Malaysian financial reporting standards and auditing standards now at par with international standards for public interest entities
KUALA LUMPUR, February 22, 2012 – A new World Bank report says Malaysia has achieved good progress in improving the quality and consistency of corporate financial reporting and corporate governance for public interest entities. The Report on the Observance of Standards and Codes, released today, notes that the Malaysian accounting and auditing profession is well developed and that Malaysian accounting and auditing standards are in line with international standards. Full convergence with International Financial Reporting Standards is likely to be achieved by 2012. The report also highlights that the institutional framework for corporate financial reporting by public interest entities in Malaysia is well developed with multiple layers of systematic control, review and enforcement.
“A key strength of the Malaysian framework is the high level of collaboration and coordination between the accounting profession and the regulatory enforcement agencies” says Samia Msadek, Regional Manager, Financial Management, East Asia and Pacific Region of the World Bank. “This results in strong regulatory oversight of public interest entities while minimizing the potential for overlap and duplication by regulators.”
The report makes several recommendations to further enhance the accounting and auditing infrastructure. These include:
- reviewing the number of statutory audits required,
- improving the quality of audits of private entities,
- updating the accounting standards for private entities,
- reviewing the level of audit fees charged
- taking steps to address the audit expectation gap
- strengthening the Malaysian Institute of Accountants
“These recommendations could be used to help prepare a comprehensive country action plan, aimed at building on existing systems to further strengthen the regulatory framework in what is already a strong and cohesive financial reporting and auditing system.” says Annette Dixon, World Bank Country Director for Malaysia. “Implementing these recommendations should be a collaborative process among the government, regulatory agencies, and the accountancy profession.”
With increased training, monitoring, and enforcement, accountants and auditors would be better informed with the latest standards and could thus consistently prepare high quality financial statements.