Disclosure analysis of MFRSs amongst Bursa Malaysia PLCs (Industrial Products)

form year 2016 to 2018:

1. Khind Holdings Berhad
Leading world manufacturer and distributor brand from Malaysia. Established
in 1961, Khind has always sought to be at the forefront of bringing great
innovative and affordable products to customers. Khind striving to
continuously be the leading one-stop provider of the best home appliances.

2. Panasonic Manufacturing Malaysia

Most trusted and welcome names for electrical home appliances chosen by
most Malaysian households. Panasonic manufacture, operate, deliver and
maintain under the Panasonic brand name to the market with their excellent
after-sales services.

3. Pensonic Holdings Berhad

Pensonic Group was founded in 1965 as Keat Radio and Electrical Co. in
Balik Pulau, Penang. Being the pioneer in the electrical home appliances
market, they have set our sight on sustaining their proud reputation as one of
the most successful enterprise in Malaysia.

Contents
Task Distribution Table......................................................................................................................3
A. Malaysian Financial Reporting Standards (MFRSs)..............................................................5
i. MFRS 101 – Presentation of Financial Statements...........................................................5
ii. MFRS 102 - Inventories.........................................................................................................9
iii. MFRS 116 – Property, Plant and Equipment....................................................................11
iv. MFRS 136 – Impairment of Assets.................................................................................15
v. MFRS 120 - Accounting for Government grants and Disclosure of Government
Assistance......................................................................................................................................17
vi. MFRS 138 – Intangible Assets........................................................................................18
vii. MFRS 140 - Investment Property...................................................................................21
viii. MFRS 137 – Provisions, Contingent Liabilities and Contingent Asset......................22
B. Regulatory Framework – Statutory Regulations on Financial Accounting Reporting......24
i. The Financial Reporting Act 1997......................................................................................24

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 ii. The Companies Act 2016....................................................................................................25
iii. The Income Tax Act 1967....................................................................................................26
iv. Regulations by the Securities Commission...................................................................27
v. The Audit Oversight Board..................................................................................................28
vi. Regulations by Bursa Malaysia.......................................................................................29
vii. Regulations of Bank Negara Malaysia...........................................................................30
viii. Accounting Standard Pronouncements in Malaysia.....................................................31
ix. Directors’ Report of Companies – Companies Act 2016 Section 252(1), 253(1),
253(3) 32
x. Management Commentary..................................................................................................33
xi. Business Review in Director’s Report............................................................................34
C. Conceptual Framework – MASB’s Conceptual Framework for Financial Reporting. . .35
i. Economic Resources and Claims.......................................................................................35
ii. Changes in Economic Resources and Claims..................................................................36
iii. Financial Performance reflected by Accrual Accounting.................................................37
iv. Financial Performance reflected by Past Cash Flows..................................................39
v. Changes in Economic Resources and Claims not resulting from Financial
Performance..................................................................................................................................40
vi. Two Fundamental Qualitative Characteristics of Useful Financial Information –
Relevance and Faithful Representation.....................................................................................41
vii. Four Enhancing Qualitative Characteristics of Useful Financial Information –
Comparability, Verifiability, Timeliness and Understandability...............................................42
viii. Three Faithful Representation qualities – Completeness, Neutrality and Free from
Error 43
ix. Underlying Assumption – Going Concern......................................................................44
x. Elements of Financial Statements consists of Elements of Financial Position (Assets,
Liabilities and Equity) and Elements of Performance (Income, Expenses and Capital
Maintenance Adjustments)..........................................................................................................45
xi. Recognition of the Elements of Financial Statements..................................................47
xii. Measurement of the Elements of Financial Statements..............................................49
Conclusion.........................................................................................................................................50
i. Best Disclosure and Worst Disclosure...............................................................................50
ii. Ways to improve disclosure in annual reports;.................................................................50

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Task Distribution Table

NAME MATRIC TASK DISTRIBUTION

S
NUMBER
Shopanadevi a/p 146838 a. MFRS 101 – Presentation of
Munusamy Financial Position
b. MFRS 138 – Intangible Asset
c. Accounting Standard
Pronouncements in Malaysia
d. Directors’ Report of Companies –
Companies Act 2016 Section
252(1), 253(1), 253(3)
e. Management Commentary
f. Business Review in Director’s

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 Report
g. Four Enhancing Qualitative
Characteristic of Useful Financial
Information – Comparability,
Verifiability, Timeless and
Understandability
h. Underlying Assumption – Going
Concern
i. Elements of Financial Statements
consists of Elements of Financial
Position (Assets, Liabilities and
Equity) and Elements of
Performance (Income, Expenses
and Capital Maintenance
Adjustments)
j. Recognition of the Elements of
Financial Statements
k. Measurement of the Elements of
Financial Statements
Nur Khadijah Binti Esa 147306 a. MFRS 116 – Property, Plant and
Equipment
b. MFRS 136 – Impairment of Assets
c. MFRS 137 – Provisions, Contingent
Liabilities and Contingent Assets
d. The Audit Oversight Board
e. Regulations by Bursa Malaysia
f. Regulations by Bank Negara
Malaysia
g. Financial Performance reflected by
Past Cash Flows
h. Changes in Economic Resources
and Claims not resulting from
Financial Performance
i. Two Fundamental Qualitative
Characteristics of Useful Financial
Information – Relevance and
Faithful Representation
j. Three Faithful Representation
qualities – Completeness, Neutrality
and Free from Error
Shazwanie Binti Amat 146389 a. MFRS 102 – Inventories
Sazali b. MFRS 120 – Accounting for
Government Grants and Disclosure

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 of Government Assistance
c. MFRS 140 – Investment Property
d. The Financial Reporting Act 1997
e. The Companies Act 2016
f. The Income Tax Act 1967
g. Regulations by the Securities
Commission
h. Economic Resources and Claims
i. Changes in Economic Resources
and Claims
j. Financial Performance reflected by
Accrual Accounting

A. Malaysian Financial Reporting Standards (MFRSs)

i. MFRS 101 – Presentation of Financial Statements

The following terms are used in this Standard with the meanings specified:

General purpose financial statements (referred to as ‘financial statements’) are those

intended to meet the needs of users who are not in a position to require an entity to
prepare reports tailored to their particular information needs.

Based on the information that I have extracted from the Annual Report of
Panasonic Manufacturing Malaysia, Khind Holdings Berhad and Pensonic Holdings
Berhad, all these three companies have included their disclosures about MFRS 101
– Presentation of Financial Statements in their Annual Report.

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 1) Panasonic Manufacturing Malaysia

For the year 2016, Panasonic Manufacturing Malaysia has achieved total
assets and equity and liabilities of RM 986,093,000 as per Statement of Financial
Position. This company also gained a total comprehensive income of RM
141,034,000 for the financial year as reported in the Statement of Profit or Loss and
Other Comprehensive Income. Based on Statement of Changes in Equity for the
year 2016, Panasonic Manufacturing Malaysia recorded a total equity of
RM629,821,000. As per Statement of Cash Flow the company disclosed cash and
cash equivalents of RM601,514,000 at the end of the financial statement.

For the year 2017, Panasonic Manufacturing Malaysia recorded a value of

RM1,005,444,000 for total assets, total equity and liabilities as per Statement of
Financial Position. This company also gained a profit and total comprehensive
income of RM 127,118,000 for the financial year as per Statement of Profit or Loss
and Other Comprehensive Income. On 2017, Statement of Changes in Equity of
Panasonic Manufacturing Malaysia recorded a total equity of RM672,231,000. As
per Statement of Cash Flow the company disclosed cash and cash equivalents of
RM602,431,000 at the end of the financial statement.

On 2018, Panasonic Manufacturing Malaysia has recorded RM 1,071,194,000

of total assets, total equity and total liabilities as stated in Statement of Financial
Position. This company then gained profit and total comprehensive income of RM
131,025,000 for the financial year as per Statement of Profit or Loss and Other
Comprehensive Income. On 2018, the Statement of Changes in Equity of this
company recorded a total equity of RM881,736,000. As per Statement of Cash Flow
the company disclosed cash and cash equivalents of RM650,610,000 at the end of
the financial statement.

2) Khind Holdings Berhad

Moving on to Khind Holdings Berhad for the year 2016, the company recorded
a total assets, total equity and total liabilities of RM 76,779,000 as per Statement of
Financial Position. This company also gained a total comprehensive income of RM
113,000 for the financial year as per Statement of Profit or Loss and Other
Comprehensive Income. Based on Statement of Changes in Equity for the year
2016, this company recorded a total equity of RM 67,572,000. As per Statement of

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Cash Flow, Khind Holdings Berhad discloses cash and cash equivalents of RM
5,029,000 at the end of the financial statement.

