRB at http://www.hasil.gov.my/pdf/pdfam/PR5_2011.pdf and http://www.hasil.gov.my/pdf/pdfam/PR6_2011.pdf respectively.  Members may also view them at the Institute’s website at: http://www.ctim.org.my/cms/news.asp?menuid=14

Income Tax (Deduction for Investment in an Approved Food Production Project) Rules 2011 [P.U.(A) No.167/2011]

This Order applies to a company incorporated under the Companies Act 1965 and resident in Malaysia who has made an investment, in the form of cash or holding of paid-up share capital in respect of ordinary shares, in its related company undertaking a new approved food production project (the project) under the Income Tax (Exemption) (No.3) Order 2011 [P.U. (A) No.166/2011] and who has applied to the Minister between 1 October 2005 and 31 December 2015.
Related company means a company incorporated under the Companies Act 1965 where at least 70% of its paid-up share capital in respect of ordinary shares is directly owned by a company that made an investment for the purpose of an approved food production project.
In arriving at the adjusted income of a company from its business in the basis period for a year of assessment, an amount equivalent to the value of investment for the sole purpose of financing the project undertaken by the related company is allowed as a deduction.  The value of investment is equivalent to expenditure incurred by the related company in the basis period for the same year of assessment and is made for a period and up to an amount as approved by the Minister.  Such an investment shall not be disposed of within 5 years from the date of the last investment made if such investment is in the form of holding of paid-up share capital in respect of ordinary shares.
Where a company which has made an investment in the form of holding of paid-up share capital in respect of ordinary shares and claimed a deduction in respect of that investment receives an amount as consideration for the disposal of such shares, the amount so received shall be added in ascertaining the adjusted income for the year of assessment in the basis period in which that amount was received, provided that the amount added in ascertaining the adjusted income shall not exceed the total deductions allowed in relation to that investment.  This does not apply to disposal of shares which takes place after 5 years from the date of the last investment in the form of paid-up share capital in respect of ordinary shares made in the related company.
The deduction to the company shall cease in the basis period for a year of assessment in which the period of exemption of the related company commences (refer P.U. (A) No.166/2011 above). 
The deduction is not available to a company which has been granted an exemption for an approved food production project under:
(i)        Income Tax (Exemption) (No. 3) Order 2011 [P.U.(A) 166/2011]
(ii)       Income Tax (Exemption) (No. 9) Order 2006 [P.U.(A) 50/2006]
(iii)      Income Tax (Exemption) (No. 10) Order 2006 [P.U.(A) 51/2006]  

Income Tax (Exemption) (No.3) Order 2011 [P.U. (A) No.166/2011]

This Order exempts a qualified person from payment of income tax on its statutory income from an approved food production project applied to the Minister between 1 October 2005 and 31 December 2015, on condition that the project has not commenced at the date of application and it commences within a year from the date of approval.  The statutory income shall be determined after deducting capital allowances notwithstanding that no claim for such allowances has been made.
For a new project, the exemption commences from the first year of assessment in which statutory income from the project is derived, and continues for a period of ten consecutive years of assessment.  
For an expansion project, the exemption commences from the first year of assessment in which statutory income from the existing and expansion projects is derived, and continues for a period of five consecutive years of assessment provided that the first year of assessment shall not be earlier than the year of assessment in the basis period in which the date of Minister’s approval falls.
Any amount of adjusted loss incurred -
(i)        from the year of assessment in the basis period in which the project commenced to the year of assessment immediately prior to the exempt years of assessment; and
(ii)       during the exempt years of assessment
shall be allowed carried forward and deducted against the statutory income from the project in its post-exempt years of assessment until the adjusted loss is fully utilised.
Qualified person means:
(i)    a company incorporated under the Companies Act 1965
(ii)   an agro-based co-operative society
(iii)  an Area Farmers’ Association
(iv) a Federal Farmers’ Association
(v)  a State Farmers’ Association
(vi) an Area Fishermen’s Association
(vii)a Federal Fishermen’s Association
(viii)   a State Fishermen’s Association, and
(ix) sole proprietorship, partnership, or association solely engaged in agriculture or fishery
Approved food production project means a project in relation to
(a)  planting of kenaf, vegetables, fruits, herbs or spices
(b)  aquaculture
(c)  rearing of cows, buffaloes, goats or sheep; or
(d)  deep sea fishing
         which is deemed to be a separate and distinct business.
New project means the first project carried out by a qualified person for the purpose of undertaking an approved food production project and the new project is approved by the Minister.
Expansion project means a project carried out by a qualified person for the purpose of expanding its existing approved food production project where the expansion project has not been granted an exemption under this Order and it involves a new area of land and is approved by the Minister.
The Order shall not apply to a person who has been granted/made a claim for
a)        any incentive under the Promotion of Investments Act 1986
b)        re-investment allowance (Schedule 7A) and investment allowance (Schedule 7B) of ITA
c)        an exemption under Section 127(3)(b) or (3A) of ITA; or
d)        deduction under any rules made under Section 154 except an allowance under Schedule 3 of ITA.
The Minister may withdraw the exemption if the qualified person fails to comply with the conditions imposed by the Minister.

