malaysian exam notes

Students sitting the nancial accounting and auditing papers of the international stream adapted for Malaysia, and the Malaysian variant tax papers are strongly advised to read the following exam notes. Papers are reviewed to ensure that they reect current Malaysian law, regulation, and practices. ACCA applies a six-month rule, in that questions requiring an understanding of new legislation will not be set until at least six calendar months after the last day of the month in which the legislation received Royal Assent. For other regulatory pronouncements such as accounting and auditing standards, the relevant date is the date of issue. The relevant last day is 30 November 2006 for the June 2007 exams. This may be before the implementation date. You are advised to bring a calculator to the exam hall for all papers. You are permitted to take a noiseless, cordless, pocket-sized, programmable or non-programmable calculator without printout or graphic/word display facilities. It is strongly recommended that you refer to articles published in student accountant and on the ACCA website as part of your study preparation for the exams. No key examinable articles for the June 2007 exams will be published in the May 2007 issue of student accountant.
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PAPERS 1.1 (MYS), 2.5 (MYS), 2.6 (MYS), 3.1 (MYS) AND 3.6 (MYS) MALAYSIAN LEGISLATION, REGULATIONS AND PRACTICE These refer to the Acts of Malaysia and include all Rules and Regulations made thereunder. It also includes Legislative Notifications and Rules made under the respective legislation and such guidelines and practice notes issued by the Government Authorities entrusted with the administration of the respective Acts. Practice is determined over a period of time and accepted as custom but may not necessarily be the law. It is incumbent upon students to know the law and practice and to differentiate between the two. The exam papers for Malaysia will encompass the law and best practice in Malaysia. ACCOUNTING AND AUDITING Students will be examined on generally accepted accounting and auditing principles (GAAP) in Malaysia. These comprise of legislation, regulations and practice in which the accountant functions in the financial reporting framework in Malaysia. There will be instances when Malaysian GAAP is silent. In such circumstances, reference should be made to international practices and standards, and guidelines issued by the International Accounting Standards Board and the International Federation of Accountants on accounting and auditing respectively. LEGISLATION, REGULATIONS AND PRACTICE This comprises all the corporate and securities legislation, the Accountants Act, 1967 and the Financial Reporting Act, 1997. Students must know the legal and regulatory framework in which accountants function and how accounting and auditing standards are promulgated, regulated, and enforced. STANDARDS This applies to all accounting and auditing standards issued in Malaysia. Standards that are not examinable will be excluded from the list of examinable standards. Exposure Drafts, Issue Papers, Discussion Papers and other documents issued by the regulatory bodies will be examinable to the extent detailed in the list of examinable standards. Phrases used in International Standards on Auditing and International Accounting Standards may be different from those used in Malaysia. In Malaysia these phrases are often used interchangeably but nevertheless students must be familiar with the common terms used in Malaysia. ADDITIONAL READING LIST Students may wish to refer to the following additional books in preparation for their exams: Members Handbook, Malaysian Institute of Accountants International Accounting Standards Malaysia, Ng Eng Juan, FT Law & Tax Financial Reporting in Malaysia, Dr Abdul Latif Al-Murisi and Professor Len Skerratt, FT Financial Publishing A Practical Guide to Financial Reporting Standards (Malaysia), Ng Eng Juan, CCH Asia Pte Ltd. 58 student accountant March 2007

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FINANCIAL ACCOUNTING EXAMINABLE MASB STANDARDS FRS 101 Presentation of Financial Statements FRS 102 Inventories FRS 107 Cash Flow Statements 1.1, 2.5, 3.6 1.1, 2.5, 3.6 1.1 (note 1), 2.5 (note 1), 3.6 FRS 108 Accounting Policies, Changes in Accounting Estimates and Errors FRS 110 Events After the Balance Sheet Date FRS 111 Construction Contracts FRS 112 Income Taxes FRS 114 Segment Reporting FRS 116 Property, Plant and Equipment FRS 117 Leases FRS 118 Revenue FRS 119 Employee Benefits FRS 120 Accounting for Government Grants and Disclosure of Government Assistance FRS 121 The Effects of Changes in Foreign Exchange Rates FRS 123 Borrowing Costs FRS 124 Related Party Disclosures FRS 127 Consolidated and Separate Financial Statements FRS 128 Investments in Associates FRS 129 Financial Reporting in Hyperinflationary Economies FRS 131 Interests in Joint Ventures FRS 132 Financial Instruments: Disclosure and Presentation FRS FRS FRS FRS Earnings per Share Interim Financial Reporting Impairment of Assets Provisions, Contingent Liabilities and Contingent Assets FRS 138 Intangible Assets FRS 139 Financial Instruments: Recognition and Measurement FRS FRS FRS FRS 140 201 204 1 Investment Property Property Development Activities Accounting of Aquaculture First-time Adoption of Financial Reporting Standards 133 134 136 137 1.1, 2.5, 3.6 1.1, 2.5, 2.5, 2.5, 1.1, 2.5, 1.1, 3.6 2.5, 3.6 3.6 3.6 3.6 2.5, 3.6 3.6 2.5, 3.6 2.5, 3.6 3.6 2.5, 3.6 2.5, 3.6 2.5, 3.6 2.5, 3.6 3.6 2.5, 3.6 2.5 (note 2), 3.6 2.5, 3.6 3.6 2.5, 3.6 1.1, 2.5, 3.6 1.1 (note 3), 2.5, 3.6 2.5 (note 2), 3.6 2.5, 3.6 2.5, 3.6 3.6 2.5, 3.6

