The manufacturing company stated in Bursa Malaysia which is YTL Cement Berhad. YTL Corporation carries out its Cement Manufacturing through its subsidiary YTL Cement Berhad. YTL Cement is one of the largest, most efficient and profitable manufacturers of cement and ready mixed concrete products in Malaysia. The principal activities of YTL Cement Berhad involve the manufacture and supply of cement products, quarry products, concrete products, processing and supply of ready-mixed concrete and related services to the construction sector. The target market of the YTL Cement Berhad is those contractors.
The trading company listed on Bursa Malaysia is The Store Corporation Berhad. The Store Corporation Berhad is an investment holding company engaged in the provision of management services. It is principally engaged in retail operations in Malaysia. Besides, The Store Corporation Berhad is a leading operator of supermarkets, hypermarkets and departmental stores in the country. The Store Corporation not only recognized as the largest supermarket but also as a departmental chain by The Malaysia Book of Records since 2001. On the other hand, it is also the oldest existing supermarket which has department chain and the only Malaysian retailer with outlets established in every state of the Peninsular Malaysia, with 51 supermarkets and department stores. However, the target market of The Store is the consumer of difference necessity.
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The finance sector listed on Bursa Malaysia is Public Bank Berhad. Public Bank Berhad is a leading financial services provider which serving over five million customers in Malaysia. The Public Bank Group is highly reputed in its prudent management, strong balance sheet, superior asset quality, superior customer service, strong corporate governance and effective corporate culture. It is even the best brand in financial services in Malaysia. The Public Bank Group focused in its core business areas of consumer and retail commercial loan. The Public Bank Group is promoting sales of unit trust funds, wealth management products, card business, trade finance, remittances and investment-linked products. The target market of Public Bank included credit card holder, shareholder, stakeholder and public.
Requirements of MASB1.
The Presentation of Financial Statements (MASB1) provides comprehensive guidelines to the presentation of financial statement in Malaysia. The objective of this Standard and in combination with other MASB standards is to confirm the management present financial statements which present fairly the financial performance, financial position and cash flows in the enterprise. MASB 1 sets the basic of the presentation of general financial statements in Malaysia and provides discussion for financial statements.
The MASB 1's requirement is the financial statement, it should be presented consistency. The consistency states that an enterprise should use a similar accounting policy in preparing and reporting its financial statements. This is because there are several methods which can be used in preparing the enterprise's financial statements.. The application of consistency is important because it will allow users of financial statements to make meaningful comparisons of financial information. Consequently, this will assist them in making their making decisions.
Besides that, all the financial statement should be going concern. The financial statement of an enterprise is prepared on the assumption that the business is a continuing business. Besides, an enterprise acquired a building to carry on its business. The value of the building that will in the financial statements is based on the purchase price of the building. In contrast, if the business is to be closed down or not a going concern the value of the building will be based on the amount to be received if it was intended for sale.
The reporting of significant accounting information is known as the application of the materiality concept. The distinction between significant and insignificant information depends on the size of the enterprise. The preparer of the financial statements need to make certain judgments in determining the significance of information to be reported. These include the nature of the information, amount of an item and effects on the results which will be reported. Others than that, the accounting policies, accrual basis of accounting, materiality and aggression, offsetting and comparative information also as a important requirement in MASB1.
Besides, MASB 1 also requires all the enterprises to provide four statement and relevant notes in their annual financial statement. The first requirement of MASB 1 included a balance sheet. It provides the user with the data about available resources. However the balance sheet, it is not necessary to make a current or non-current distinction. If not the items are to be presented in order of liquidity.
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Secondly, is the income statement. It provides the user with the data about the profitability of the enterprise detailing sources of revenue and the expenses which reduce profit. For the income statement, the separation of operating or non-operating items is required. The Standard also specifies the disclosure of certain items in the income statement. But, there are alternative formats are allowed for the showing changes in equity. The statement may show only those recognized gains and losses.
Thirdly, MASB 1 requires presentation of a cash flow statement. It represents the sources and uses of a firm's financial resources, and demonstrating trends in the alteration of its capital structure. And the last is the statement of movement in equity. It is mediates the owners' equity section of successive balance sheets and showing what has happened to generated revenue.
