Financial statements disclosures and presentation...© 2016 KPMG, a partnership established under...
Transcript of Financial statements disclosures and presentation...© 2016 KPMG, a partnership established under...
© 2016 KPMG, a partnership established under
Malaysian law and a member firm of the KPMG
network of independent member firms affiliated with
KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved.
Printed in Malaysia.
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual
or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is
accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information
without appropriate professional advice after a thorough examination of the particular situation.
What’s next for Private Entities – MPERS or MFRS?
September 2016
Financial
statements
disclosures
and
presentation
1© 2016 KPMG, a partnership established under Malaysian law and a member firm of the KPMG network of
independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.
All rights reserved. Printed in Malaysia.
MPERS Conversion steps
Determine functional currency
Restate opening
balances and comparatives
MPERS-compliant financial
statements
Step 1 Step 2 Step 3 Step 4 Step 5
Select accounting
policiesIdentify gaps
Apply transitional provisions
where applicable
(Section 35)
© 2016 KPMG, a partnership established under
Malaysian law and a member firm of the KPMG
network of independent member firms affiliated with
KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved.
Printed in Malaysia.
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual
or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is
accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information
without appropriate professional advice after a thorough examination of the particular situation.
What’s next for Private Entities – MPERS or MFRS?
September 2016
Agenda
Foreign currency translation
and presentation currency
Related party disclosures
Events after the end of the
reporting period
First MPERS financial
statements
3© 2016 KPMG, a partnership established under Malaysian law and a member firm of the KPMG network of
independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.
All rights reserved. Printed in Malaysia.
Foreign currency translation and presentation currencyKey changes in MPERS
Presentation &
disclosures
Treatment of foreign currency transaction with the concept of functional currency.
Recognition &
measurement
MPERS
MPERS does not permit the use of forward exchange contract rate to translate monetary items.
Translation of functional currency to presentation currency.
© 2016 KPMG, a partnership established under
Malaysian law and a member firm of the KPMG
network of independent member firms affiliated with
KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved.
Printed in Malaysia.
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual
or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is
accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information
without appropriate professional advice after a thorough examination of the particular situation.
What’s next for Private Entities – MPERS or MFRS?
September 2016
4© 2016 KPMG, a partnership established under Malaysian law and a member firm of the KPMG network of
independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.
All rights reserved. Printed in Malaysia.
Foreign currency translation and presentation currencyKey changes in MPERS
Presentation &
disclosures
Treatment of foreign currency transaction with the concept of functional currency.
Recognition &
measurement
MPERS
5© 2016 KPMG, a partnership established under Malaysian law and a member firm of the KPMG network of
independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.
All rights reserved. Printed in Malaysia.
Functional currency: Foreign currency transaction
Entity A Entity B
Sells goods
USD debtor of USD10,000
Exchange rate 1USD = RM
1/1/X1 31/1/X1 15/2/X1
3.0 3.1 3.2
MPERS: Presentation currency = RM
Statement of financial position as at 31/1/X1
USD debtor USD10,000 3.1 RM31,000
Retained earnings USD10,000 (RM30,000)
Forex reserve - (RM1,000)
Profit or loss for period ended 31/1/X1
Revenue USD10,000 3.0 RM30,000
MPERS: Functional currency = USD
1/1/X1 Dr USD debtor USD10,000
Cr Sales USD10,000
(Record sales in functional currency of USD)
31/1/X1 No Entry
15/2/X1 Dr Bank USD10,000
Cr USD debtor USD10,000
(Received cash from debtors)
No forex difference Forex differences on presentation
© 2016 KPMG, a partnership established under
Malaysian law and a member firm of the KPMG
network of independent member firms affiliated with
KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved.
Printed in Malaysia.
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual
or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is
accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information
without appropriate professional advice after a thorough examination of the particular situation.
What’s next for Private Entities – MPERS or MFRS?
September 2016
6© 2016 KPMG, a partnership established under Malaysian law and a member firm of the KPMG network of
independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.
All rights reserved. Printed in Malaysia.
