REHDA Studying the Implications of IFRIC 15

Petaling Jaya, 11 June 2010

Recent media reports and articles have highlighted the concerns of the investment and business community on Malaysia’s adoption of the interpretation issued by the International Financial Reporting Interpretations Committee (IFRIC) 15 to account for property development income, which is scheduled to take effect on 1 July 2010.

The Real Estate and Housing Developers’ Association (REHDA) has put together a task force to address the issues arising out of the application of IFRIC 15 in the Malaysian context, assisted by accounting and legal experts.

"The application of IFRIC 15 directly affects public-listed property companies. As this is an international standard, we are shouldering the responsibility of conducting thorough research to ensure that the interpretation is correctly applied in the Malaysian context and to make the best recommendations to the relevant authorities," said Datuk Ng Seing Liong, President of REHDA.

Datuk Ng highlighted that "The general perception is that IFRIC 15 only permits property development income to be recognised on a completion basis — this is a misconception which has created much confusion and concern. The business community’s concerns are further compounded by the fact that the Malaysian Inland Revenue Board recognizes property development income only using the progressive basis method."

"In actual fact, IFRIC 15 permits property development income to be recognised using either the completion or progressive basis methods depending on how the property development business is conducted in each country. REHDA is of the view that Malaysia's legal and regulatory framework, as well as the manner in which the property business is conducted, provide clear opportunities for property development income to be recognised on a progressive basis, as allowed by IFRIC 15. Our in-depth research into this matter also included case studies on countries which have implemented IFRIC 15 whilst still adopting the progressive method to recognise property development income," he added.

Together with the major public-listed property development companies, REHDA has made representations and held discussions with the Malaysian Accounting Standards Board, the Malaysian Institution of Accountants and Securities Commission on the matter. "We are confident that as a result of the on-going consultations between REHDA and the accounting bodies as well as regulatory authorities, implementation issues surrounding the adoption of IFRIC 15 in Malaysia can be resolved in a manner which ensures that property development companies, particularly the publicly listed ones, are not adversely affected" Datuk Ng concluded.

Issued by:

Datuk Ng Seing Liong, PJN, JP
拿督黃騰亮 太平局紳
President
Real Estate and Housing Developers’ Association Malaysia