For the year 2017, Khind Holdings Berhad has recorded total assets, total
equity and liability of RM78,023,000 as per Statement of Financial Position. This
company also gained a total comprehensive income of RM 1,429,000 for the
financial year as per Statement of Profit or Loss and Other Comprehensive Income.
On 2017, Statement of Changes in Equity of Khind Holdings Berhad recorded a total
equity of RM68,600,000. As per Statement of Cash Flow the company disclosed
cash and cash equivalents of RM2,954,000 at the end of the financial statement.

At 2018, the company recorded a total assets, total equity and total liabilities
of RM78,957,000 as per Statement of Financial Position. This company also gained
a total comprehensive income of RM 944,000 for the financial year as per Statement
of Profit or Loss and Other Comprehensive Income. Based on Statement of
Changes in Equity for the year 2018, this company recorded a total equity of RM
69,594,000. As per Statement of Cash Flow, Khind Holdings Berhad discloses cash
and cash equivalents of RM 1,635,000 at the end of the financial statement.

3) Pensonic Holdings Berhad

As for Pensonic Holdings Berhad, a total assets, total equity and total liabilities of
RM106,430,786 was recorded on the Statement of Financial Position at 2016. This
company achieved a total comprehensive income of RM 4,426,452 for the financial
year as per Statement of Profit or Loss and Other Comprehensive Income. This
company recorded a total equity of RM 81,823,109 as stated in Statement of
Changes in Equity. As per Statement of Cash Flow, Pensonic Holdings Berhad
discloses cash and cash equivalents of RM1,320,372 at the end of the financial
statement.

As for 2017, a total assets, total equity and total liabilities of RM 99,965,826
was recorded on the Statement of Financial Position at 2017 of Pensonic Holdings
Berhad. This company noted a total comprehensive income of RM 3,537,084 for the
financial year as per Statement of Profit or Loss and Other Comprehensive Income.
This company recorded a total equity of RM 82,766,833 as disclosed in Statement of
Changes in Equity. As per Statement of Cash Flow, Pensonic Holdings Berhad
discloses cash and cash equivalents of RM 938,163 at the end of the financial
statement.

On 2018, Pensonic Holdings Berhad recorded a total assets, total equity and
total liabilities of RM 94,755,310 on the Statement of Financial Position at 2018. This
company disclosed an amount of RM1,799,706 as total comprehensive income for
the financial year as in Statement of Profit or Loss and Other Comprehensive

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Income. Pensonic Holdings Berhad reported a total equity of RM 81,973,179 in the
company’s Statement of Changes in Equity. As per Statement of Cash Flow reveals
cash and cash equivalents that values RM 263,621 at the end of the company’s
financial statement.

Based on the data collected from the Annual Report, these three companies gained
an increase in total assets, total equity and liabilities as per Statement of Financial
Position from the year 2016 to 2018. Moving on, Panasonic Manufacturing Malaysia
noticed a decrease in total profit and total comprehensive income from the year 2016
to 2017 and then increased from 2017 to 2018. While Khind Holdings Berhad
experienced a drastic increase in total profit and total comprehensive income from
the year 2016 to 2017 and continues to decrease from 2017 to 2018. Whilst
Pensonic Holdings Berhad experienced a continuous increase in total profit and total
comprehensive income from the year 2016 to 2018. As for total equity based on
Statement of Change in Equity, Panasonic Manufacturing Malaysia and Khind
Holdings Berhad recorded an increase in total equity from 2016 to 2018 whereas
Pensonic Holdings Berhad the total equity increased from 2016 to 2017 and then
decreased on from 2017 to 2018. As for cash and cash equivalents, Panasonic
Manufacturing Malaysia reported on a continuous increase on Statement of Cash
Flow from 2016 to 2018. While, Khind Holdings Berhad and Pensonic Holdings
Berhad reported on a continuous decrease on the cash and cash equivalents.

In conclusion, all these three companies disclosed MFRS 101 - Presentation of

Financial Statements that comprised of:

1. Statement of Financial Position as at the end of the period

2. Statement of Profit or Loss and Other Comprehensive Income for the period
3. Statement of Changes in Equity for the period
4. Statement of Cash Flows for the period
5. Notes, comprising a summary of significant accounting policies and other
explanatory information which makes the Annual report of the company to be
complete.

The objective of financial statements is to provide information about the financial

position, financial performance and cash flows of an entity that is useful for users
such as shareholders and stakeholders in making economic decisions.

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 ii. MFRS 102 - Inventories

The following terms are used in this Standard with the meanings specified:
Inventories are assets:
a) held for sale in the ordinary course of business
b) in the process of production for such sale
c) in the form of materials or supplies to be consumed in the production process
or in the rendering of services.
Net realisable value is the estimated selling price in the ordinary course of business
less the estimated costs of completion and the estimated costs necessary to make
the sale.

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Fair value is the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the measurement
date

According to information I have collected from Khinds Holdings Berhad, Panasonic

Manufacturing Malaysia, and Pensonic Holdings Berhad annual reports, all the
companies disclosed their information about MFRS 102 – Inventories clearly. They
disclosed same amount of information which is inventories are measured at the
lower of cost and net realisable value that called Cost of Inventories. Moreover, it
includes expenditure to calculate inventories, conversion costs and other cost.

1) Khinds Holdings Berhad

Khinds Holdings Berhad disclose clearly including information of goods and
property development in details. In Khind annual reports stated that they been using
first-in-first-out method as cost formula to calculate cost of inventories. For 2016,
value of inventories recognised as cost of sales is RM222,324,000 while the
properties under development is RM6,242,000. As for 2017, value of inventories
recognised as cost of sales is RM216,515,000 while the properties under
development is RM6,292,000. Lastly for 2017, value of inventories recognised as
cost of sales is RM 218,428,000 while the properties under development is
RM6,336,000.

2) Panasonic Manufacturing Malaysia

According to Panasonic Manufacturing Malaysia, they disclose slightly less
than Khinds Holdings Berhad. However, in Pensonic annual reports, the cost of
inventories calculated using weighted average. As for financial statement, value of
inventories recognised as cost of sales for 2016 is RM651,444,000. For 2017 and
2018, it is RM651,444,000 and RM733,161,000, respectively.
3) Pensonic Holdings Berhad
Pensonic Holdings Berhad disclose same amount of information as
Panasonic Manufacturing Malaysia. As for Pensonic, they use weighted average
bases to calculate cost of inventories. Based on their financial statements, for the
year 2016, value of inventories recognised as cost of sales is RM400,978,000 while
for 2017 is RM288,127,730. Lastly for 2018, it is RM250,055,395.
As conclusion, best disclosure clearly goes to Khinds Holdings Berhad as
they disclose slightly more in detailed compare to Panasonic Manufacturing
Malaysia, and Pensonic Holdings Berhad. However, there is no worst disclosure as
other two disclose the same information.

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 iii. MFRS 116 – Property, Plant and Equipment

The main objective of this standard is to prescribe the accounting treatment for
property, plant and equipment so that users of the financial statements can discern
information about an entity’s investment in its property, plant and equipment and the
changes in such investment. The principal issues in accounting for property, plant
and equipment are the recognition of the assets, the determination of their carrying
amounts and the depreciation charges and impairment losses to be recognised in
relation to them.

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As overview, we can see that

A. Recognition and Measurement

Items in property, plant and equipment shall be recognised as asset when it is
probable that the future economic benefits associated with asset will flow to entity
and cost of the asset can be measure reliably. Then, an item of property, plant and
equipment that qualifies for recognition as an asset shall be measured at its cost.
Panasonic Manufacturing Malaysia Berhad, Khind Holdings Berhad and Pensonic
Holdings Berhad has divided two ways of recognised and measure their item of
property, plant and equipment. Firstly, these companies stated item in property,
plant and equipment at cost less any accumulated depreciation and any
accumulated impairment losses. Meanwhile, the gain or loss on disposal of an item
of property, plant and equipment is determined by comparing the proceeds from
disposal with carrying amount of property, plant and equipment and recognised net
within ‘other income’ and ‘other expenses’ respectively in profit or loss.

