Malaysian Accounting Standards Board (MASB) announced to defer the effective date of IC Interpretation 15 Agreements for the Construction of Real Estate (IC 15) from 1 July 2010 to 1 January 2012.
IC 15 is a copy-and-paste identical from IFRIC 15 except for the effective date. IFRIC 15 was issued by the International Accounting Standards Board (IASB) in July 2008 with an effective date of 1 January 2009. In Hong Kong, HKICPA also issued an identical Interpretation, HK(IFRIC) 15, with the same effective date (i.e. 1 January 2009). In Singapore’s context, the Accounting Standards Council (ASC) issued INT FRS 115 with an effective date of 1 January 2011.
It was a bold step for Malaysia to put in an effective date of 1 July 2010, however it is now deferred to allow more time for Malaysian developers to be well prepared to this significant change in revenue/profits reporting from percentage of completion (POC) method to completed method.
Apart from keeping up to pace with IFRS standards, Hong Kong has adopted the same effective date 1 Jan 2009 issued by IASB, and it is believed that the effect of change in reporting method by HK or China Mainland developers is minimal, given China developers have been practicing completed method all this while.
In Singapore, the industry players and accounting body were previously concluded to prefer keeping POC method, while keeping an eye on the development of proposed IFRIC 15. In order to align with IFRSs, Singapore developers will also have change their reporting to completed method, but with a year later from IFRIC 15. Malaysia context is pretty much similar to Singapore.
The reason for the deferment is to allow stakeholders in Malaysia, to continue to deliberate its implementation and to provide opportunity to give feedback through MASB on a proposed new Standard on Revenue from Contracts with Customers, that is anticipated to subsume the requirements of IFRIC 15 upon issuance, expected to be in mid 2011.
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