KUALA LUMPUR: Ernst & Young has launched a guide 'Good Bank (International) Limited' to help banks and financial institutions prepare the consolidated financial statements in line with the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB).
It said on Monday, Jan 31 that for Malaysia, the Financial Reporting Standards (FRS)are principally IFRS which would fully converge with IFRS by Jan 1, 2012.
'Good Bank (International) Limited' comprises illustrative annual financial statements prepared in accordance with applicable IFRS as well as other standards and interpretations approved by the IASB.
The assurance partner for financial services of Ernst & Young, Chan Hooi Lam said two key standards have been effective in Malaysia from Jan 1, 2010.
They are the FRS 139 on 'Financial instruments: Recognition and measurement -'' and FRS 7 on 'Financial instruments: Disclosures.
The FRS 139 and FRS 7 are based on IAS 39 and IFRS 7. The adoption of these two standards in Malaysia would ensure full convergence with IFRS as FRS 139 and FRS 7.
'Banks are the most affected by these two standards. As Malaysia starts to develop its own good practices in applying these two standards and making necessary disclosures in the financial statements, the preparers will find this guide timely,' Chan said.
The guide was developed based on practices observed globally, specifically by banks in the past few years.
The companies with financial year ended Dec 31, 2010 in Malaysia are expected to issue the annual financial statements first with FRS 139 and FRS 7 being applied.
'Most listed companies in Malaysia would have completed the work in applying FRS 139, which effects should have been reflected in their quarterly announcements throughout 2010. But the complexities in applying FRS 7, which is applicable for annual financial statements, should not be underestimated.
'Our advice to the preparers is to make reference and perform sufficient benchmarking with the companies in the same industry which have applied the standard earlier, and decide on disclosure formats that best suit their specific situations, including amount of available and reliable information, and the board's attitude towards extent of disclosures, amongst others,' Chan said
FRS 7 introduces new disclosures on the processes of managing financial risks, credit concentration and credit quality, fair value of certain collaterals held on hand, and sensitivity analysis of the effects of market risks (including interest rate risk, foreign exchange risk, equity price risk and commodity price risk) on profit or loss and equity.
'We believe that preparers of financial statements from the banking and financial services industry will find the guide a very timely and useful publication as they work hard to apply the two new standards now,' Chan added.
Ernst & Young will make Good Bank (International) Limited available on its website, www.ey.com/my, for download.
It said on Monday, Jan 31 that for Malaysia, the Financial Reporting Standards (FRS)are principally IFRS which would fully converge with IFRS by Jan 1, 2012.
'Good Bank (International) Limited' comprises illustrative annual financial statements prepared in accordance with applicable IFRS as well as other standards and interpretations approved by the IASB.
The assurance partner for financial services of Ernst & Young, Chan Hooi Lam said two key standards have been effective in Malaysia from Jan 1, 2010.
They are the FRS 139 on 'Financial instruments: Recognition and measurement -'' and FRS 7 on 'Financial instruments: Disclosures.
The FRS 139 and FRS 7 are based on IAS 39 and IFRS 7. The adoption of these two standards in Malaysia would ensure full convergence with IFRS as FRS 139 and FRS 7.
'Banks are the most affected by these two standards. As Malaysia starts to develop its own good practices in applying these two standards and making necessary disclosures in the financial statements, the preparers will find this guide timely,' Chan said.
The guide was developed based on practices observed globally, specifically by banks in the past few years.
The companies with financial year ended Dec 31, 2010 in Malaysia are expected to issue the annual financial statements first with FRS 139 and FRS 7 being applied.
'Most listed companies in Malaysia would have completed the work in applying FRS 139, which effects should have been reflected in their quarterly announcements throughout 2010. But the complexities in applying FRS 7, which is applicable for annual financial statements, should not be underestimated.
'Our advice to the preparers is to make reference and perform sufficient benchmarking with the companies in the same industry which have applied the standard earlier, and decide on disclosure formats that best suit their specific situations, including amount of available and reliable information, and the board's attitude towards extent of disclosures, amongst others,' Chan said
FRS 7 introduces new disclosures on the processes of managing financial risks, credit concentration and credit quality, fair value of certain collaterals held on hand, and sensitivity analysis of the effects of market risks (including interest rate risk, foreign exchange risk, equity price risk and commodity price risk) on profit or loss and equity.
'We believe that preparers of financial statements from the banking and financial services industry will find the guide a very timely and useful publication as they work hard to apply the two new standards now,' Chan added.
Ernst & Young will make Good Bank (International) Limited available on its website, www.ey.com/my, for download.
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