Change of functional currency on date of transitionTranslation of opening balance sheet
Balance sheet at 1 Jan 2015
31.12.2014 : Reporting currency – RM
1.1.2015 : Functional currency – USD
RM Rate USD
PPE 130,000
Debtors 30,000
160,000
Payables (45,000)
Long-term borrowings (75,000)
Share capital (35,000)
Retained earnings (5,000)
Cumulative exchange
reserve -
(160,000)
Date of transition to MPERS
1 Jan 2015 31 Dec 2015
1 Jan 2015: 1USD = RM3.0
7© 2016 KPMG, a partnership established under Malaysian law and a member firm of the KPMG network of
independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.
All rights reserved. Printed in Malaysia.
PPE RM Rate at date of
transaction
USD
Acquisition 50,000 3.1 16,129
Depreciation Y1 (5,000) 3.2 (1,562)
Depreciation Y2 (5,000) 3.1 (1,613)
Addition 100,000 3.3 30,303
Depreciation Y3 (10,000) 3.2 (3,125)
130,000 40,132
Change of functional currency on date of transition (cont’d)Historical rate of non-monetary item
Historical rate of PPE movements
Option 1
Option 2
1 Jan 2015: 1USD = RM3.0
Using exchange rate at the date of transition
RM130,000 / RM3.0 = USD43,333 Which option
is
appropriate?
Option 2
© 2016 KPMG, a partnership established under
Malaysian law and a member firm of the KPMG
network of independent member firms affiliated with
KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved.
Printed in Malaysia.
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual
or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is
accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information
without appropriate professional advice after a thorough examination of the particular situation.
What’s next for Private Entities – MPERS or MFRS?
September 2016
8© 2016 KPMG, a partnership established under Malaysian law and a member firm of the KPMG network of
independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.
All rights reserved. Printed in Malaysia.
Change of functional currency on date of transition (cont’d)Translation of opening balance sheet
Balance sheet at 1 Jan 2015
31.12.2014 : Reporting currency – RM
1.1.2015 : Functional currency – USD
RM Rate USD
PPE 130,000
Debtors 30,000
160,000
Payables (45,000)
Long-term borrowings (75,000)
Share capital (35,000)
Retained earnings (5,000)
Cumulative exchange
reserve 0
(160,000)
Date of transition to MPERS
1 Jan 2015 31 Dec 2015
1 Jan 2015: 1USD = RM3.0
40,132
10,000
50,132
(15,000)
(25,000)
(11,290)
1,158
0
50,132
Historical rate
3.0
Deemed to be zero at the date of transition
Balancing
Historical rate
3.0
3.0
9© 2016 KPMG, a partnership established under Malaysian law and a member firm of the KPMG network of
independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.
All rights reserved. Printed in Malaysia.
Change of functional currency on date of transition (cont’d)Restatement of profit or loss
Date of transition to MPERS
31.12.2014 : Reporting currency – RM
1.1.2015 : Functional currency – USD
Profit or loss for FYE 2015
1 Jan 2015
Restate profit or loss in
functional currency (e.g.
depreciation, forex
gain/loss)
31 Dec 2015
© 2016 KPMG, a partnership established under
Malaysian law and a member firm of the KPMG
network of independent member firms affiliated with
KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved.
Printed in Malaysia.
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual
or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is
accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information
without appropriate professional advice after a thorough examination of the particular situation.
What’s next for Private Entities – MPERS or MFRS?
September 2016
10© 2016 KPMG, a partnership established under Malaysian law and a member firm of the KPMG network of
independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.
All rights reserved. Printed in Malaysia.
Foreign currency translation and presentation currencyKey changes in MPERS
Presentation &
disclosures
Recognition &
measurement
MPERS
MPERS does not permit the use of forward exchange contract rate to translate monetary items.
11© 2016 KPMG, a partnership established under Malaysian law and a member firm of the KPMG network of
independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.
All rights reserved. Printed in Malaysia.
