2.0 Benefit of the convergence to MFRS 2.1 MFRS framework is internationally recognized MFRS framework also known as Malaysian Financial Reporting Standard is recognized as an International financial reporting standard compliant framework, which means this framework is internationally
recognized.
(https://www.kpmg.com/M/en/Iss!es"ndInsights/"rticles#!$lications/%oc!ments/&'&/Insights )into)Msia)IFRS)*on+ergence&.pdf -- Since this MFRS framework is internationally recognized, )into)Msia)IFRS)*on+ergence&.pdf the acco!nt statement prepared $y pres!ming Malaysia can $e accepted in the eyes of foreign co!ntries and the acco!nt statements prepared $y Malaysia is not secl!ded to only domestic !se. herefore $y switching to MFRS framework will help companies, in+estors, and the p!$lic to glo$ally compare their financial statements easier $eca!se it is internationally !nderstood, and it helps m!ltinational m!ltinational $!sinesses to stay !p)to)date and stay competiti+e competiti+e in the glo$alization of market markets. s. o f!rthe f!rtherr stren strength gthen en my point point,, intere interesti stingl ngly y, not not m!ch m!ch finan financia ciall impac impactt was was o$ser+ed !pon the con+ergence con+ergence to MFRS $eca!se it is identical to IFRS framework in all maor aspects. (https://www.crowehorwath.net/!ploadedfiles/my/insights/insights)assets/ames.pdf (https://www.crowehorwath.net/!ploadedfiles/my/insights/insights)assets/ames.pdf -
2.2 Consistency can e achieved in com!aring financial statements "ccording to an an article p!$lished p!$lished $y %a+id "l$recht, "l$recht , it is said that 0$y adopting IFRS framework, a $!siness can present its financial statements on the same $asis as its foreign competitors, making comparisons easier1. ( https://profal$recht.wordpress.com/&''2/&/&'/why)switch)to)ifrs) from)gaap/-- So as to speak, if e+ery co!ntry has a different set of financial standards, while from)gaap/ m!ltinational m!ltinational companies e3ist in different different co!ntries, it is diffic!lt to compare how each company stands $eca!se there is no consistency. *onsistency can only $e achie+ed when $oth parties ha+e the same thing to compare with. hat is how 0consistency1 $ecomes a key factor in comparing financial statements. 4itho!t the one set of glo$al standards, there won5t $e any consistency and it will $e more diffic!lt, if not impossi$le, to compare with other competitors d!e to e3tra finances and time. " glo$al standard is !st like an international standard or g!ideline where e+eryone aro!nd the world operates !nder it and with that allows companies and competitors to $e a$le to compare a partic!lar thing among among each other other with ease. #res!ming a locally locally operated firm in Malaysia is a$le to compare its financial statements with foreign firms from foreign co!ntries acc!rately d!e
to $oth firms applying the same financing reporting standard framework to their acco!nting statements.
(http://small$!siness.chron.com/international)financial)reporting)standards)))
ad+antages)disad+antages)&67.html Moreo+er, consistency is not only important for compara$ility $!t it also $rings !nity all o+er the glo$e in preparing financial statements. 4ith all the co!ntries that are reporting with IFRS, each co!ntry can watch o+er each other when it comes to following the acco!nting standards . (https://profal$recht.wordpress.com/&''2/&/&'/why)switch)to)ifrs)from)gaap/ -
2." #cco$nting information can e easily $nderstood MFRS framework incl!des new disclos!res of $oth 8!antitati+e and 8!alitati+e information to help $!siness owners or in+estors $etter !nderstand the nat!re, amo!nt, timing and !ncertainty of re+en!e and cash flows from contracts with c!stomers. 9y con+erging to MFRS framework, the acco!nting information will $e prepared and disclosed in an !nderstanda$le fashion. his is an important characteristic which $enefits for small $!siness owners as maority of the small $!siness owners do not ha+e a strong acco!nting $ackgro!nd. Financial information that is too technical or cannot $e !nderstood $y a layperson can $e ineffecti+e for $!siness owners as $!siness owners will most likely fail in e3ec!ting effecti+e decisions. herefore, small $!siness owners or small companies often ha+e to hire professional acco!ntants or other o!tside cons!ltants
to
help
complete
+ario!s
acco!nting
f!nctions
which
deem
costly.
