Goodwill accounting in Malaysia and the tradition to IFRS - A Compliance assessment of large first year adopters

Tyrone M. Carlin, Nigel Finch, Nur Hidayah Laili

Research output: Contribution to journalArticle


Prior to the adoption of an IFRS based reporting framework in Malaysia, no binding standard governing goodwill had ever been implemented. After several decades in which a laissez faire approach to the problem represented the dominant paradigm, the highly prescriptive and technical provisions of FRS 136 – Impairment of Assets represent a very substantial variation from past practice. This in turn gives rise to questions about the extent to which Malaysian companies and their auditors have fared during the process of transition to a complex new reporting regime and in consequence to the quality and consistency of reports produced pursuant to that new regime. Thus, FRS 136 presents an opportunity to interrogate the level of compliance and disclosure quality exhibited by first-time reporting entities – and by extension, yield insights into the implications of and challenges associated with transition to new and complex reporting regimes. Focussing specifically on compliance and disclosure quality relating to the highly detailed requirements set out in FRS 136, this paper finds evidence that the quality of the responses by large listed Malaysian firms has indeed been mixed, with many firms producing financial reports that have failed to meet the mark of the new standard. While the move by MASB to adopt IFRSs is a reflection of Malaysia’s commitment to align with global accounting standards in order to achieve harmonization with international practice, these findings suggest that continued improvement will be required by Malaysian companies and their auditors before Malaysian practice is truly aligned to the international standard.
Original languageEnglish
Pages (from-to)75-104
Number of pages30
JournalJournal of financial reporting and accounting
Issue number1
Publication statusPublished - 2009


  • financial reporting standard
  • FRS 136
  • goodwill accounting
  • impairment
  • Malaysia

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