Bank Negara Issues Three Financial Reporting Policy Documents
10 May 2022
On 29 April 2022, Bank Negara Malaysia (‘BNM’) issued three policy documents on financial reporting, namely:
(collectively the ‘Three Reporting Documents’).
Application
The Financial Reporting Document applies to institutions licensed under section 10 of the Financial Services Act 2013 (‘FSA’) to carry on business as licensed banks, licensed investment banks and licensed insurers and financial holding companies approved under section 112 of the FSA.
The Takaful Operators’ Reporting Document applies to institutions licensed under section 10 of the Islamic Financial Services Act 2013 (‘IFSA’) to carry on business as takaful operators, international takaful operators and retakaful operators and financial holding companies approved under section 124 of the IFSA of the aforesaid institutions.
The Islamic Banking Reporting Document applies to Islamic banks (other than international Islamic banks) licensed under section 10 of the IFSA, licensed banks and licensed investment banks approved to carry on Islamic banking business under section 15 of the FSA and financial holding companies approved under section 124 of the IFSA of the aforesaid institutions.
Summary of the Three Reporting Documents
Each of the Three Reporting Documents, inter alia, sets out:
- the specific requirements on the application of the Malaysian Financial Reporting Standards (‘MFRS’) to a financial institution that is subject to the relevant reporting document (‘relevant financial institution’);
- the information to be disclosed in the financial statements of the relevant financial institution, including in the case of the Islamic Banking Reporting Document, information arising from the Shariah contracts;
- the requirements relating to dividend payment by the relevant financial institution; and
- submission and publication of the financial statements by the relevant financial institution.
According to the
announcement issued by BNM, the Takaful Operators’ Reporting Document and the Financial Reporting Document align the relevant reporting requirements with the requirements in MFRS 17 Insurance Contracts and MFRS 9 Financial Instruments.
The Three Policy Documents also discontinue the requirement for a relevant financial institution to publish an abridged format of its audited annual financial statements in at least two local daily newspapers, one of which is to be in Bahasa Malaysia and another, in English (‘Discontinued Requirement’).
Effective Date
The Islamic Banking Reporting Document came into effect on 29 April 2022 and supersedes the policy document on Financial Reporting for Islamic Banking Institutions issued by BNM on 27 September 2019.
The Financial Reporting Document and the Takaful Operators’ Reporting Document will come into effect on 1 January 2023 except for the Discontinued Requirement which came into effect on 29 April 2022. The Financial Reporting Document will supersede the policy document on Financial Reporting issued by BNM on 27 September 2019 whilst the Takaful Operators’ Reporting Document will supersede the policy document on Financial Reporting for Takaful Operators issued by BNM on 2 February 2018.
Alert prepared by Lee Ai Hsian (Partner) and Tai Kean Lynn (Associates) of the Banking and Finance Practice of Skrine.