Using forward exchange contract (“FEC”) rate
Entity A Entity B
Sells goods
USD Debtor of USD10,000
Exchange rate 1USD = RM
1/1/X1 31/1/X1 15/2/X1
3.0 3.1 3.2
PERS
1/1/X1 Dr USD Debtor RM32,000
Cr Sales RM32,000
(Record sales in reporting currency of RM
based on FEC rate)
15/2/X1 Dr Bank RM32,000
Cr USD Debtor RM32,000
(Received cash from debtors)
Entered into forward exchange
contract
1USD = RM3.2
MPERS
1/1/X1 Dr USD Debtor RM30,000
Cr Sales RM30,000
(Record sales at spot rate)
Forward exchange contract is accounted for separately
and needs to be fair valued at period end because it is
not a basic financial instrument.
© 2016 KPMG, a partnership established under
Malaysian law and a member firm of the KPMG
network of independent member firms affiliated with
KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved.
Printed in Malaysia.
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual
or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is
accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information
without appropriate professional advice after a thorough examination of the particular situation.
What’s next for Private Entities – MPERS or MFRS?
September 2016
12© 2016 KPMG, a partnership established under Malaysian law and a member firm of the KPMG network of
independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.
All rights reserved. Printed in Malaysia.
Foreign currency translation and presentation currencyKey changes in MPERS
Presentation &
disclosures
Recognition &
measurement
MPERS
Translation of functional currency to presentation currency.
13© 2016 KPMG, a partnership established under Malaysian law and a member firm of the KPMG network of
independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.
All rights reserved. Printed in Malaysia.
Translation to presentation currency
Balance sheet
USD Rate RM
PPE 10,000 3.0 30,000
Debtors 5,000 3.0 15,000
15,000 45,000
Payables (4,000) 3.0 (12,000)
Long-term borrowings (8,000) 3.0 (24,000)
Share capital (1,000) 3.0 (3,000)
Retained earnings (2,000) (6,200)
Forex reserve 0 200
(15,000) (45,000)
Entity A maintains its accounts in functional currency USD.
Due to statutory requirement, Entity A presents its financial
statements in RM.
Exchange rate1USD = RM
Closing Average
3.0 3.1
Assets and
liabilities for each
statement of
financial position
presented (i.e.
including
comparatives) shall
be translated at the
closing rate at the
date of that
statement of
financial position.
© 2016 KPMG, a partnership established under
Malaysian law and a member firm of the KPMG
network of independent member firms affiliated with
KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved.
Printed in Malaysia.
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual
or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is
accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information
without appropriate professional advice after a thorough examination of the particular situation.
What’s next for Private Entities – MPERS or MFRS?
September 2016
14© 2016 KPMG, a partnership established under Malaysian law and a member firm of the KPMG network of
independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.
All rights reserved. Printed in Malaysia.
Translation to presentation currency (cont’d)
Profit or loss
USD Rate RM
Revenue 30,000 3.1 93,000
Cost of sales (18,000) 3.1 (55,800)
Admin exp (4,000) 3.1 (12,400)
Other
operating exp (5,000) 3.1 (15,500)
Profit 3,000 9,300
Tax (1,000) 3.1 (3,100)
Profit after tax 2,000 6,200
Entity A maintains its accounts in functional currency USD.
Due to statutory requirement, Entity A presents its financial
statements in RM.
Income and expenses shall be
translated at exchange rates at the
dates of the transactions.
For practical reasons, an entity
may use a rate that approximates
the exchange rate at the dates of
the transactions, e.g. an average
rate for the period.
Exchange rate1USD = RM
Closing Average
3.0 3.1
Agenda
Foreign currency translation
and presentation currency
Related party disclosures
Events after the end of the
reporting period
First MPERS financial
statements
© 2016 KPMG, a partnership established under
Malaysian law and a member firm of the KPMG
network of independent member firms affiliated with
KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved.
Printed in Malaysia.
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual
or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is
accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information
without appropriate professional advice after a thorough examination of the particular situation.
What’s next for Private Entities – MPERS or MFRS?
September 2016
16© 2016 KPMG, a partnership established under Malaysian law and a member firm of the KPMG network of
independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.
All rights reserved. Printed in Malaysia.
