Page 50 - SC Annual Report 2018 (ENG)

Securities
Commission
Malaysia
ANNUAL
REPORT
2018

To ensure the monitoring of corporate activities companies to ensure compliance with approved
remain effective, the SC continues to carry out accounting standards. In 2018, several areas
thematic studies on listed companies to identify of non-compliance with approved accounting
potential risks in the areas of financial reporting standards were identified with subsequent
and corporate transactions. These were followed by regulatory actions taken (Diagram 4).
focused reviews on the identified listed companies
to facilitate early detection of breaches. Based
on the identified risks and focus in 2018, the Creating awareness on new
SC conducted 54 engagements involving over accounting standards
120 individuals comprising representatives from
listed companies, statutory auditors and other MFRS 16, a new accounting standard which
stakeholders. The SC also issued 48 query letters supersedes MFRS 117 takes effect and applies
to listed companies seeking clarification on the to financial statements of listed companies with
identified issues. annual periods beginning on or after 1 January
2019. The principles of MFRS 16 bring about
changes to a lessee’s accounting model as most
Detecting and deterring transgressions operating leases will need to be recognised in the
Statement of Financial Position.
In 2018, the SC continued to detect and deter
corporate transgressions through its active monitoring A survey was conducted by the SC to gauge the
and review of corporate transactions, disclosures and awareness and readiness of listed companies in
financial reporting by listed companies. Examples of implementing MFRS 16. It showed that almost
corporate transgressions that commonly occurred are all of the selected 245 listed companies were
highlighted in Diagram 3. aware of the new standard and a majority had
undertaken efforts to prepare for its adoption
through training and stakeholder engagement.
Maintaining quality of financial reporting Following the conclusion of the survey, the SC
issued a circular to listed companies in November
High quality, reliable and accurate financial reporting 2018 to reiterate the importance of timely
facilitates informed investment decisions. Hence, the implementation and provided guidance on the
SC continues to review financial statements of listed disclosures required.

Diagram 3
common areas of corporate transgression and regulatory actions taken in 2018

common areas of corporate transgression outcomes

Disposal of Using internal funds Pre-empted 1 questionable
assets at below to finance purchase of transaction worth
market price companies’ own shares RM7.4 million

Sale of assets
to questionable Payment made to 5 issues involving transactions
customers at suppliers without worth RM30.8 million
a price below receiving the goods under investigation
market value

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