FROM PERS TO MPSAS: AN EXPLORATION INTO CHALLENGES TO FEDERAL STATUTORY BODIES IN MALAYSIA

Abstract

Abstract 

In 2015, departments and agencies of the Federal Government of Malaysia’s financial statements will be prepared using the accrual basis, in accordance with the Malaysian Public Sector Accounting Standards (MPSAS) for the first time. The Accountant General’s Department (AGM) develops MPSAS, which are drawn up primarily from the International Public Sector Accounting Standards (IPSAS) as a standard and to be applied in the preparation of general purpose financial reports of all public sector entities to replace Private Entities Reporting Standards (PERS). Among the notable differences between PERS and MPSAS are the standards for assets, generally, and treatment of Property, Plant and Equipment (PPE), specifically. Using the example of Federal Statutory Bodies (FSBs) as a case study, this paper will illustrate the differences in asset recognition principles, subsequent expenditure and cost of PPE and revaluation treatment of PPE. Apart from that, the challenges faced by the FSB in coping with the new standards are then discussed and identified. The study will be conducted using a qualitative approach of content analysis of secondary data such as annual reports, standards and various other publications as well as primary data obtained from interviews with selected FSB. This paper presents an analysis of a financial reporting issue using the framework based approach.  The findings are anticipated to prepare and assist the FSBs and other industry players in making financial reporting decisions through the transition period from PERS to MPSAS thereby overcoming the challenges of incorporating MPSAS.

Keywords: PERS, MPSAS, PPE, Federal Statutory Bodies, Challenges