MPERS widens the disclosure net
Typical related parties CA 1965 MPERS
Holding companies
Subsidiaries
Associates
Joint ventures
Associates or joint ventures of holding
companies
Directors
Other key management personnel
17© 2016 KPMG, a partnership established under Malaysian law and a member firm of the KPMG network of
independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.
All rights reserved. Printed in Malaysia.
Minimum disclosures for related parties
Minimum disclosure requirements
Transaction amount
Outstanding balance
Provision for uncollectible
receivables
Expenses recognised for bad or
doubtful debts
Entities with control, joint control or significant
influence over the entity
Entities over which the entity has control, joint control or
significant influence
Key management personnel of the entity or its parent (in
the aggregate)
Other related parties
A government related entity (control, joint control or
significant influence) is exempted from these
minimum disclosures when transacting with other
government related entities
© 2016 KPMG, a partnership established under
Malaysian law and a member firm of the KPMG
network of independent member firms affiliated with
KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved.
Printed in Malaysia.
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual
or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is
accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information
without appropriate professional advice after a thorough examination of the particular situation.
What’s next for Private Entities – MPERS or MFRS?
September 2016
18© 2016 KPMG, a partnership established under Malaysian law and a member firm of the KPMG network of
independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.
All rights reserved. Printed in Malaysia.
MPERS widens the disclosure netDefinition of related parties – application tips
C (entity)Reporting entity
Entity or
Person
Entity or
Person
Reporting entity A (entity)
Entity or
Person
Reporting entity B (entity)
Related to each other Related to each other
NOT related to each other
19© 2016 KPMG, a partnership established under Malaysian law and a member firm of the KPMG network of
independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.
All rights reserved. Printed in Malaysia.
Definition – Key management personnel
Key management personnel are those persons having
authority and responsibility for planning, directing and
controlling the activities of the entity, directly or indirectly,
including any directors (whether executive or otherwise) of
that entity.
Incorporates a requirement to disclose
compensation to key management personnel in total
only (no need by category or type of benefits).
© 2016 KPMG, a partnership established under
Malaysian law and a member firm of the KPMG
network of independent member firms affiliated with
KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved.
Printed in Malaysia.
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual
or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is
accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information
without appropriate professional advice after a thorough examination of the particular situation.
What’s next for Private Entities – MPERS or MFRS?
September 2016
20© 2016 KPMG, a partnership established under Malaysian law and a member firm of the KPMG network of
independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.
All rights reserved. Printed in Malaysia.
Minimum disclosures for related parties
Significant related party
transactions
Key management personnel
Note 30
Page 107 - 109
21© 2016 KPMG, a partnership established under Malaysian law and a member firm of the KPMG network of
independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.
All rights reserved. Printed in Malaysia.
Key differences between MPERS and MFRS
MFRS also requires disclosures of related party transactions in the following
situations:
Government Related EntityManagement Entity
Disclose management service fee
paid to Management Entity
Disclose other transactions with
the Management Entity e.g. loans
Name of government and nature of relationship
Nature and amount of each individually significant
transaction
A qualitative or quantitative indication of the extent of other
transactions that are collectively, but not individually, significant
2015 A
Aligned definition related party
with regards to Management
Entity with MFRS
© 2016 KPMG, a partnership established under
Malaysian law and a member firm of the KPMG
network of independent member firms affiliated with
KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved.
Printed in Malaysia.
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual
or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is
accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information
without appropriate professional advice after a thorough examination of the particular situation.
What’s next for Private Entities – MPERS or MFRS?
September 2016
Agenda
Foreign currency translation
and presentation currency
Related party disclosures
Events after the end of the
reporting period
First MPERS financial
statements
23© 2016 KPMG, a partnership established under Malaysian law and a member firm of the KPMG network of
independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.
All rights reserved. Printed in Malaysia.
Breaches of covenants Unconditional right to defer settlement of liability
Date of financial statements
31 May 2017
Company X breached a loan covenant
in respect of a long-term loan from a
bank on 1 Dec 2016.
Due to the breach, the bank is entitled
(but not obliged) to demand immediate
repayment of loan.
End of reporting period
31 Dec 2016
PERS
MPERS Current liabilityCurrent
liability
Non-current liability
Bank formally agreed to
waive the covenant and
not to demand early
repayment of loan after
the end of the reporting
period and before the
financial statements were
approved for issue.