B. Subsequent Cost
Item in property, plant and equipment is recognised in the carrying amount of the
item if it is probable that the future economic benefits embodied within the
component will flow to the Company and its cost can be measured reliably.
Panasonic Manufacturing Malaysia Berhad, Khind Holdings Berhad and Pensonic
Holdings Berhad recognised the item of property, plant and equipment by the
carrying amount of the replaced component is de-recognised to profit-or-loss. The
costs of the day-to-day servicing of property, plant and equipment are recognised in
profit or loss as incurred.

C. Depreciation
Each part of item in property, plant and equipment with a cost that is significant in
relation to the total cost of the item shall be depreciated separately. The depreciation
charge for each period shall be recognised in profit or loss unless it is included in the
carrying amount of another asset. Also, the depreciable amount of an asset shall be
allocated systematic basis over its useful life.
Panasonic Manufacturing Malaysia Berhad, Khind Holdings Berhad and Pensonic
Holdings Berhad recognised in profit or loss on a straight-line basis over the
estimated useful lives of each component. Depreciation is based on the cost of an
asset less its residual values.

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 1) Panasonic Manufacturing Malaysia Berhad
For the year 2016, Panasonic Manufacturing Malaysia Berhad has achieved
the carrying amount of accumulated depreciation is RM330,174,000. As per
Statement of Cash Flows for the year 2016, they recorded RM23,393,000 as
company’s depreciation cost. This company also gain on disposal by RM110,000 as
stated in Statement of Cash Flows. It has disclosed a total of property, plant and
equipment of RM62,030,000 as reported in Statement of Financial Position at the
end of the financial statement.
For the year 2017, Panasonic Manufacturing Malaysia Berhad has achieved
the carrying amount of accumulated depreciation is RM349,229,000. As per
Statement of Cash Flows for the year 2017, they recorded RM30,549,000 as
company’s depreciation cost. This company also gain on disposal by RM176,000 as
stated in Statement of Cash Flows. It has disclosed a total of property, plant and
equipment of RM74,981,000 as reported in Statement of Financial Position at the
end of the financial statement.
For the year 2018, Panasonic Manufacturing Malaysia Berhad has achieved
the carrying amount of accumulated depreciation is RM97,185,000. As per
Statement of Cash Flows for the year 2018, they recorded RM31,064,000 as
company’s depreciation cost. This company also gain on disposal by RM206,000 as
stated in Statement of Cash Flows. It has disclosed a total of property, plant and
equipment of RM1,071,194,000 as reported in Statement of Financial Position at the
end of the financial statement.

2) Khind Holdings Berhad

For the year 2016, Khind Holdings Berhad has achieved the carrying amount
of accumulated depreciation is RM50,232,000. As per Statement of Cash Flows for
the year 2016, they recorded RM5,144,000 as company’s depreciation cost. This
company also gain on disposal by RM18,000 as stated in Statement of Cash Flows.
It has disclosed a total of property, plant and equipment of RM61,268,000 as
reported in Statement of Financial Position at the end of the financial statement.
For the year 2017, Khind Holdings Berhad has achieved the carrying amount
of accumulated depreciation is RM54,877,000. As per Statement of Cash Flows for

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the year 2017, they recorded RM5,330,000 as company’s depreciation cost. This
company also gain on disposal by RM13,000 as stated in Statement of Cash Flows.
It has disclosed a total of property, plant and equipment of RM63,461,000 as
reported in Statement of Financial Position at the end of the financial statement.
For the year 2018, Khind Holdings Berhad has achieved the carrying amount
of accumulated depreciation is RM58,366,000. As per Statement of Cash Flows for
the year 2018, they recorded RM5,298,000 as company’s depreciation cost. This
company also gain on disposal by RM26,000 as stated in Statement of Cash Flows.
It has disclosed a total of property, plant and equipment of RM64,352,000 as
reported in Statement of Financial Position at the end of the financial statement.

3) Pensonic Holdings Berhad

For the year 2016, Pensonic Holdings Berhad has achieved the carrying
amount of accumulated depreciation is RM43,341,223. As per Statement of Cash
Flows for the year 2016, they recorded RM7,425,030 as company’s depreciation
cost. This company also gain on disposal by RM56,630 as stated in Statement of
Cash Flows. It has disclosed a total of property, plant and equipment of
RM146,214,893 as reported in Statement of Financial Position at the end of the
financial statement.
For the year 2017, Pensonic Holdings Berhad has achieved the carrying
amount of accumulated depreciation is RM47,319,565. As per Statement of Cash
Flows for the year 2017, they recorded RM7,395,861 as company’s depreciation
cost. This company also loss on disposal by RM4,731 as stated in Statement of
Cash Flows. It has disclosed a total of property, plant and equipment of
RM140,005,619 as reported in Statement of Financial Position at the end of the
financial statement.
For the year 2018, Pensonic Holdings Berhad has achieved the carrying
amount of accumulated depreciation is RM53,324,409. As per Statement of Cash
Flows for the year 2018, they recorded RM7,580,469 as company’s depreciation
cost. This company also gain on disposal by RM220,807 as stated in Statement of
Cash Flows. It has disclosed a total of property, plant and equipment of
RM155,045,942 as reported in Statement of Financial Position at the end of the
financial statement.
Based on data collected from Annual Report of each company, these
companies gained a different amount of accumulated depreciation as for Panasonic
Manufacturing Malaysia Berhad having an increasing amount of accumulated
depreciation on 2016 to 2017 while drop a bit in 2018. While the other two
companies gain an increasing amount of accumulated depreciation cost in 2016 to
2018. As for depreciation property, plant and equipment cost, Panasonic
Manufacturing Malaysia Berhad gain an increasing cost while Khind Holdings

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Berhad was increasing but then decreasing in year 2017 to 2018 but Pensonic
Holdings Berhad decreasing in year 2016 to 2017 but increasing in 2017 to 2018.
Panasonic Manufacturing Malaysia Berhad and Khind Holdings Berhad gain in
disposal of property, plant and equipment for three years while Pensonic Holdings
Berhad had facing loss in disposal for year 2017. In Statement of Financial Position,
Panasonic Manufacturing Berhad gain more carrying forward cost of property, plant
and equipment than two other companies.
In conclusion, Khind Holdings Berhad had performed better disclosure in MFRS 116
among two other companies.

iv. MFRS 136 – Impairment of Assets

The main objective of this Standards is to prescribe the procedures that an entity
applies to ensure that its assets are carried at no more than their recoverable
amount. An asset is carried at more than its recoverable amount if it carrying amount
exceeds the amount to be recovered through use or sale of the asset. If this is the
case, the asset is described as impaired and the Standard requires the entity to

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recognise an impairment loss. The Standard also specifies when an entity should
reverse an impairment loss and prescribes disclosures.

1) Panasonic Manufacturing Malaysia Berhad

In year 2016, this company has achieved the carrying amount of financial
assets by RM713,592,000 in the analysis financial instrument carried at fair value.
However, as per Statement of Cash Flow, the cost fair value gain on derivative
financial instrument by RM9,169,000 for the year 2016. They make a disclosure for
these two costs of financial assets and other assets completely.
In year 2017, this company has achieved the carrying amount of financial
assets by RM715,274,000 in the analysis financial instrument carried at fair value.
However, as per Statement of Cash Flow, the cost fair value loss on derivative
financial instrument by RM4,807,000 for the year 2017. They make a disclosure for
these two costs of financial assets and other assets completely.
In year 2018, this company has achieved the carrying amount of financial
assets by RM780,713,000 in the analysis financial instrument carried at fair value.
However, as per Statement of Cash Flow, the cost fair value gain on derivative
financial instrument by RM7,668,000 for the year 2018. They make a disclosure for
these two costs of financial assets and other assets completely.

2) Khind Holdings Berhad

In year 2016, this company has achieved the carrying amount of financial
assets by RM1,997,000 in the analysis financial instrument carried at fair value.
However, as per Statement of Cash Flow, the cost fair value gain on derivative
financial instrument by RM25,000 for the year 2016. They make a disclosure for
these two costs of financial assets and other assets completely.
In year 2017, this company has achieved the carrying amount of financial
assets by RM2,767,000 in the analysis financial instrument carried at fair value.
However, as per Statement of Cash Flow, the cost fair value gain on derivative
financial instrument by RM196,000 for the year 2017. They make a disclosure for
these two costs of financial assets and other assets completely.
In year 2018, this company has achieved the carrying amount of financial
assets by RM1,011,000 in the analysis financial instrument carried at fair value.
However, as per Statement of Cash Flow, the cost fair value loss on derivative
financial instrument by RM129,000 for the year 2018. They make a disclosure for
these two costs of financial assets and other assets completely.