Wednesday 1 June 2011

CIRCULAR MF14/2011: PROPOSED REVISED INTERNATIONAL STANDARD ON ASSURANCE ENGAGEMENTS 3000

CIRCULAR MF14/2011: PROPOSED REVISED INTERNATIONAL STANDARD ON ASSURANCE ENGAGEMENTS 3000 - ASSURANCE ENGAGEMENTS OTHER THAN AUDITS OF REVIEWS OF HISTORICAL FINANCIAL INFORMATION

01 Jun 2011 Circular MF14/2011

TO ALL MEMBER FIRMS

PROPOSED REVISED INTERNATIONAL STANDARD ON ASSURANCE ENGAGEMENTS 3000 - ASSURANCE ENGAGEMENTS OTHER THAN AUDITS OF REVIEWS OF HISTORICAL FINANCIAL INFORMATION


The Institute is pleased to inform members that the Council has approved the release of the exposure draft on revised International Standard on Assurance Engagements (ISAE) 3000 “Assurance Engagements Other Than Audits or Reviews of Historical Financial Information” 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 of the International Federation of Accountants.

Proposed ISAE 3000 is a principles-based standard that can be applied effectively to a broad range of assurance engagements. Such engagements may range from assurance on statements about the effectiveness of internal control, for example, to direct engagements such as performance or “value for money” audits, to possible future engagements addressing integrated reporting or corporate social responsibility reporting.

Proposed ISAE 3000 covers both reasonable and limited assurance engagements. Among other proposals, the ISAE introduces guidance designed to help readers better understand these two levels of assurance. It also includes guidance addressing direct engagements that have become common in the public sector and have been undertaken increasingly in the private sector.

Proposed ISAE 3000 also includes material from the existing International Framework for Assurance Engagements that is necessary for the ISAE to be understood without reference to the Framework. Accompanying the exposure of the proposed ISAE are also proposed consequential amendments to the Framework reflecting the impact of the proposals in ISAE 3000.
Deadline for comment
ED ISAE 3000/2011 ISAE 3000 (Revised), Assurance Engagements Other Than Audits or Reviews of Historical Financial Information

Click HERE to download the ED ISAE 3000/2011.
1 July 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 standard before being issued in the form of an Approved Standard on Assurance Engagements.

Comments should be submitted in writing by the deadline and addressed to:

The Secretariat
Auditing and Assurance Standards Board
Dewan Akauntan
2, Jalan Tun Sambanthan 3
Brickfields
50470 Kuala Lumpur
Tel : 03 2274 5055
Fax : 03 2273 4319
Email : technical@mia.org.my
Website address: http://www.mia.org.my


Please be guided accordingly.

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