Non-current
liabilityNon-current liability
© 2016 KPMG, a partnership established under
Malaysian law and a member firm of the KPMG
network of independent member firms affiliated with
KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved.
Printed in Malaysia.
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual
or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is
accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information
without appropriate professional advice after a thorough examination of the particular situation.
What’s next for Private Entities – MPERS or MFRS?
September 2016
End of
Steps 3 and 4
25© 2016 KPMG, a partnership established under Malaysian law and a member firm of the KPMG network of
independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.
All rights reserved. Printed in Malaysia.
MPERS Conversion steps
Determine functional currency
Select accounting
policiesIdentify gaps
Apply transitional provisions
where applicable
(Section 35)
MPERS-compliant financial
statements
Step 1 Step 2 Step 3 Step 4 Step 5
Restate opening
balances and comparatives
© 2016 KPMG, a partnership established under
Malaysian law and a member firm of the KPMG
network of independent member firms affiliated with
KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved.
Printed in Malaysia.
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual
or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is
accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information
without appropriate professional advice after a thorough examination of the particular situation.
What’s next for Private Entities – MPERS or MFRS?
September 2016
Agenda
Foreign currency translation
and presentation currency
Related party disclosures
Events after the end of the
reporting period
First MPERS financial
statements
27© 2016 KPMG, a partnership established under Malaysian law and a member firm of the KPMG network of
independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.
All rights reserved. Printed in Malaysia.
Components of financial statements
Statement of changes in
equity
Other notes and
explanatory information
Summary of significant
accounting policies
Cash flows statement
Balance sheet
Income statement
PERS
Statement of changes in
equity
Other notes and
explanatory information
Summary of significant
accounting policies
Statement of cash flows
Statement of financial
position
Statement of
comprehensive income
MPERS
© 2016 KPMG, a partnership established under
Malaysian law and a member firm of the KPMG
network of independent member firms affiliated with
KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved.
Printed in Malaysia.
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual
or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is
accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information
without appropriate professional advice after a thorough examination of the particular situation.
What’s next for Private Entities – MPERS or MFRS?
September 2016
28© 2016 KPMG, a partnership established under Malaysian law and a member firm of the KPMG network of
independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.
All rights reserved. Printed in Malaysia.
Statement of financial position
Page 13
Note3.7, Page 59
Non-controlling interest is presented
within equity
Disclosure relating to binding sale
agreement for a major disposal of assets, or
a group of assets and liabilities
What’s new in MPERS
Non-current assets held for sale and
disposal group classified as “current” in
MFRS
Key differences between
MPERS and MFRS
29© 2016 KPMG, a partnership established under Malaysian law and a member firm of the KPMG network of
independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.
All rights reserved. Printed in Malaysia.
Statement of comprehensive income
Other comprehensive income
Combined statement of income and
retained earnings:
where there are only profit or loss,
dividends, correction of error and
change in accounting policy
Two-statement approach
Where expenses are classified by
“function”, MPERS requires minimum
disclosure of “cost of sales”
What’s new in MPERS
Page 15
Appendix 1, Page 115
Appendix 2, Page 116
© 2016 KPMG, a partnership established under
Malaysian law and a member firm of the KPMG
network of independent member firms affiliated with
KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved.
Printed in Malaysia.
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual
or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is
accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information
without appropriate professional advice after a thorough examination of the particular situation.
What’s next for Private Entities – MPERS or MFRS?
September 2016
30© 2016 KPMG, a partnership established under Malaysian law and a member firm of the KPMG network of
independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.
All rights reserved. Printed in Malaysia.
Statement of comprehensive income (cont’d)
Gains and losses arise from translation of financial statements
of foreign operations
Actuarial gains and losses
Changes in fair value of hedging instruments
Example of other comprehensive income items
31© 2016 KPMG, a partnership established under Malaysian law and a member firm of the KPMG network of
independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.
All rights reserved. Printed in Malaysia.