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 3) Pensonic Holdings Berhad
In year 2016, this company has achieved the carrying amount of financial
assets by RM121,444,063 in the analysis financial instrument carried at fair value.
However, as per Statement of Cash Flow, the cost fair value gain on derivative
financial instrument by RM7,047 for the year 2016. They make a disclosure for these
two costs of financial assets and other assets completely.
In year 2017, this company has achieved the carrying amount of financial
assets by RM101,055,378 in the analysis financial instrument carried at fair value.
However, as per Statement of Cash Flow, the cost fair value gain on derivative
financial instrument by RM54,570 for the year 2017. They make a disclosure for
these two costs of financial assets and other assets completely.
In year 2018, this company has achieved the carrying amount of financial
assets by RM87,513,159 in the analysis financial instrument carried at fair value.
However, as per Statement of Cash Flow, the cost fair value loss on derivative
financial instrument by RM44,251 for the year 2018. They make a disclosure for
these two costs of financial assets and other assets completely.

v. MFRS 120 - Accounting for Government grants and Disclosure of

Government Assistance

The following terms are used in this Standard with the meanings specified:
(a) Government refers to government, government agencies and similar bodies
whether local, national or international.

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 (b) Government assistance is action by government designed to provide an
economic benefit specific to an entity or range of entities qualifying under
certain criteria. Government assistance for the purpose of this Standard does
not include benefits provided only indirectly through action affecting general
trading conditions, such as the provision of infrastructure in development
areas or the imposition of trading constraints on competitors.
(c) Government grants are assistance by government in the form of transfers of
resources to an entity in return for past or future compliance with certain
conditions relating to the operating activities of the entity. They exclude those
forms of government assistance which cannot reasonably.
Based on the researched I have done on these three companies (Khinds
Holdings Berhad, Panasonic Manufacturing Malaysia, and Pensonic Holdings
Berhad) annual reports, only Pensonic Holdings Berhad disclose about their MFRS
120 - Accounting for Government grants and Disclosure of Government Assistance.
Starting from 2016 until 2018, Khind and Panasonic did not closure any of the MFRS
120 in their annual reports.
According to 3 years (2016,2017 & 2018) annual reports, Pensonic Holdings
Berhad stated that in their annual report that when the grant relates to an expense
item, it is recognised in profit or loss on systematic basis over the periods. However,
it also stated that government grants are not recognised until there is reasonable
assurance. Unfortunately, they did not disclose the accounting policy adopted for
government grants as well as methods of presentation adopted.
In conclusion, it is obvious that Pensonic Holdings Berhad won the best disclosure
compared as they got grants from the government to other two as they disclose
about their MFRS 120 - Accounting for Government grants and Disclosure of
Government Assistance and others did not. However, other two companies are
doing good in their industry, yet they did not get any grants from any government.

vi. MFRS 138 – Intangible Assets

Amortization is the systematic allocation of the depreciable amount of an intangible

asset over its useful life. An asset is a resource:
(a) controlled by an entity as a result of past events
(b) from which future economic benefits are expected to flow to the entity.

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Carrying amount is the amount at which an asset is recognized in the statement of
financial position after deducting any accumulated amortization and accumulated
impairment losses thereon.
Based on the information that I have gained from the Annual Report of
Panasonic Manufacturing Malaysia, Khind Holdings Berhad and Pensonic Holdings
Berhad, all these three companies have included their disclosures about MFRS 138
– Intangible Assets in their company’s Annual Report. Intangible assets are
identifiable non-monetary assets that have no physical substance.

1) Panasonic Manufacturing Malaysia

Panasonic Manufacturing Malaysia has declared that financial asset or a
financial liability is recognized in the statement of financial position when Company
becomes a party to the contractual provisions of the instrument under initial
Recognition and Measurement that complies accounting policies. The company also
reported that a financial instrument is recognized initially, at its fair value. For non-
financial asset, the fair value measurement takes into account a market participant’s
ability to generate economic benefits by using the asset in its highest and best use or
by selling it to another market participant that would use the asset in its highest and
best use. When measuring the fair value of an asset or a liability, the Company uses
observable market data as far as possible. Fair value is categorized into different
levels in a fair value hierarchy based on the input used in the valuation technique as
follows. In the case of a financial instrument not at fair value through profit or loss,
transaction costs that are directly attributable to the acquisition or issue of the
financial instrument.
This company reported a share of post-acquisition reserves RM149,282,000
in the year 2016, RM149,553,000 in the year 2017 and RM 131,859,000 in the year
2018. The company reported that financial statements have been prepared on the
historical cost basis, unless stated. Lastly, Research and development expenditure is
recognized as an expense except that costs incurred on development projects are
recognized as development assets to the extent that such expenditure is expected to
generate future economic benefits. Development costs initially recognized as
expenses are not recognized as an asset in a subsequent financial year. Costs
incurred on development projects are recognized as intangible assets when the
following criteria are fulfilled.
2) Khind Holdings Berhad
Moving on to Khind Holdings Berhad, this company disclosed MFRS 138 in
detailed in their Annual Report. Firstly, it reported that Goodwill arises on business
combinations is measured at cost less any accumulated impairment losses.
Intangible assets, other than goodwill, that are acquired by the Group and the
Company, which have finite useful lives, are measured at cost less any accumulated

18 | P a g e
amortization and any accumulated impairment losses. The company also declared
that the fair value of patents and trademarks acquired in a business combination is
based on the discounted estimated royalty payments that have been avoided as a
result of the patent or trademark being owned. The fair value of other intangible
assets is based on the discounted cash flows expected to be derived from the use
and eventual sale of the assets. Subsequent expenditure is capitalized only when it
increases the future economic benefits embodied in the specific asset to which it
relates. All other expenditure, including expenditure on internally generated goodwill
and brands, is recognized in profit or loss as incurred.
Goodwill and intangible assets with indefinite useful lives are not amortized
but are tested for impairment annually and whenever there is an indication that they
may be impaired. Other intangible assets are amortized from the date that they are
available for use. Amortization is based on the cost of an asset less its residual
value. Amortization is recognized in profit or loss on a straight-line basis over the
estimated useful lives of intangible assets. The estimated useful life of patents and
trademarks of Khind Holdings Berhad is ten (10) years. The company complied
amortization methods, useful lives and residual values are reviewed at the end of
each reporting period.
3) Pensonic Holdings Berhad
As for Pensonic Holdings Berhad this company declared that intangible
assets acquired in a business combination and recognized separately from goodwill
are initially recognized at their fair values at the acquisition date. Subsequently initial
recognition, intangible assets acquired in a business combination are reported at
cost less accumulated amortization and accumulated impairment losses, on the
same basis as intangible assets that are acquired separately. An intangible asset is
derecognized on disposal, or when no future economic benefits are expected from
use or disposal. Gains or losses arising from derecognition of an intangible asset,
measured as the difference between the net disposal proceeds and the carrying
amount of the asset, are recognized in profit or loss when asset is derecognized.
Intangible assets with indefinite useful lives that are acquired separately are carried
at cost less accumulated impairment losses. For goodwill and intangible assets that
have indefinite useful lives, or that are not yet available for use, the recoverable
amount is estimated each period at the same time. The trademark was assessed as
having an indefinite useful live subject to use in good faith. Capital expenditure
consists of additions of property, plant and equipment, intangible assets and
investment properties including assets from the acquisition of subsidiary companies

After all, Pensonic Holdings Berhad reported total intangible asset of RM1,061,043
for the year 2016, RM1,068,014 for the year 2017 and a total of RM1,058,298 for the
year 2018. Whereas, Khind Holdings Berhad disclosed total intangible asset of RM
1,044,000 at the year 2016, RM1,083,000 at 2017 and a value of RM1,136,000 at

19 | P a g e
2018. While, Panasonic Manufacturing Malaysia did not disclose any intangible
assets in their annual report either than the accounting policies used.

vii. MFRS 140 - Investment Property

Investment property is property (land or a building—or part of a building—or both)

held (by the owner or by the lessee as a right-of-use asset) to earn rentals or for
capital appreciation or both, rather than for:
a) use in the production or supply of goods or services or for administrative
purposes
b) sale in the ordinary course of business.