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FRS 2 FRS 3 FRS 5 FRS 6 ED 50 ED 51 ED 53 ED 54

Share-based Payment Business Combinations

3.6 1.1 (note 4), 2.5, 3.6

Draft Draft IC 110

IC 112 IC 113

IC 115 IC 121 IC 125

IC 127

IC 129 IC 131 IC 132 IC 201 SOP 1

Non-current Assets Held for Sale and Discontinued Operations 1.1, 2.5, 3.6 Exploration for and Evaluation of Mineral Resources 3.6 Agriculture 3.6 Insurance Contracts 3.6 Framework for the Preparation and Presentation of Financial Statements 3.6 Amendment to FRS 121 The Effect of Changes in Foreign Exchange Rates Net Investment in a Foreign Operation 3.6 IC Interpretations 6, 7, 8 3.6 IC Interpretations 1, 2, 5 3.6 Government Assistance No Specific Relation to Operating Activities 2.5, 3.6 Consolidation Special Purpose Entities 3.6 Jointly Controlled Entities Non-monetary Contributions by Venturers 3.6 Operating Leases Incentives 3.6 Income Taxes Recovery of Revalued Non-Depreciable Assets 3.6 Income Taxes Changes in the Tax Status of an entity or its Shareholders 3.6 Evaluating the Substance of Transactions involving the Legal Form of a Lease 3.6 Disclosure Service Concession Arrangements 3.6 Revenue Barter Transactions Involving Advertising Services 3.6 Intangible Assets Website Costs 3.6 Preliminary and Pre-Operating Expenditure 1.1, 2.5, 3.6 Exempt Enterprises 3.6

EXAMINABLE INTERNATIONAL ACCOUNTING STANDARDS/ INTERNATIONAL FINANCIAL REPORTING STANDARDS AND INTERPRETATIONS OF THE INTERNATIONAL FINANCIAL REPORTING INTERPRETATIONS COMMITTEE NOT ADOPTED BY MASB No Title Papers Framework for the Preparation and Presentation of Financial Statements 1.1, 2.5, 3.6 IFRS 7 Financial Instruments: Disclosures 2.5, 3.6 IFRIC 4 Determining Whether an Arrangement Contains a Lease 2.5, 3.6 IFRIC 9 Reassessment of Embedded Derivatives 3.6 IFRIC 10 Interim Financial Reporting and Impairment 3.6 IFRIC 11 Group and Treasury Share Transactions 3.6 IFRIC 12 Service Concessions Arrangements 3.6

NOTES 1 Group cash flow statements and cash flows involving foreign currency are not examinable in Papers 1.1 and 2.5. 2 FRS 132 and IAS 39 are examinable in Paper 2.5 to the extent that they deal with the presentation and measurement of equity, debt, and convertible debt only. 3 Examinable for Paper 1.1 only to cover basic knowledge of Research and Development and Goodwill. 4 Examinable for Paper 1.1 only to cover basic consolidation.