Statement of comprehensive income (cont’d)
Segregate items of other
comprehensive income (“OCI”)
between:
items that might be
reclassified subsequently to
profit or loss
items that will not be
reclassified subsequently to
profit or loss
There are more disclosure
requirements
Key differences between
MPERS and MFRS
Face of income statement:
results of operating
activities
profit or loss from ordinary
activities
Present/describe an item as
“extraordinary item”
Where expenses are classified
by “function”, PERS also
requires additional disclosure by
“nature” of expenses (i.e. less
disclosure in MPERS but still
subject to Ninth Schedule of
the Companies Act 1965)
PERS disclosures no longer
required or permitted
2015 A
Additional requirements
to group items
presented in OCI
© 2016 KPMG, a partnership established under
Malaysian law and a member firm of the KPMG
network of independent member firms affiliated with
KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved.
Printed in Malaysia.
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual
or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is
accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information
without appropriate professional advice after a thorough examination of the particular situation.
What’s next for Private Entities – MPERS or MFRS?
September 2016
32© 2016 KPMG, a partnership established under Malaysian law and a member firm of the KPMG network of
independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.
All rights reserved. Printed in Malaysia.
Statement of compliance with MPERS
If comply with MPERS, make an “explicit and
unreserved statement of compliance” in the
notes.
Extract from WSME (page 29)
33© 2016 KPMG, a partnership established under Malaysian law and a member firm of the KPMG network of
independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.
All rights reserved. Printed in Malaysia.
Explanatory note on effect of transition to MPERS
Description of each change in accounting
policy
Reconciliation of equity
at the date of transition
at the end of comparative period
Reconciliation of profit or loss
at the end of the comparative period
Distinguish correction of error from change in
accounting policy See note 34 of WSME
MPERS does not require presentation of opening statement of
financial position at the date of transition.
Main difference compared to MFRS
© 2016 KPMG, a partnership established under
Malaysian law and a member firm of the KPMG
network of independent member firms affiliated with
KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved.
Printed in Malaysia.
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual
or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is
accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information
without appropriate professional advice after a thorough examination of the particular situation.
What’s next for Private Entities – MPERS or MFRS?
September 2016
34© 2016 KPMG, a partnership established under Malaysian law and a member firm of the KPMG network of
independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.
All rights reserved. Printed in Malaysia.
Accounting policies and explanatory notes
Disclose judgements made in applying accounting policies
Disclose key assumptions concerning the future, and other sources of
estimation uncertainty at reporting date
What’s new in MPERS
Disclosure of capital management objectives, policies and strategies
Key differences between MPERS and MFRS
Number of employees at the end of the period or average for the period
Closing rates used in the translation of foreign currencies
PERS disclosures no longer required or permitted
35© 2016 KPMG, a partnership established under Malaysian law and a member firm of the KPMG network of
independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.
All rights reserved. Printed in Malaysia.
MFRS standards not addressed by MPERS
MFRS 4, Insurance Contracts
MFRS 5, Non-current Assets Held for
Sale and Discontinued Operations
MFRS 8, Operating Segments
MFRS 133, Earnings per Share
MFRS 134, Interim Financial Reporting
MFRS standards not address by MPERS
© 2016 KPMG, a partnership established under
Malaysian law and a member firm of the KPMG
network of independent member firms affiliated with
KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved.
Printed in Malaysia.
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual
or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is
accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information
without appropriate professional advice after a thorough examination of the particular situation.
What’s next for Private Entities – MPERS or MFRS?
September 2016
36© 2016 KPMG, a partnership established under Malaysian law and a member firm of the KPMG network of
independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.
All rights reserved. Printed in Malaysia.
Consider opportunities
1. Selective fair value as deemed cost.
2. Carrying amount RM10mil, value in use
RM12mil, fair value RM7mil. Use fair value as
deemed cost?
3. Others ... provided you know the rules!
Other opportunities you may
consider …
37© 2016 KPMG, a partnership established under Malaysian law and a member firm of the KPMG network of
independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.
All rights reserved. Printed in Malaysia.
