On 10 October 2025 the Malaysian Accounting Standards Board (MASB) issued a revised Malaysian Private Entities Reporting Standard, MPERS (2025). The notice of issuance says: “An entity shall apply MPERS (2025) for annual periods beginning on or after 1 January 2027. Earlier application is permitted.” MPERS (2016) is withdrawn for financial statements with annual periods beginning on or after that date.
For a company with a 31 December year end, the first year under the new standard begins on 1 January 2027, and the first set of accounts prepared under it will be for the year ending 31 December 2027. A company with a 30 June year end starts on 1 July 2027. The transition rules look back to the start of that first year, and in some areas to the comparative year before it, so the work on opening positions and contract data falls in 2026 and early 2027, well before the first audit.
Who this applies to
MASB defines a private entity as a private company under section 2 of the Companies Act 2016 that is not itself required to prepare or lodge financial statements under any law administered by the Securities Commission Malaysia or Bank Negara Malaysia, and is not a subsidiary or associate of, or jointly controlled by, an entity that is. A private company connected in the same way to a management company under the Interest Schemes Act 2016 is not a private entity.
A private entity must apply either MPERS in its entirety or Malaysian Financial Reporting Standards (MFRS) in their entirety. If your company already reports under MFRS, MPERS (2025) does not change that. If it reports under MPERS, MPERS (2025) is what it will apply from its first annual period beginning on or after 1 January 2027.
What MPERS (2025) is based on
MASB states that MPERS (2025) “is based on the third edition of the IFRS for SMEs Accounting Standard issued by the International Accounting Standards Board (IASB) except for the scope and applicability.” The MASB Chairman, announcing the standard, said that apart from its scope, “MPERS (2025) prescribes the same requirements as the third edition of the IFRS for SMEs Accounting Standard issued by the IASB in February 2025.”
The paragraph references below are to that third edition. Check them against the MPERS (2025) text before relying on a specific paragraph.
MASB’s announcement describes “updates to nearly all sections of the Standard”, with significant changes in six areas:
- Section 2, Concepts and Pervasive Principles
- Section 9, Consolidated and Separate Financial Statements
- Section 11, Basic Financial Instruments, renamed Financial Instruments
- a new Section 12, Fair Value Measurement
- Section 19, Business Combinations and Goodwill
- Section 23, Revenue, renamed Revenue from Contracts with Customers
How transition works
The general rule in paragraph A2 is retrospective application under Section 10, which means applying the new policy to comparative information as if it had always applied, to the earliest date practicable. Paragraphs A3 to A49 then carve out exceptions, area by area. The “date of initial application” is the beginning of the reporting period in which the entity first applies the third edition: 1 January 2027 for a December year end.
Where an entity has not restated comparatives under the transition rules, paragraph A3 relieves it from disclosing the amount of the adjustment for each affected line item for prior periods.
Revenue: choose your transition method
Section 23 now applies a five-step model: identify the contract, identify the promises in it, determine the transaction price, allocate the price to the promises, and recognise revenue when or as each promise is fulfilled.
Paragraph A27 gives a choice, applied consistently to all contracts with customers:
- Retrospective, under Section 10, with up to three practical exemptions in paragraph A28: completed contracts that began and ended in the same reporting period, or were complete at the start of the earliest period presented, need not be restated; completed contracts with variable consideration can use the final transaction price; and contracts modified before the earliest period presented can reflect the aggregate effect of those modifications instead of restating each one. An entity using an exemption must disclose that it has done so (A30).
- Prospective, from the date of initial application. The revised Section 23 applies to contracts that begin after that date, and the entity does not change its accounting for contracts in progress at that date (A32). It must disclose that comparatives have not been restated and the nature of the change (A34). For as long as any of those in-progress contracts remain open, it must also disclose the accounting policy used for them and the revenue recognised from them in the period (A36).
The prospective route avoids restating 2026, but a business with long contracts carries two revenue policies side by side until the old contracts close, and has to disclose both.
Consolidation: a new definition of control
Section 9 now defines control in three parts (paragraph 9.4B): power over the investee, exposure or rights to variable returns from involvement with it, and the ability to use that power to affect those returns. Control is still presumed where the investor holds a majority of the voting rights, but the presumption can be rebutted (9.5).
If the new definition brings an investee into consolidation, or takes one out, paragraphs A5 and A6 require the investor to adjust the annual period immediately before the date of initial application, with any difference taken to equity at the start of that period. If the answer does not change, no adjustment is needed (A8). Loss of control that happened before the date of initial application is not reopened (A10).
Fair value and business combinations: forward only
The new Section 12, Fair Value Measurement, applies prospectively from the date of initial application (A12), and its disclosures are not required for comparative periods (A13).
The revised Section 19 applies to business combinations with an acquisition date on or after the date of initial application, and to asset acquisitions from that date (A21). Assets and liabilities from earlier business combinations are left unadjusted (A22).
Other changes
- Intra-group guarantees. Financial guarantee contracts issued at nil consideration, where the debtor is another entity in the group, fall within Section 21, Provisions and Contingencies (paragraph 21.1A). Other issued financial guarantee contracts fall within Part II of Section 11.
- Depreciation. A depreciation method based on revenue generated by an activity that includes the use of an asset “is not appropriate” (17.22). The amended requirements apply prospectively from the date of initial application (A19).
- Uncertain tax treatments. Paragraphs 29.34A to 29.34D set out how to account for a tax treatment whose acceptance by the tax authority is uncertain, assuming the authority examines everything it has a right to examine with full knowledge. On transition they apply retrospectively, or, where that is impracticable or needs hindsight, through an adjustment to opening retained earnings at the date of initial application (A44).
- Cash flow disclosures. Paragraph 7.19A requires a reconciliation of opening and closing liabilities arising from financing activities. Paragraphs 7.19B and 7.19C add disclosures for supplier finance arrangements, often called supply chain finance, payables finance or reverse factoring.
- Key management services. An entity that obtains key management personnel services from a separate management entity discloses the amounts it incurs for those services, without disclosing the management entity’s own payments to its staff (33.7A).
What to do now
If you have a 31 December year end: your first MPERS (2025) year starts on 1 January 2027. Decide on the revenue transition method before then, because the prospective method needs a complete list of contracts in progress at that date.
If your group has subsidiaries, associates or joint arrangements: test each investee against the three-part control definition now. A change in the answer means adjusting 2026 figures.
If your company guarantees group borrowings at no charge: list the guarantees, so they can be assessed under Section 21.
If you hold tax positions HASiL could challenge: document them against the uncertain tax treatment paragraphs before the first year-end under the new standard.
If you are planning an acquisition: anything with an acquisition date on or after your date of initial application is accounted for under the revised Section 19.
Speak to your auditors early about the transition choices, since the elections affect comparatives and disclosures in the first audited accounts.
If you would like help planning the transition, preparing an opening-balance review, or building the contract register for the revenue election, we can work through it with you.
Sources: Malaysian Accounting Standards Board, Notice of Issuance of MASB Approved Accounting Standards and Notice of Withdrawal, 10 October 2025; MASB, “MASB Approved Accounting Standards for Private Entities” and “MPERS (2025)” pages; MASB press release, “MASB issues amendments to the disclosure standard and a major multi-section update to MPERS”; IFRS Foundation, IFRS for SMEs Accounting Standard, third edition (February 2025), Sections 7, 9, 17, 21, 23, 29 and 33 and Appendix A. All retrieved 20 October 2026. This article is general information current as at 27 October 2026 and is not accounting or professional advice. Paragraph numbers are from the IASB text on which MASB states MPERS (2025) is based; confirm against the MPERS (2025) text.