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 Based on information I found in Khinds Holdings Berhad, Panasonic
Manufacturing Malaysia, and Pensonic Holdings Berhad annual reports, only two
companies chose to disclose about MFRS 140 – Investment Property. Panasonic
Manufacturing Malaysia is the only company that do not disclose for 3 years in row
starting in 2016 to 2018. According to Khind and Pensonic, they disclose with
detailed and slightly different of disclosure between with each other. Both
companies, applied the cost model which for Pensonic’s investment property
measured at cost, including transaction costs, less any accumulated depreciation
and impairment losses. Same goes to Khind where their investment property carried
at cost.
1) Khinds Holdings Berhad
According to Khinds Holdings Berhad, disclose clearly about their Investment
Property which they stated the purpose of the MFRS that property is owned to earn
rental income or for capital appreciation or for both. Moreover, fair value is estimated
using unobservable inputs for the investment property. For 2016, rental income is
RM60,000 and fair value of investment property (land and building) is RM4,820,000
while for the year 2017, the amount of rental income and is RM15,000 fair value of
investment property (land and building) is RM 5,106,000. On the report of 2018, it is
RM60,000 for rental income and RM3,827,00 for the fair value of investment
property (land and building).
2) Pensonic Holdings Berhad
Pensonic Holdings Berhad disclose a slightly a little more information from
Khinds Holdings Berhad. They stated that their investment properties are
depreciated on a straight-line basis and it derecognised upon disposal or when they
are permanently withdrawn from use and no future economic benefits are expected
from their disposal. However, the fair value was based on Director’s estimation. For
2016, rental income is RM29,324 while for the year 2017 is RM11,900. Sadly, on the
report of the year 2018, they did not disclose about their rental income in financial
statements.
Thus, until year 2018 Pensonic Holdings Berhad is leading compared to other two.
However, worst company goes to Panasonic Manufacturing Malaysia because they
did not disclose any information about the MFRS – Investment properties.

viii. MFRS 137 – Provisions, Contingent Liabilities and Contingent

Asset

The main objective of this Standard is to ensure that appropriate recognition criteria
and measurement bases are applied to provisions, contingent liabilities and

21 | P a g e
contingent assets and that sufficient information is disclosed in the notes to enable
users to understand their nature, timing and amount.
A provision is recognised if, as a result of a past event, the Group has a
present legal or constructive obligation that can be estimated reliably, and it is
probable that an outflow of economic benefits will be required to settle the obligation.
Provisions are determined by discounting the expected future cash flows at a pre-tax
rate that reflects current market assessments of the time value of money and the
risks specific to the liability. The unwinding of the discount is recognised as finance
cost.
Provisions can be distinguished from other liabilities because there is
uncertainty about the timing or amount of settlement. The more common provision
recorded by the Group arise from obligations in relation to warranties. The
recognition and measurement of provisions require the Group and the Company to
make significant estimates with regard to the probability (if the event is more likely
than not to occur) that an outflow of resources will be required to settle the obligation
and make assumptions whether a reliable estimate can be made of the amount of
the obligation.
Moreover, the Group’s and the Company’s accounting policy require
recognition of the best estimate of the amount that would be required to settle an
obligation and the estimate may be based on information that produces a range of
amounts. Since the measurement is based on present value, it involves making
estimates around the appropriate discount rate in order to reflect the risks specific to
the liability.
Contingent liabilities of the Group and the Company are not recognised but
disclosed, unless the possibility of an outflow of resources embodying economic
benefits is remote. Contingent liabilities represent possible obligations that arise from
past events and whose existence will be confirmed only by the occurrence or non-
occurrence of one or more uncertain future events not wholly within the control of the
entity. They are not recognised because it is not probable that an outflow of
resources will be required to settle the obligation and the amount of the obligation
cannot be measured with sufficient reliability.
At the date of this report, there does not exist:
(i) any charge on the assets of the Group and of the Company which has
arisen since the end of the financial year which secures the liabilities of
any other person; or
(ii) any contingent liability in respect of the Group and of the Company which
has arisen since the end of the financial year.
(iii) no contingent liability or other liability has become enforceable or is likely
to become enforceable within the period of twelve months after the end of

22 | P a g e
 the financial year which will or may affect the ability of the Group and of
the Company to meet their obligations as and when they fall due
Where it is not probable that an outflow of economic benefits will be required,
or the amount cannot be estimated reliably, the obligation is not recognised in the
statements of financial position and is disclosed as a contingent liability, unless the
probability of outflow of economic benefits is remote. Possible obligations, whose
existence will only be confirmed by the occurrence or non-occurrence of one or more
future events, are also disclosed as contingent liabilities unless the probability of
outflow of economic benefits is remote.
Moreover, the Group’s accounting policy requires recognition of the best
estimate of the amount that would be required to settle an obligation and the
estimate may be based on information that produces a range of amounts. Since the
measurement is based on present value, it involves making estimates around the
appropriate discount rate in order to reflect the risks specific to the liability.
However, in these three years annual report of Panasonic Manufacturing
Malaysia Berhad, Khind Holdings Berhad and Pensonic Holdings Berhad, they did
not make a disclosure for contingent assets. As for contingent asset, there were no
amount for that cost.
In conclusion, provision is recognised as the best estimate for an annual report.
Pensonic Holdings Berhad and Khind Holdings Berhad have make a best estimate
for their company and make their best disclosure while Panasonic Manufacturing
Malaysia Berhad not fully disclosed their MFRS.

B. Regulatory Framework – Statutory Regulations on

Financial Accounting Reporting

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 i. The Financial Reporting Act 1997

An Act to establish the Financial Reporting Foundation and the Malaysia Accounting
Standards Board, to provide for their functions and powers and to provide for matters
connected therewith.
According to the annual reports Khinds Holdings Berhad, Panasonic
Manufacturing Malaysia, and Pensonic Holdings Berhad, none of these companies
has mentioned or disclosed about The Financial Reporting Act 1997 for 3 years in
row starting from 2016 to 2018. However, all these companies disclosed about the
external Financial Statements such as Income Statement, Statement of
Comprehensive Income, Balance Sheet, Statement of Cash Flows, and Statement of
Stockholders’ Equity.
Therefore, there is no best disclosure or worst disclosure as all the companies
did not put detail about The Financial Reporting Act 1997 in their annual reports.

ii. The Companies Act 2016

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The Companies Act 2016, which came into effect on 31 January 2017, introduces
changes to ease the doing of business and to simplify administration requirements
for companies.

Based on the annual reports of Khinds Holdings Berhad, Panasonic

Manufacturing Malaysia, and Pensonic Holdings Berhad, all these companies have
disclosed and mentioned about The Companies Act 2016. However, in 2016, Khind
and Panasonic still using The Companies Act 1965 while Pensonic did not disclose
about the act for that year. There are slightly difference between Companies Act
1965 and Companies Act 2016, which is Under the Companies Act 1965, a
memorandum and articles of association is required for a company to be
incorporated. Under the Companies Act 2016, the M&A is replaced by Constitution.
However, they do mention about this act in their annual report but not in specific
places.

On the reports, starting from year 2017, all the companies started to disclose
and applied The Companies Act 2016. As for the best disclosure will go to Khind
Holdings Berhad and Panasonic Manufacturing Berhad, while Pensonic Holdings
Berhad was one step behind from both companies as they missed to apply the act
on 2016.

iii. The Income Tax Act 1967

25 | P a g e
An Act to impose a tax upon income from the winning of petroleum in Malaysia, to
provide for the assessment and collection thereof and for purposes connected
therewith.

Based on information, I have collected from these three companies which

Khind Holdings Berhad, Panasonic Manufacturing Malaysia, and Pensonic Holdings
Berhad, sadly all these companies did not apply or disclose Income Tax Act 1967.
However, Pensonic Holdings Berhad decided to take one step ahead from others as
at year 2018, they disclose and started to applied Income Tax Act 1967. However,
they do mention about this act in their annual report but not in specific places.

As a conclusion, for the best disclose clearly goes to Pensonic Holdings

Berhad and worst goes to Khind Holdings Berhad and Panasonic Manufacturing
Malaysia.

iv. Regulations by the Securities Commission

26 | P a g e
A securities commission is a government department or agency responsible for
financial regulation of securities products within a country.

According to the annual reports Khinds Holdings Berhad, Panasonic

Manufacturing Malaysia, and Pensonic Holdings Berhad, none of these companies
has mentioned or disclosed about Regulations by the securities commission for 3
years in row starting from 2016 to 2018. None of these companies explain detailed
that stakeholders and shareholders might needed.

