An Examination of FRS 136 by Malaysian Sha’Riah Companies

Journal of Law and Financial Management, Vol. 12, No. 2, November 2013

16 Pages Posted: 15 Nov 2013

See all articles by Nigel Finch

Nigel Finch

Saki Partners

Khairil Faizal Khairi

Macquarie Graduate School of Management

Nur Hidayah Laili

Macquarie Graduate School of Management

Date Written: November 15, 2013

Abstract

The objective of the study is to investigate the compliance level and disclosure quality of FRS 136 by the top 20 Shari’ah-approved companies in Bursa Malaysia as at 2010. The weighted index is employed to differentiate the quality and importance of each mandatory disclosure under FRS 136. The weighted index was developed by constructing disclosure scoring sheets, obtaining companies’ annual reports, completing scoring sheets for each firm by assigned weighting for the disclosure items and calculating disclosure weighted index. This study revealed that 13 out of 20 companies (65%) failed to comply with the most basic elements of the FRS 136 pertaining to goodwill impairment testing, especially in goodwill allocation and key assumptions used in determining the recoverable amount of CGU assets. This study suggests that the performance of the top 20 Shari’ah-approved companies must improve before Malaysian practice can attain a truly international standard.

Keywords: finance, law

JEL Classification: M40, M41

Suggested Citation

Finch, Nigel and Khairi, Khairil Faizal and Laili, Nur Hidayah, An Examination of FRS 136 by Malaysian Sha’Riah Companies (November 15, 2013). Journal of Law and Financial Management, Vol. 12, No. 2, November 2013. Available at SSRN: https://ssrn.com/abstract=2354890

Nigel Finch (Contact Author)

Saki Partners ( email )

Australia

Khairil Faizal Khairi

Macquarie Graduate School of Management ( email )

99 Talavera Road
Sydney, NSW 2113
Australia

HOME PAGE: http://www.mq.edu.au

Nur Hidayah Laili

Macquarie Graduate School of Management ( email )

99 Talavera Road
Sydney, NSW 2113
Australia

HOME PAGE: http://www.mq.edu.au

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