1.1 Research questions
Stage one of this qualitative study raised the broad question about the socio-economic impact
of the adoption and convergence of IFRS with local accounting standards on companies in
two ASEAN countries: Singapore and Malaysia. In order to perform further in-depth analysis
on this research question, sub-questions for interviews were posed as follows:
(1) What are the impacts of adoption of IFRS on wider stakeholders and on the socioeconomy
in the selected ASEAN countries?
(2) What are the perceived tensions between companies on the potential/adoption of
IFRS in the selected ASEAN countries?
(3) What are the ongoing IFRS education and training issues?
The findings for Singapore were that most standards, introduced since 2005, including
IAS 12: Income Taxes, have been implemented without much difficulty. IFRS is more
established in Singapore compared to Malaysia. However, in Singapore the application of the
principles-based ‘fair value’ requirement of standards has continued to be problematic in the
financial services and agricultural sectors. Whilst IFRS education was found to be quite
satisfactory, responses were varied as to whether the IFRS regime has been meaningful,
including reservations about the reward of lower cost of capital and concerns about loss of
competitive position. In Singapore our questions about the IFRS framework setting a
momentum for foreign investment revealed a degree of scepticism in the responses.
The move towards IFRS convergence in Malaysia was one of the major plans to
respond to Capital Market Master Plan Two (CMP2) that was launched by the Securities
Commission at the seventh edition of Invest Malaysia.6
By 2012, all approved accounting
standards applicable to entities other than private entities were due to converge fully with all
IFRS issued by the IASB. In November 2011, the MASB issued a new accounting
framework, namely the Malaysian Financial Reporting Standards (MFRS Framework) and
approximately one thousand Malaysian public listed companies have been affected since the
IFRS convergence in 2012. Malaysia officially adopted IFRS in 2012. There is a clear
expectation of positive impacts, such as the attraction of inward investment and resultant
increases in standards of living. There is tension amongst financial and tax practitioners, and
policy makers with regards to the accounting standards for financial instruments, real estate
and agriculture. The ‘complexity’ of the fair value principles-based approach has impacted
confidence, and there are differences for tax. There are concerns about adequate preparatory
IFRS training; and problems of low numbers of accountants in Malaysia. There is disquiet
about IFRS authorities not taking into account cultural, religious and societal variations
around the globe.
The investigation in relation to the research questions and detailed findings are
organised in this article as follows: Section 2 explains the methodology and methods. Section
3 discusses the literature review. Section 4 provides the background of IFRS in the selected
ASEAN countries considered in this study. Section 5 presents the analysis and discussion.
Section 6 contains the Stage one conclusions and Section 7 outlines the directions for further
research into IAS 12 Income Taxes.