Therefore, there is no best or worst because none of the companies applied

or mentioned about the regulations by the securities commission in their annual
report.

v. The Audit Oversight Board

27 | P a g e
 The Audit Oversight Board is responsible for the registration of auditors of
public interest entities or schedule funds under Part IIIA of the Securities
Commission Malaysia Act 1993 (SCMA). It is also fostering high quality independent
auditing to promote confidence in the quality and reliability of audited financial
statements of public-interest entities and schedule funds in Malaysia.

Based on the annual report stated, Panasonic Manufacturing Malaysia

Berhad, Khind Holdings Berhad and Pensonic Holding Berhad have disclosed their
report and stated the Audit Oversight Board in each annual report. As for Audit
Oversight Board, Panasonic Manufacturing Malaysia Berhad had the most well-
organised report better than Khind Holdings Berhad and Pensonic Holdings Berhad.
This is because Panasonic Manufacturing Malaysia Berhad giving more information
and summarized all the information that needed by the third party. While Khind
Holdings Berhad had the least information about the Audit Oversight Board than the
others company.

28 | P a g e
 vi. Regulations by Bursa Malaysia

Bursa Malaysia is mandated with regulatory duties under the law, which include
maintaining market integrity and protecting investors’ interests in those markets in
which it operates. There are five-pronged approach in discharging under regulatory
function which are development, supervision, engagement, enforcement and
education.
From annual report that been reported in Bursa Malaysia, Panasonic
Manufacturing Malaysia Berhad, Khind Holdings Berhad and Pensonic Holdings
Berhad disclosed their annual report according to Regulations of Bursa Malaysia.
However, annual report of Panasonic Manufacturing Malaysia Berhad company had
disclosed their annual report better than Khind Holdings Berhad and Pensonic
Holdings Berhad. Their annual report had the most completed information for
regulations based on their regulatory rule that should be followed by the companies.

29 | P a g e
 vii. Regulations of Bank Negara Malaysia

Regulations of Bank Negara Malaysia is promoting financial sector stability through

the progressive development of sustainable, robust and sound financial institutions
and financial infrastructure, thus enabling a competitive local financial industry to be
resilient against the changing future environment as well as leads initiatives to
enhance access to financing. It also formulates and implements policies and
strategies towards building and positioning Malaysia as a premier integrated Islamic
Financial Centre and enhance the financial capability of consumers.
Based on annual report, Panasonic Manufacturing Malaysia Berhad, Khind
Holdings Berhad and Pensonic Holdings Berhad disclosed their annual report by
following the regulations of Bank Negara Malaysia. Pensonic Holdings Berhad had
the most organised annual report rather than Khind Holdings Berhad and Panasonic
Manufacturing Malaysia Berhad. This is because every financial infrastructure in
their annual report will be fully separated between group statement and company
statement. So, it will become more easier for investor to look on their annual report.

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 viii. Accounting Standard Pronouncements in Malaysia

The Malaysian Accounting Standards Board (MASB) issued the following

pronouncements which are equivalent to the International Financial Reporting
Standards (IFRSs) as issued by the International Accounting Standards Board
(IASB).
Based on information, I have collected from these three companies which
Khind Holdings Berhad, Panasonic Manufacturing Malaysia, and Pensonic Holdings
Berhad, all companies disclosed that the directors have ensured that applicable
approved accounting standards under Malaysia Financial Reporting Standards
(MFRS) and the provisions of the Companies Act, 2016 have been applied while
preparing financial statements.
In conclusion, these three companies have disclosed in their annual reports on
accounting standard pronouncements in Malaysia while preparing financial
statements.

31 | P a g e
 ix. Directors’ Report of Companies – Companies Act 2016
Section 252(1), 253(1), 253(3)

As per Companies Act 2016 Section 252(1), the directors of the company shall
prepare for each financial year a report and such report shall be attached to the
financial statements prepared under section 248. As per Companies Act 2016
Section 253(1), a director’s report for a financial report in relation to a company the
name of director of company, the principal activities and the matter set out on the
fifth schedule. As per Companies Act 2016 Section 253(3), directors’ report prepared
under section 252 may include a business review.
Based on information, I have collected from these three companies which
Khind Holdings Berhad, Panasonic Manufacturing Malaysia, and Pensonic Holdings
Berhad, sadly all these companies did not disclose any information about
Companies Act 2016 Section 252(1), 253(1), 253(3) but there are attachments of
financial statements and director’s report in all three companies annual report.
Therefore, there is no best or worst disclosure because none of the companies
mention specifically about directors’ report of companies – Companies Act 2016
section 252(1), 253(1), 253(3) in their annual report.

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 x. Management Commentary

Management commentary is a narrative report that relates to financial statements

that have been prepared in accordance with IFRS. Management commentary
provides users with historical explanations of the amount presented in the financial
statements, specifically the entity’s financial position, financial performance and cash
flows. It also provides commentary on an entity’s prospects and other information not
presented in the financial statements.
Based on information, I have collected from these three companies which is
Khind Holdings Berhad, Panasonic Manufacturing Malaysia, and Pensonic Holdings
Berhad, sadly all these companies did not disclose any information about
management commentary in their annual report.
Therefore, there is no best or worst disclosure because none of these companies
mention about management commentary in their annual report.

33 | P a g e
 xi. Business Review in Director’s Report

The directors’ report has an important function in providing shareholders with

information about the company’s business which may not be ascertainable from the
financial information given in the accounts. The directors’ report of a company must
contain a business review, unless the company falls within the reporting exemptions.
The purpose of the business review is to inform members of the position of
company’s business and to help them assess how the directors have performed their
common law duty to act for the benefit of the members.
According to the annual reports Khinds Holdings Berhad, Panasonic
Manufacturing Malaysia, and Pensonic Holdings Berhad, all three companies have
disclosed business review in their annual report. The business review disclosed
under director’s report includes principal activity of the respective company,
subsidiaries, financial results of current year profit that help stakeholder in decision-
making, reserves and provision, and dividend.
In conclusion, there is no best or worst disclosure as all these three companies have
disclosed in their annual reports on business review in director’s report in the
companies’ annual report.

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 C. Conceptual Framework – MASB’s Conceptual Framework
for Financial Reporting

i. Economic Resources and Claims

Economic resources are the assets that a business owns and controls. Claims to
economic resources are what creditors and investors or shareholders have claims to
or the liabilities and equity of a business.

Based on the information I have collected about Economic Resources and Claims
and from annual reports of three companies (Khinds Holdings Berhad, Panasonic
Manufacturing Malaysia, and Pensonic Holdings Berhad), the information more
towards help shareholders and stakeholders to access about the company’s liquidity
and solvency. Different types of economic resources can affect a result of
stakeholder or shareholders assessment towards the company prospects for future
cash flows. Some future cash flows result directly from existing economic resources,
such as accounts receivable. Thus, from what I understand from economic
resources and claims, it is more towards liquidity risk in the annual reports.

Khinds Holdings Berhad and Pensonic Holdings Berhad annual reports from
the year 2016 until 2018, stated liquidity risk in their annual report as risk that the
Group will not be able to meet its financial obligations as they fall due. Various
payable, loans and borrowings could be the company’s exposure to the risk. They
maintain a level of cash and cash equivalents and bank facilities deemed adequate
by the management to ensure. The only different between this both is just at their
maturity analysis amount.

According to Panasonic Manufacturing Malaysia from the year 2016 until

2018, stated that prudent liquidity risk management implies maintaining enough cash
to meet the obligations as and when they fall due. They planned and analysed their
budget and viewed in different aspects as they need to maintain the stability of the
company. As stated in annual reports that, all liquid cash are deposited in short-term
time deposits with Panasonic Financial Centre (Malaysia) Sdn Bhd.

As a conclusion, Panasonic Manufacturing Malaysia leads the economic resources

and claims as they disclose different thing compared to Pensonic and Khinds.