DISCUSSION PAPERS AND OTHER DOCUMENTS No Title DP Preliminary Views on Accounting Standards for Small and Medium-sized Entities DP Management Commentary DP Fair Value Measurements

Papers

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AUDITING The accounting knowledge that is assumed for Paper 2.6 is the same as that examined in Paper 2.5. However, Paper 2.6 only assumes a detailed knowledge of accounting standards that are examinable in Paper 1.1. The accounting knowledge that is assumed for Paper 3.1 is the same as that examined in Paper 2.5. MALAYSIAN APPROVED STANDARDS ON AUDITING No Title A Preface to Approved Standards on Auditing AI 120 Framework of ISAs AI 200 Objectives and General Principles Governing an Audit of Financial Statements AI 210 Terms of Audit Engagement AI 220 Quality Control for Audits of Historical Financial Information (Revision) AI 230 Documentation AI 240 The Auditors Responsibility to Consider Fraud in an Audit of Financial Statements (Revision) AI 250 Consideration of Laws and Regulations in an Audit of Financial Statements AI 260 Communications of Audit Matters with Those Charged with Governance AI 300 Planning an Audit of Financial Statements AI 315 Understanding the Entity and its Environment and Assessing the Risks of Material Misstatement AI 320 Audit Materiality AI 330 The Auditors Procedures in Response to Assessed Risks AI 402 Audit Considerations Relating to Entities Using Service Organisations AI 500 Audit Evidence (Revised) AI 501 Audit Evidence Additional Considerations for Specific Items AI 505 External Confirmations AI 510 Initial Engagements Opening Balances AI 520 Analytical Procedures AI 530 Audit Sampling and other Selective Testing Procedures AI 540 Audit of Accounting Estimates AI 545 Auditing Fair Value Measurements and Disclosures AI 550 Related Parties AI 560 Subsequent Events AI 570 Going Concern (Revised) AI 580 Management Representations AI 600 Using the Work of Another Auditor AI 610 Considering the Work of Internal Auditing AI 620 Using the Work of an Expert 60 student accountant March 2007

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AI 700 AI 710 AI 720 AI 800 AI 2400 AI 3000 Papers 2.6, 3.1 2.6, 3.1 2.6, 3.1 2.6, 3.1 3.1 2.6, 3.1 AI 3400 AI 4400 AI 4410 ISQC 1 The Auditors Report on Financial Statements Comparatives Other Information in Documents Containing Audited Financial Statements The Auditors Report on Special Purpose Audit Engagements Engagements to Review Financial Statements Assurance Engagements Other than Audit or Reviews of Historical Financial Information The Examination of Prospective Financial Information Engagements to Perform Agreed Upon Procedures Regarding Financial Information Engagements to Compile Financial Information Quality Control for Firms that Perform Audits and Reviews of Historical Financial Information and Other Assurance and Related Services and Engagements 2.6, 3.1 2.6, 3.1 2.6, 3.1 3.1 2.6, 3.1 2.6, 3.1 3.1 3.1 3.1 3.1 2.6, 3.1 2.6, 3.1 2.6, 3.1 2.6, 3.1 DISCUSSION PAPER The Audit Profession and the Environment OTHER DOCUMENTS No Title IAPS 1000 Inter-bank Confirmation Procedures IAPS 1005 The Special Considerations in the Audit of Small Entities IAPS 1010 The Consideration of Environmental Matters in the Audit of Financial Statements IAPS 1013 Electronic Commerce Effect on the Audit of Financial Statements IAPS 1014 Reporting by Auditors on Compliance with International Financial Reporting Standards ISA 230 Audit Documentation (Revised) ISA 700 The Independent Auditors Report on a Complete Set of General Purpose Financial Statements ISA 701 Modifications to the Independent Auditors Report ISAE 3000 Assurance Engagements other than Audits or Reviews of Historical Financial Information ISRE 2410 Review of Interim Financial Information Performed by the Auditor of the Entity Preface to the International Standards on Quality Control, Auditing, Assurance and Related Services International Framework for Assurance Engagements 3.1 Papers 2.6 (note 1) 2.6, 3.1 3.1 2.6, 3.1 3.1 2.6, 3.1 2.6, 3.1 2.6, 3.1 2.6, 3.1 3.1 2.6, 3.1 2.6, 3.1 2.6, 3.1 2.6, 3.1 2.6, 3.1 2.6, 2.6, 2.6, 2.6, 3.1 3.1 3.1 3.1 2.6, 3.1 2.6, 3.1 3.1 3.1 2.6, 2.6, 2.6, 3.1 2.6, 2.6, 2.6, 3.1 2.6, 3.1 3.1 3.1 3.1 3.1 3.1 NOTE 1 Students will not be examined on the audit of banks. This document is relevant to the extent that it applies to the confirmation of financial and business relationships between banks and non-bank customers.

