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
Date Written: November 15, 2013
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: Suggested Citation