35 | P a g e
 ii. Changes in Economic Resources and Claims

According to information I have collected from Khinds Holdings Berhad, Panasonic

Manufacturing Malaysia, and Pensonic Holdings Berhad annual reports, all the
companies disclosed in detailed their information about changes in economic
resources and claims. Based on our understanding for this framework, to properly
assess both the prospects for future net cash inflows and management’s company
which is result from company’s financial performance such as liquidity, solvency,
profitability, repayment capacity and financial efficiency and from transactions or
events such as equity instruments and issuing debt.
Khinds Holdings Berhad’s annual reports from 2016 until 2018, disclosed
about their financial guarantee contracts which stated that it is contract that requires
the issuer to make specified payments to reimburse the holder for a loss it incurs
because a specified debt or fails to make payment. They also stated that the
company monitors on an ongoing basis the results of the subsidiaries and
repayments made by the subsidiaries. By the end of the period, there should be no
sign that subsidiary would be non-payment on repayment.
In the annual report for 3 years of Panasonic Manufacturing Malaysia, they
able to identify those two types of changes mentioned in first paragraph above. They
allow stakeholders and shareholders to buy an ownership stake in the company
which are common shares and preferred shares. It is part of equity instruments in
transaction or events. This company stated that they have repayment term of 30 to
60 days.
Pensonic Holdings Berhad’s annual reports from 2016 until 2018, they
disclosed a bit about the changes in economic resources and claims. However, they
stated same thing about repayments and contract of financial guarantee as Khinds
Holdings Berhad stated which is there should be no sign of subsidiary would be non-
payment on repayment at the end of the period. The contract requires the issuer to
make specified payments to recompense the holders for a loss it incurs because the
debtor fails to pay when due in accordance with the original or modified terms of a
debt instrument.
As a conclusion, all the three companies did their best in disclose about the
conceptual framework which is changes in economic resources and claims. Thus,
there are no best disclosure or worst disclosure for this framework.

36 | P a g e
 iii. Financial Performance reflected by Accrual Accounting

Accrual accounting depicts the effects of transactions and other events and
circumstances on a reporting entity’s economic resources and claims in the periods
in which those effects occur, even if the resulting cash receipts and payments occur
in a different period.
According to the annual reports of Khinds Holdings Berhad, Panasonic
Manufacturing Malaysia, and Pensonic Holdings Berhad, all these companies have
disclosed and mentioned about this conceptual framework which is financial
performance reflected by accrual accounting. Based on my understanding for this
framework is information about a reporting company’s financial performance during a
period can also help stakeholders or shareholders to assess management’s
stewardship of the entity’s economic resources. Moreover, it may indicate the extent
to which events such as changes in market prices or interest rate have increased or
decreased the company’s economic resources and claims. Thus, it will be affecting
the company’s ability to generate net cash inflows.
1. Panasonic Manufacturing Malaysia
In the annual report for 3 years of Panasonic Manufacturing Malaysia, in
notes of financial statements section explained about market risk which risk
that changes in market prices such as interest rates and foreign exchange
rates that can affect the cash flows. Moreover, under market risk, it contains
subtopic which is interest rate risk. Based on the annual report, it is the
Combined Entity’s and the Company’s income and operating cash flows are
substantially independent of changes in market interest rates. Unfortunately, a
change in interest rates at the end of the reporting period would not affect
profit or loss.
2. Khind Holdings Berhad
Khind Holdings Berhad stated same thing about market risk as Panasonic
Manufacturing Malaysia, that is risk that changes in market prices such as
interest rates and foreign exchange rates that can affect the Group’s financial
position or cash flows. It also stated that the Group’s and the Company’s fixed
rate deposits and borrowings are uncovers from risk of change in their fair
value due to changes in interest rates while Group’s and Company’s variable
rate borrowings are exposed to a risk of change in cash flows.

37 | P a g e
 3. Pensonic Holdings Berhad
Pensonic Holdings Berhad annual reports from the year 2016 until 2018,
stated same thing about market risk with two other companies. As in annual
report, Pensonic said that short term receivables and payables are not
significantly exposed to interest rate risk. Other than that, it is the same with
Khind Holdings Berhad.
As conclusion all these three companies already did their best to disclose their
conceptual framework inside their annual reports. Thus, all companies deserve best
disclosure.

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 iv. Financial Performance reflected by Past Cash Flows

Information about a reporting entity’s cash flows during a period also helps users to
assess the entity’s ability to generate future net cash inflows and to assess
management’s stewardship of the entity’s economic resources. That information
indicates how the reporting entity obtains and spends cash, including information
about its borrowing and repayment of debt, cash dividends or other cash
distributions to investors, and other factors that may affect the entity’s liquidity or
solvency. Information about cash flows helps user to understand a reporting entity’s
operations, evaluate its financing and investing activities, assess its liquidity or
solvency and interpret other information about financial performance.
Based on annual report by Pensonic Holdings Berhad for three years, they’re
disclosed their annual report by reflected their past cash flow. Such as, they wrote
down the past cash flow besides the cash flow for the current year. This way also
applied by Khind Holdings Berhad to disclose their cash flow. However, Panasonic
Manufacturing Malaysia Berhad was doing their best to make a better disclosure by
doing the same, but they’re not separated the Group and Company part and it will be
harder for investor to look at their annual report for the three year.
In conclusion, Pensonic Holdings Berhad and Khind Holdings Berhad have
the best disclosure rather than Panasonic Manufacturing Malaysia Berhad.

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 v. Changes in Economic Resources and Claims not resulting from
Financial Performance

A reporting entity’s economic resources and claims may also change for
reasons other than financial performance, such as issuing debt or equity
instruments. Information about this type of change is necessary to give users a
complete understanding of why the reporting entity’s economic resources and claims
changed and the implications of those changes for its future financial performance.
According to information I have collected from Panasonic Manufacturing
Malaysia Berhad, Khind Holdings Berhad and Pensonic Holdings Berhad annual
reports, these companies disclosed in detail their information about changes in
economic resources and claims not resulting from financial performance. As for
Panasonic Manufacturing Malaysia Berhad, they are setting their own standard
operating procedure (SOP) for day to day operations to be carried out such as
issuing debt. It is to ensure the periodic reviews are performed followed by the SOP.
So, by the end of the period, they’ll get to know how much they are spending to
issued debt.
In the annual report for three years of Pensonic Holdings Berhad and Khind
Holdings Berhad, they disclosed a bit about the changes in economic resources and
claims not resulting from financial performance. However, they are disclosed their
annual report using the way which stated in the first paragraph. These companies
make their best move to make a better disclosure.
In conclusion, there are no best or worst disclosure for these frameworks from
these three companies for the three years.

40 | P a g e
 vi. Two Fundamental Qualitative Characteristics of Useful Financial
Information – Relevance and Faithful Representation

Relevance financial information is to be useful; it must be relevance and faithfully

represent what it supports to represent. The usefulness of financial information is
enhanced if it is comparable, verifiable, timely and understandable. It is also capable
to make a comparison and making a difference in decision if it has predictive value,
confirmatory value or both. As for faithful representation, it is representing an
economic phenomenon in words and number.
According to annual report of Panasonic Manufacturing Malaysia Berhad,
Khind Holdings Berhad and Pensonic Berhad, these three companies are trying to
make their best disclosure by following the relevance and faithful representation.
They are using their relevance to make their financial information easier to read by
their investors. It is also comparable, verifiable, timely and understandable in their
annual report. These companies also stated their economic phenomena either in
words or number.
In conclusion, for the three years annual report for Panasonic Manufacturing
Malaysia Berhad, Khind Holdings Berhad and Pensonic Holdings Berhad have
makes the best disclosure that they can do. They are all mutual and same in this
conceptual framework.

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 vii. Four Enhancing Qualitative Characteristics of Useful Financial
Information – Comparability, Verifiability, Timeliness and
Understandability

Comparability, verifiability, timeliness and understandability are qualitative

characteristics that enhance the usefulness of information that is relevant and
faithfully represented. The enhancing qualitative characteristics may also help
determine which of two ways should be used to depict a phenomenon if both are
considered equally relevant and faithfully represented. Comparability is the
qualitative characteristic that enables users to identify and understand similarities in,
and differences among, items. Verifiability means that different knowledgeable and
independent observers could reach consensus, although not necessarily complete
agreement, that a depiction is a faithful representation. Timeliness means having
information available to decision-makers in time to be capable of influencing their
decisions. Understandability means classifying, characterising and presenting
information clearly and concisely makes it understandable.
All three companies (Khinds Holdings Berhad, Panasonic Manufacturing Malaysia,
and Pensonic Holdings Berhad), has declared qualitative characteristics of
comparability in their annual report by comparing current year financial information
with previous year financial information. As for verifiability, all three companies did
not disclose information related to verifiability in their annual reports. The annual
assessment is quality and timeliness of reports furnished to the Audit Committee as
per annual report of three companies. As for understandability, all the three
companies annual report are made understandable by all members are whom
financially literate and can read, interpret and understand the financial statements.
In conclusion, these three companies have disclosed enhancing qualitative
characteristics of useful financial information which is comparability, timeliness and
understandability except for verifiability in their annual reports.