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OTHER GUIDANCE ACCAs Code of Ethics and Conduct IFACs Code of Ethics for Professional Accountants The Combined Code (of the Committee on Corporate Governance) IAASB Paper Financial Reporting on the Internet: Responsibilities of Directors and Management

2.6, 3.1 3.1 3.1 3.1

IAPS 1014 Reporting by Auditors on Compliance with International Financial Reporting Standards Aug 2006 AI ISRE 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity Aug 2006 Topics of EDs (above) are examinable for Paper 3.1. However, detailed knowledge of the content of EDs is examinable to the extent that relevant articles are published in student accountant. PAPER 9 (MYS) PREPARING TAXATION COMPUTATIONS, PAPER 2.3 (MYS) BUSINESS TAXATION, PAPER 3.2 (MYS) ADVANCED TAXATION This guidance note is intended to help students to identify topics and changes in the law which affect the exam for which they are studying. In general, the six-month rule applies, but candidates may find the following detailed guidance helpful. BUDGET 2007 None of the measures announced in the Budget 2007 will be examinable at the June 2007 session. Candidates can ignore the Finance Act 2006, Act 661, which was gazetted on 31 December 2006. NEW LAWS EXAMINABLE AT JUNE 2007 Applicable to all papers Income Tax (Deduction for Allowances under the Capital Market Unemployed Graduates Training Scheme) Rules 2006 PU(A) 203/2006 Income Tax (Exemption) (No.20) Order 2006 PU(A) 205/2006 (Income derived from management of an international school) Income Tax (Exemption) (No.21) Order 2006 PU(A) 206/2006 (Non-resident experts providing training) Income Tax (Exemption) (No.22) Order 2006 PU(A) 207/2006 (Exemption for government grants, subsidies, collections and donations) Income Tax (Accelerated Capital allowances) (Mould for the Production of Industrialised Building System Component) Rules 2006 PU(A) 249/2006 Applicable to Paper 3.2 (MYS) only Income Tax (Industrial Building Allowance) (Approved Multimedia Super Corridor (MSC) Status Company) Rules 2006 PU(A) 202/2006 NEW INLAND REVENUE BOARD PUBLIC RULING EXAMINABLE AT JUNE 2007 Applicable to all papers No.6/2006 Tax Treatment of Legal and Professional Expenses Candidates are expected to be familiar with certain IRB Public Rulings and guidelines. More details are given in the respective Study Guides. Visit www.HasilNet.org.my to download Public Rulings from the IRB website. March 2007 student accountant 61

Documents under Other Guidance (above) are examinable only to the extent that they are relevant to topics in the Syllabus and Study Guide. EXPOSURE DRAFTS (EDs) Title Issue date ED IAPS 1004 The Relationship Between Banking Supervisors and Banks External Auditors ISA 240 (Redrafted) The Auditors Responsibility to Consider Fraud in an Audit of Financial Statements ISA 260 (Revised and Redrafted) Communication with Those Charged with Governance ISA 300 (Redrafted) Planning an Audit of Financial Statements ISA 315 (Redrafted) Understanding the Entity and its Environment and Assessing the Risks of Material Misstatement ISA 320 (Revised and Redrafted) Materiality in Planning and Performing an Audit ISA 330 (Redrafted) The Auditors Procedures in Response to Assessed Risks ISA 450 (Redrafted) Evaluation of Misstatements Identified During the Audit ISA 540 (Revised) Auditing Accounting Estimates And Related Disclosures (Other than Those Involving Fair Value Measurements and Disclosures) ISA 550 (Revised) Related Parties ISA 600 (Revised and Redrafted) The Audit of Group Financial Statements ISA 705 Modifications to the Opinion in the Independent Auditors Report ISA 706 Emphasis of Matter Paragraphs and Other Matters Paragraphs in the Independent Auditors Report ISA 701 The Independent Auditors Report on Other Historical Financial Information ISA 800 The Independent Auditors Report on Summary Audited Financial Statements AI ED 700 The Independent Auditors Report on a Complete Set of General Purpose Financial Statements IAPS 1005 The Special Considerations in the Audit of Small Entities IAPS 1006 Audits of the Financial Statements of Banks IAPS 1013 Electronic Commerce Effect on the Audit of Financial Statements

Oct 2005 Oct 2005 Nov 2006 Oct 2005

Oct 2005 Nov 2006 Oct 2005 Nov 2006

Dec 2004 Dec 2005 Mar 2006 Mar 2005 Mar 2005 June 2005 June 2005 Aug 2006 Aug 2006 Aug 2006 Aug 2006