Home > Article > Audit > Understanding the Differences Between MPERS and MFRS

Understanding the Differences Between MPERS and MFRS

27 March 2025

Choosing the Right Accounting Standard for Your Business.

When it comes to preparing financial statements in Malaysia, businesses must choose the appropriate accounting framework that aligns with their size, operation and compliance obligations. The two key standards available are the Malaysian Private Entities Reporting Standards (MPERS) and the Malaysian Financial Reporting Standards (MFRS). But how do they differ and which one suits your company best.

Let’s break it down in simple terms.

What is MPERS?

Malaysian Private Entities Reporting Standards (MPERS) was issued by the Malaysian Accounting Standard Board (MASB) and came into effect for financial periods beginning on or after 1 January 2016. It is primarily based on the IFRS for SMEs (as revised by the IASB in May 2015) with a few amendments to fit the Malaysian context.

MPERS is designed specifically for private entities in Malaysia. A private entity is a private company as defined in Section 2 of the Companies Act 2016.

Is not itself required to prepare or lodge any financial statements under any law administered by the Securities Commission or Bank Negara Malaysia; and
Is not subsidiary or associate of or jointly controlled by, an entity which is required to prepare or lodge any financial statements under any law administered by the Securities Commission or Bank Negara Malaysia.

What is MFRS?

MFRS is a full suite of standards that complies completely with the International Financial Reporting Standards (IFRS). It is applicable to Public Interest Entities (PIEs) companies with significant public accountability.

PIE refer to those entities that are currently specified under Part 1 of Schedule 1 of the SCMA 1993. They include:

Public listed company listed on the stock exchange;
Bank licensed under the Financial Services Act 2013;
Insurer licensed under the Financial Services Act 2013;
Takaful operator licensed under the Islamic Financial Services Act 2013;
Islamic bank licensed under the Islamic Financial Services Act 2013;
Financial institution prescribed under section 212 of the Financial Services Act 2013 or section 223 of the Islamic Financial Services Act 2013;
Development financial institution prescribed under section 212 of the Financial Services Act 2013 or section 223 of the Islamic Financial Services Act;
Holder of a Capital Markets and Services License for the carrying on of the regulated activities of dealing in securities, dealing in derivatives or fund management;
Exchange holding company approved under the securities laws;
Capital Market Compensation Fund Corporation
Central depository approved under the securities law.

MFRS provides comprehensive guidance and ensures comparability at the international level, which is crucial for entities with stakeholders beyond Malaysia.

Differences between MPERS & MFRS

	MPERS	MFRS
Control of Subsidiaries	Control over an investee means the investor has the “power” to govern the financial and operating policies for the investee so as to obtain benefits from its activities	Control must be “demonstrated” through 3 elements: Power Exposure to variable returns Investor’s ability to use its power to affect its variable returns
Goodwill	Measured at cost less impairment and amortization maximum up to 10 years.	Measured at fair value and not amortized as it has indefinite life.
Investment in associated/ Join venture	3 different measurement models: Equity model Cost model Fair value model	Only equity model
Financial Instrument	2 Measurement models for financial assets and liabilities	4 measurement models for financial assets and liabilities.
Investment Property	Measured at fair value without undue cost or affect or if this is not possible then IP measured at depreciated cost model.	Measured at fair value or depreciated cost model
Borrowing Costs	To be recognized as an expenses in P&L	Directly attributable to the acquisition, construction or production of a qualifying asset to be capitalized as part of the cost of asset
Intangible Assets other than goodwill	Consider all intangible assets to have a finite useful life and must be amortized over the useful life. Use the revaluation model is not allowable.	R&D to be recognized as expenses while development costs are capitalized as an asset if criteria are met.

Conclusions

Choosing between MPERS and MFRS depends on your company’s nature, reporting needs and future goals. MPERS is ideal for most SMEs due to its simplicity and focus on cost-effective reporting. MFRS, on the other hand, is necessary for publicly accountable entities and those seeking international comparability.