Regulatory framework

Topics: Financial statements, International Financial Reporting Standards, Balance sheet Pages: 12 (2640 words) Published: September 11, 2014
Introduction
Regulatory framework is a system of regulations and the means used to enforce them. They are usually established by the government to regulate the specific activities. These rules have a structured way of being supported and enclosed in a safe place. Most of them are recognized by the law. A conceptual framework is important to the understanding of the many principles and concepts that underpin International Financial Reporting Standards (IFRS) and is an often-neglected part of candidates’ studies.

Malaysian Legal & Regulatory Authorities
MASB (Malaysian Accounting Standard Board)
IASB (International Accounting Standard Board)
Securities Commission
MACPA (Malaysian Association Chartered of Public Accountants)

Legislative Acts
Company Act
An Act of Parliament which regulates the workings of companies, stating the legal limits within which companies may do their business

Financial Reporting Act
Financial report is a formal record of the financial activities of a business, person, or other entity. Relevant financial information is presented in a structured manner and in a form easy to understand. They typically include basic financial statements, accompanied by a management discussion and analysis

Note to the Financial Statements
Basis of Preparation
The financial statements of the group are prepared under the historical cost convention and in compliance with the Financial Reporting Standards (FRS) and Companies Act 1965 in Malaysia.

Malaysian Legal & Regulatory Authorities
MASB:
To issue high quality, clear and enforceable new accounting standards as approved accounting standards To review, revise or adapt as approved accounting standards existing accounting standards To issues statements of principles for financial reporting

To sponsor or undertake development of possible accounting standards To conduct such public consultation as may be necessary in order to determine the contents of accounting concepts, principles and standards. IASB:

Formulating and publishing accounting standards
Promoting worldwide acceptance and observance of its standards Develop a single set of global accounting standards of high quality, untestable and enforceable that require transparent and comparable information in general purpose financial statement.

Securities Commission:
Encourage and promote the development of the capital market in Malaysia by regulating all matters relating to the securities industry.

Legislative Acts
The Framework deals with:
the objective of financial statements;
the qualitative characteristics that determine the usefulness of information provided in financial statements; definition, recognition and measurement of the elements from which financial statements are constructed; and concepts of capital and capital maintenance

The management of an enterprise has the responsibility for the and presentation of the financial statements of the enterprise. Management is also interested in the information contained in the financial statements even though it has access to additional management and financial information that helps it carry out its planning, decision-making and control responsibilities. Management has the ability to determine the form and content of such additional information in order to meet its own needs. The reporting of such information, however, is beyond the scope of this Framework, The preparers of financial statements have to contend with the uncertainties that inevitably surround many events and circumstances, such as the collectability of receivables, the probable useful life of plant and machinery, and the warranty claims that may occur. Such uncertainties are recognised by the disclosure of their nature and extent and by the exercise of prudence in the preparation of the financial statements. Prudence is the inclusion of a degree of caution in the exercise of the judgements needed in making the estimates required under...
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