PART 4 (I) - NEW COMPANIES ACT 1965 - NINTH SCHEDULE

PART 4 – (i)

(13) RASTIONALIZING AUDIT AND FINANCIAL REPORTING FRAMEWORK

EXISTING LAW

(a) THE NINTH SCHEDULE OF THE COMPANIES ACT 1965

EXISTING LAWS - NINTH SCHEDULE

Other than complying with FRS/IFRS/IAS, other Malaysian authorities like Securities Commission, MASB, Bank Negara  require Companies to adhere strictly to the Ninth Schedule of the Malaysian Companies Act 1965 pertaining preparation of companies Financial Statement.

The relevant section are s.169 which relates to Profit and Loss Accounts, Balance Sheet and directors’ report .

Section 169A- Relief From Requirements As To Form And Content Of Accounts and Reports

Section 326-Balance Sheets And Accounts

NEW COMPANIES ACT

• Reliance on approved accounting standards and to eliminate inconsistencies between Companies Act and accounting standards.
  
  
• Itrems under the Ninth Schedule which are not edequately delat with in the present approved accounting standards shall be considered by the Malaysian Accounting Standards (MASB) where ist is relevant, for inclusion in the approved accounting standard.

With that the entire Ninth Schedule of the Companies Act 1965 is entirely removed as it is largely repetitive  to and with the accounting standards.

The existing Ninth Schedule of the companies Act 1965 - https://www.ssm.com.my/acts/fscommand/act125sc009.htm

(b) The current Companies Act requires companies to comply with approved accounting standard.

- Accounts must be prepared in accordance to accounting standard approved by MASB

The New law require compliance with approved accounting standards

• Accounts must be prepared in accordance to accounting standards approved by MASB
  
  
  
• However in case certain authorities (eg. Security Commission or Bank Negara Malaysia) specify modification to the approved accounting standards based on FRA 1997, the financial statement must  be prepared in accordance to such modification issued by the authorities.

The new provision is to allow compliance framework to be streamlined with the true and fair view requirement in the event of authorized modifications are specified by regulators to the approved accounting standards.

(C) COMPANY AUDITOR

- A person shall not be appointed as auditor for a company if he is indebted to an amount exceeding RM2500

New Provision

• A person shall not be appointed as auditor for a company if he is indebted to an amount exceeding RM25,000

The above changes are made taking into consideration the inflation rate, the increase in the amount of indebtedness is reflective of current commercial situation.

To be continued - Appointment of Auditor

Mohdar Ismail

Company Secretarial Practitioner