Simplicity matters in life, and financial reporting
digital economy creates an efficient financial governance medium and our financial reporting should reflect that.
This should cover the entire reporting process, from data capture through analysis to data presentation.
New and revised standards are rolled out to reflect the new and complex realities of the economy and the business world.
Examples are the financial reporting standards of Malaysian Financial Reporting Standards (MFRS) 9: Financial Instruments (effective Jan 1 this year), MFRS 15: Revenue from Contracts with Customers (effective Jan 1 this year) and MFRS 16: Leases (to take effect on Jan 1 next year).
However, to ensure better governance, measures need to be taken to carry out the above standards.
The Malaysian Institute of Accountants said a focus on organisations’ core businesses is needed to ensure that systems and processes are in place.
Secondly, stakeholders in organisations should be committed to the change process of the business transformation.
Knowledge, skills and attitudes of stakeholders should be matched with organisations’ vision and mission.
Thirdly, embracing information technology as much as possible will expedite the implementation process.
Finally, accountants must improve their financial reporting skills to give effect to the intent of the new standards of financial reporting.
Users’ feedback that MFRS is complex and difficult to be understood must be dealt with.
It is more important to provide clear, simple, useful but actionable financial reporting information for decisions to be made.
Jargon should be ditched for clear, simple and actionable terms.
This enables stakeholders to read reports easily, understand business model, strategies, operations and outcomes. Simplicity matters not only in life, but also in financial reporting.
Deputy rector of Research, Industrial Linkages & Alumni, Johor UiTM