Consider opportunitiesOptional exemption: Cost of investment
JCESubsidiary Associate
At the date of transition, an investment may be stated at:
– cost as determined per MPERS (Section 9); or
– deemed cost:
fair value; or
previous GAAP carrying amount.
Parent Co.
Exemption available on investment-by-investment basis.
If deemed cost exemption is elected, adjustments are
taken to retained earnings.
© 2016 KPMG, a partnership established under
Malaysian law and a member firm of the KPMG
network of independent member firms affiliated with
KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved.
Printed in Malaysia.
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual
or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is
accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information
without appropriate professional advice after a thorough examination of the particular situation.
What’s next for Private Entities – MPERS or MFRS?
September 2016
38© 2016 KPMG, a partnership established under Malaysian law and a member firm of the KPMG network of
independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.
All rights reserved. Printed in Malaysia.
Restating opening balances and comparativesThings to watch out
Correction of errors
Not part of transition to MPERS.
Separately identified and disclosed.
Estimates
No hindsight!
Change in estimate accounted for
prospectively, e.g. provision for
litigation not revised at the date of
transition due to subsequent
settlement. Deferred tax and NCI
implications
Adjustments to assets and liabilities
affect deferred tax and NCI.
Tax base is not affected.
Use of fair value
Availability of fair value report.
Date of fair value.
Impairment of non-financial
assets
Re-assess impairment for goodwill
and CGU where higher fair value is
used as deemed cost.
39© 2016 KPMG, a partnership established under Malaysian law and a member firm of the KPMG network of
independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.
All rights reserved. Printed in Malaysia.
Re-assess impairment of assets
Date of transition
Net assets
of CGU
Goodwill
Net assets
of CGU
Goodwill
Fair value as
deemed cost
Fair value less
costs to sell
Value in use
Impairment
of goodwill
© 2016 KPMG, a partnership established under
Malaysian law and a member firm of the KPMG
network of independent member firms affiliated with
KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved.
Printed in Malaysia.
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual
or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is
accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information
without appropriate professional advice after a thorough examination of the particular situation.
What’s next for Private Entities – MPERS or MFRS?
September 2016
End of
Financial
statements
disclosures and
presentation
End of
Step 5
© 2016 KPMG, a partnership established under
Malaysian law and a member firm of the KPMG
network of independent member firms affiliated with
KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved.
Printed in Malaysia.
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual
or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is
accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information
without appropriate professional advice after a thorough examination of the particular situation.
What’s next for Private Entities – MPERS or MFRS?
September 2016
42© 2016 KPMG, a partnership established under Malaysian law and a member firm of the KPMG network of
independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.
All rights reserved. Printed in Malaysia.
Recap: MPERS Conversion steps
Determine functional currency
Select accounting
policiesIdentify gaps
Apply transitional provisions
where applicable
(Section 35)
Restate opening
balances and comparatives
MPERS-compliant financial
statements
Step 1 Step 2 Step 3 Step 4 Step 5
43© 2016 KPMG, a partnership established under Malaysian law and a member firm of the KPMG network of
independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.
All rights reserved. Printed in Malaysia.
KPMG in Malaysia publications
Illustrative Financial
Statements for MPERS
Upcoming publication
© 2016 KPMG, a partnership established under
Malaysian law and a member firm of the KPMG
network of independent member firms affiliated with
KPMG International Cooperative (“KPMG
International”), a Swiss entity. All rights reserved.
Printed in Malaysia.
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual
or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is
accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information
without appropriate professional advice after a thorough examination of the particular situation.
What’s next for Private Entities – MPERS or MFRS?
September 2016
44© 2016 KPMG, a partnership established under Malaysian law and a member firm of the KPMG network of
independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.
All rights reserved. Printed in Malaysia.
Is MPERS a simpler standard?
Perhaps to use
MFRS?
© 2016 KPMG, a partnership established under Malaysian law and a member firm of the KPMG network of independent
member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed
in Malaysia.
The KPMG name, logo and "cutting through complexity" are registered trademarks or trademarks of KPMG International.
The information contained herein is of a general nature and is not intended to address the circumstances of any particular
individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such
information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon
such information without appropriate professional advice after a thorough examination of the particular situation.