(http://small$!siness.chron.com/international)financial)reporting)standards)))ad+antages) disad+antages)&67.html 4ith the new con+ergence of MFRS framework, financial information can $e easily !nderstood $y not only small $!siness owners e+en others who ha+e no acco!nting $ackgro!nd as well. "nd this will help sa+e the cost of hiring act!al professional acco!ntants to assess the financial acco!nting statements. Moreo+er, when owners or in+estors ha+e a grasp on the financial acco!nting
information,
good
decisions
(http://www.mas$.org.my/presslist.php;id<6 -
can
$e
made
and
e3ec!ted
effecti+ely
2.% MFRS re!orting framework $ses income a!!roach to !rescrie government grants &' don(t know what '(m ty!ing )* + MFRS reporting framework !se the income approach rather than the capital approach to prescri$e re8!irements for go+ernment grant acco!nting. MFRS framework allows an entity to record the land at the nominal amo!nt as an alternati+e to fair +al!e= and MFRS re8!ire that the $enefit of a go+ernment loan at $elow market rate of interest $e treated as a go+ernment grant. his means that on initial recognition, the loan itself wo!ld need to $e meas!red at fair +al!e which is $y disco!nting the f!t!re payments at the entity5s c!rrent $orrowing cost and acco!nted for as a financial lia$ility. (http://mas$.org.my/pdf/M#>RS?&'article"?&'*omparati+e?&'"nalysis?&'of?&'#>RS ?&'M#>RS?&'and?&'MFRS?&'Frameworks.pdf -
MFRS framework a!!lies to all $siness entities &,ot s$re+ his new acco!nting framework applies to all entities other than the following s!ch as the pri+ate entities and those engaged in the agric!lt!re and real estate ind!stries, incl!ding their parents,
significant
in+estors
and
transitioning
entities
or
+ent!rers.
(http://www.mia.org.my/new/techdetail.asp;tid<6@rid
-rovide etter clarity and reven$e recognition &,ot s$re+ he o$ecti+e of MFRS framework is to impro+e the financial reporting of re+en!e and compara$ility of the financial statements among companies glo$ally. herefore, con+erging to this new acco!nting framework pro+ides $etter clarity on re+en!e recognition for companies especially on areas where e3isting re8!irements !nintentionally created di+ersity in practice. It also pro+ides
new
g!idance for
transactions that
were not
pre+io!sly addressed
comprehensi+ely. For the real estate ind!stry, MFRS is e3pected to ena$le property de+elopers to recognize re+en!e progressi+ely. For many straightforward retail transactions, the 9oard e3pects IFRS A to ha+e little, if any, effect on the amo!nt and timing of re+en!e recognition. For other contracts, s!ch
as
long)term
ser+ice
contracts
and
m!ltiple)element
arrangements
e3ample
telecomm!nications and a!tomo$ile sectors, MFRS A co!ld res!lt in some changes either to the amo!nts or timing of the re+en!e recognized.
More Fleiility &,ot s$re+ IFRS !ses a principles)$ased, rather than r!les)$ased, philosophy. " principles)$ased philosophy means that the goal of each standard is to arri+e at a reasona$le +al!ation and that there are many ways to get there. his gi+es companies the freedom to adapt IFRS to their partic!lar
sit!ation,
which
leads
to
more
easily
read
and
!sef!l
statements.
(http://small$!siness.chron.com/international)financial)reporting)standards)))ad+antages) disad+antages)&67.html Reference !$r!oses Benefits of #cco$nting Convergence &htt!s)**www.crowehorwath.net*$!loadedfiles*my*insights*insights/assets*newsletter20/ 20ifrs20convergence20final.!df + &htt!s)**www.k!mg.com*M*en*'ss$es#nd'nsights*#rticles-$lications*3oc$ments*2012*' nsights/into/Msia/'FRS/Convergence42.!df+