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 viii. Three Faithful Representation qualities – Completeness,
Neutrality and Free from Error

Faithful representation is a depiction would have three characteristics which are it

would be complete, neutral and free from error. The objectives are to minimise those
qualities to the extent possible.
Based on the information I have collected about faithful representation
qualities (completeness, neutrality and free from error) in annual report of Panasonic
Manufacturing Malaysia Berhad, Khind Holdings Berhad and Pensonic Holdings
Berhad, all these companies have disclosed by followed the conceptual framework.
It was complete as if investor can check it easier. It is also neutral from any
information in the annual report so it can maintain the external users market
confidence to develop in this business. All these three companies record is free from
error such as typing error or error in calculate. It was stated in the annual report that
these reports are free from error.
In conclusion, these three companies were making their best disclosure for
this conceptual framework which are completeness, neutrality and free from error.

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 ix. Underlying Assumption – Going Concern

The financial statements prepared by an entity underlies assumption that an entity is

a going concern which will continue in operation for the foreseeable future. Hence, it
is assumed that the entity has the intention to liquidate materially its operations so
that the basis used is disclosed.
Based on the information I have collected about underlying assumption -
going concern from annual report of three companies (Khinds Holdings Berhad,
Panasonic Manufacturing Malaysia, and Pensonic Holdings Berhad), all these
companies has declared the same information that is all financial statements are
prepared on going concern basis to maintain external users market confidence for
the development of the business. However, this basis is not complied when the
directors of respective company intend to liquidate the Group or the Company or to
cease operations, have no realistic alternative but to do so.
In conclusion, these three companies have disclosed the underlying going concern
assumption in their annual reports.

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 x. Elements of Financial Statements consists of Elements of
Financial Position (Assets, Liabilities and Equity) and Elements of
Performance (Income, Expenses and Capital Maintenance
Adjustments)

The elements of financial position directly related to the measurement of financial

position in the balance sheet are assets, liabilities and equity. The elements which
are directly related to the measurement of performance in the income statement is
income and expenses. The statement of changes in financial position usually reflects
income statement elements and changes in balance sheet elements. According to
Conceptual Framework, none of the listed elements are unique to this statement.
According to the annual reports of Khinds Holdings Berhad, Panasonic
Manufacturing Malaysia, and Pensonic Holdings Berhad, all these companies have
disclosed and mentioned about this conceptual framework which is Elements of
Financial Statements consists of Elements of Financial Position (Assets, Liabilities
and Equity) and Elements of Performance (Income, Expenses and Capital
Maintenance Adjustments). Based on the annual reports of the three companies, all
three company measure a liability to distribute assets as a dividend to the owners of
the group and company at the fair value of the assets to be distributed. As for
liability, provisions are determined by discounting the expected future cash flows at a
pre-tax rate that reflects current market assessments of the time value of money and
the risks specific to the liability. As for equity, all three companies have disclosed in
their annual reports that equity are measured at cost on initial recognition and are
not remeasured subsequently.
Income is increases in economic benefits during the accounting period in the
form of inflows of assets or decreases of liabilities that result in increases in equity.
While, expenses are decreases in economic benefits during the accounting period in
the form of outflows of assets or incurrences of liabilities that result in decreases in
equity. As per the annual report, income and expense recognised in other
comprehensive income which disclosed the performance of the company. Capital
maintenance adjustments or revaluation reserves is a revaluation or restatement of
assets and liabilities gives rise to increases or decreases in equity which are not
included in the income statement under certain concepts of capital maintenance
instead included in equity. According to the annual report of the three companies, the
companies objectives when managing capital is to maintain a capital base adequate
to safeguard the Group’s ability to continue as a going concern, so as to maintain
investor, creditor and market confidence and to sustain future development of the
business. The directors monitor and are determined to maintain an optimal debt-to-
equity ratio that complies with debt covenants and regulatory requirements.

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In conclusion, these three companies have disclosed the elements of financial
statements consists of elements of financial position (assets, liabilities and equity)
and elements of performance (income, expenses and capital maintenance
adjustments) in their annual reports.

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 xi. Recognition of the Elements of Financial Statements

Recognition is the process of incorporating in the balance sheet or income statement

an item that meets the definition of an element and satisfies the criteria for
recognition set out. For example, asset needs a recognition of another element that
is income or liability. An item of element is recognised if it is probable that any future
economic benefit associated with the item will flow to or from the entity and the item
has a cost or value that can be measured with reliability.
An item that meets the definition of an element should be recognised if it is
probable that any future economic benefit associated with the item will flow to or
from the entity. An asset is recognised in the balance sheet when it is probable that
the future economic benefits will flow to the entity and the asset has a cost or value
that can be measured reliably. According to the annual reports of Khinds Holdings
Berhad, Panasonic Manufacturing Malaysia, and Pensonic Holdings Berhad, all
these companies have declared that the cost of replacing a component of an item of
property, plant and equipment is recognised in the carrying amount of the item if it is
probable that the future economic benefits embodied within the component and its
cost can be measured reliably.
A liability is recognised in the balance sheet when it is probable that an
outflow of resources embodying economic benefits will result from the settlement of
a present obligation and the amount at which the settlement will take place can be
measured reliably. According to the annual reports of all the three companies, a
liability is recognised for the amount expected to be paid under short-term cash
bonus or profit-sharing plans if the company have present legal or constructive
obligation to pay this amount as a result of past service provided by the employee
and the obligation can be estimated reliably.
Income is recognised in the income statement when an increase in future
economic benefits related to an increase in an asset or a decrease of a liability has
arisen that can be measured reliably. As per the annual report of these three
companies, dividend income is recognised in profit or loss on the date that the
Company’s right to receive payment is established, which in the case of quoted
securities is the ex-dividend date and interest income is recognised as it accrues
using the effective interest method in profit or loss.

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 Expenses are recognised in the income statement when a decrease in future
economic benefits related to a decrease in an asset or an increase of a liability has
arisen that can be measured reliably. According to the annual report of Pensonic
Holdings Berhad and Panasonic Manufacturing Malaysia, expenses incurred are
recognised in profit or loss as other income on a systematic basis in the same
periods in which the expenses are recognised and expected to generate future
economic benefits. As for Khinds Holdings Berhad, expenses are recognised in profit
or loss using the effective interest method.
In conclusion, these three companies have disclosed the recognition of the elements
of financial statements in their annual reports.

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 xii. Measurement of the Elements of Financial Statements

Measurement is the process of determining the monetary amounts at which the

elements of the financial statements are to be recognised and carried in the balance
sheet and income statement. This involves the selection of the basis of
measurement which are historical cost, current cost, realisable value and present
value.
Based on the information I have collected about measurement of the
elements of financial statements from annual report of three companies (Khinds
Holdings Berhad, Panasonic Manufacturing Malaysia, and Pensonic Holdings
Berhad), all these companies has declared the same information that is the financial
statements have been prepared on the historical cost basis except as disclosed in
the financial statements.
In conclusion, these three companies have disclosed the measurement of the
elements of financial statements in their annual reports.

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Conclusion

i. Best Disclosure and Worst Disclosure

Panasonic
Year Khind Holdings Pensonic
Manufacturing
Company Berhad Holdings Berhad
Malaysia
2017 Worst Best disclosure
1. Malaysian disclosure
Financial
Reporting
Standards
(MFRSs)
2. Regulatory No disclosure No disclosure No disclosure
Framework
3. Conceptual Best disclosure Best disclosure Best disclosure
Framework
2018 Worst Best disclosure
1. Malaysian disclosure
Financial
Reporting
Standards
(MFRSs)
2. Regulatory No disclosure No disclosure No disclosure
Framework
3. Conceptual Best disclosure Best disclosure Best disclosure
Framework
2019 Worst Best disclosure
1. Malaysian disclosure
Financial
Reporting
Standards
(MFRSs)
2. Regulatory No disclosure No disclosure No disclosure
Framework
3. Conceptual Best disclosure Best disclosure Best disclosure
Framework

ii. Ways to improve disclosure in annual reports;

a) Make annual reports more user-friendly
b) Include strategic reports
c) Include more information that can attract stakeholders and
shareholders
d) Provide more efficient search and filter capabilities

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