This article first appeared in The Edge Financial Daily on March 16, 2018

KUALA LUMPUR: The Securities Commission Malaysia (SC) expects all public listed companies (PLCs) to comply with the new accounting standard — Malaysian Financial Reporting Standards 9 (MFRS 9) — which became mandatory on Jan 1, 2018.

However, a survey conducted by the regulator shows that many of the PLCs are not sufficiently prepared and ready for MFRS 9, according to the SC’s Annual Report 2017.

To assess the awareness and readiness of companies in implementing MFRS 9, the SC conducted a survey of 220 companies, excluding financial institutions, listed on the Main and ACE Markets, covering a diverse range of industries in Malaysia.

Based on the survey results as at September 2017, the regulator observed that respondents are generally aware of the new financial reporting requirements but are not sufficiently prepared and ready for the implementation of MFRS 9.

“However, following the survey and through our engagements, we have created greater awareness of this requirement, resulting in PLCs recognising the effort required to ensure compliance with the standards. They have since expedited their preparation for its implementation,” said the regulator in the report.

It is not just banks that will be affected by MFRS 9. Pension funds such as the Employees Provident Fund (EPF) and corporates that adhere to the MFRS and International Financial Reporting Standards are expected to be impacted as well. However, experts say the impact on them will not be as significant as on banks.

“The significance and impact of MFRS 9 on corporates will depend on the financial assets and exposure that they have and how they are managed. Under the revamped forward-looking loss model, it is expected that higher impairment provisions will be required upfront,” an SC spokesman was quoted by The Edge weekly as saying in September last year.