Implications of MASB1 on companies:
YTL Cement Berhad
The financial statements of the YTL Cement Berhad of the Group and the Company have been prepared under the historical cost convention, comply with the provisions of the companies Act, 1965 and applicable MASB approved accounting standards in Malaysia for entities other than private entities. The financial statements of YTL Cement Berhad are presented in Ringgit Malaysia on Group's functional and presentation currency. In 2007, the YTL Cement Berhad adopted the new or revised Financial Reporting Standards (FRS). The financial statements as a amendment which is required, in accordance with the relevant transitional provisions in the respective FRSs. The summary of new and revised FRS also affects the financial statement of the Group and Company.
However, in 2008, The YTL Cement Berhad areas including a higher degree of judgment, complexity, or areas where assumptions and estimates are significance to the financial statement are disclosed. Besides that, MASB has issued in following new or revised Financial Reporting Standards (FRS) and IC Interpretations (IC). The financial statements also have been amended with the relevant transitional provisions in the respective FRSs. However, the above FRSs does not have significant financial impact on the Group and the Company. So, the company has not adopted FRS 139 Financial Instruments: Recognition and Measurement which has been issued but not yet effective. In 2009, the key consumption of YTL Cement Berhad concerning in future and other key sources of estimation uncertainty of the balance sheet date that have a significant risk of affecting a material adjustment to the carrying amounts of assets and liabilities within the next financial year.
The Store Corporation Berhad
The financial statements of The Store Corporation Berhad comply with the provisions of the Companies Act, 1965 and applicable approved accounting standards for entities other than private entities issued by the Malaysian Accounting Standard Board (MASB). The Group and the Company had been adopted all the new revised Financial Reporting Standard (FRS). But it seem like does not result in significant impact on the financial statement of the Group and of the Company in years 2007 and 2008. In 2007, the company has reclassification of investment property on adoption of FRS140. The principal changes in accounting policies and causing the result from the adoption. However in 2008, The Store Corporation Berhad's significant accounting policies adopted are consistent with those of the previous financial year except the adoption of revised FRSs, which are mandatory and applicable to the Group and Company. The Group also has not chosen for the early adoption of FRSs that applicable to the Group. In 2009, the measurement applied in the preparation of the financial statements of The Store Corporation Berhad involving costs, recoverable value, fair value, realizable value. The financial statements are presented in Ringgit Malaysia (RM), also the Company's functional currency. In additional, the new and revised FRSs, Issues Committee Interpretation (IC) and Amendments to FRSs are not yet effective. So, the Company and the Group have not adopted the new and revised FRSs, and IC Interpretations that have been issued by MASB still not effective.
Public Bank Berhad
In 2007, the financial statements of the Public Bank Berhad have been prepared under the historical cost basis, except the liabilities and assets which are stated at fair value for instant, investment properties, securities available-for-sale, derivative financial instruments, securities and held-for-trading. All of these are disclosed to the financial statements and in accordance with applicable approved FRSs issued by the MASB which is modified by Bank Negara Malaysia Guidelines and comply with the provisions of the Companies Act, 1965. Besides, the financial statements including all the activities related to the Islamic banking business also undertaken by the bank. The financial statements of Public Bank Berhad also presented in Ringgit Malaysia (RM) and all the values are rounded to the nearest thousand. It estimated and underlying assumptions reviewed on an ongoing basis. A revision to accounting estimates are recognized in the financial statements which is in the period that is revised and in any future periods affected.
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In 2008, the Public Bank's Financial Reporting Standards (FRS) and IC Interpretations have been issued by the Malaysian Accounting Standard Board (MASB) as the balance sheet date but are not effective yet. In this set of financial statements, the Group and the Bank have opted to early adopt FRS 8 Operating Segments. In 2009, the accounting policies of the Public Bank Berhad adopted by the Group and the Bank are consistent with those adopted in previous years. The Financial Reporting Standards (FRS), IC Interpretations, Technical Release (TR) amendments to FRSs, and Statement of Principle (SOP) which have been issued by the Malaysian Accounting Standards Board (MASB) as of the balance sheet date, however still not effective for the financial statements.
MASB1 compliance and format of disclosure.
Objective of the MASB 1 Presentation of Financial Statements is to present fairly one organization's financial position, financial performance and cash flows by annual basis. Furthermore, the consistency of presentation of the financial statement within a company in different year is required. It's also can be used as a comparative information with other companies.
Information to be disclosed in financial statements , for example Revenue, Results of operating activities, Finance costs, Taxes, Profit & loss from the ordinary activities, Minority interest, Net profit or loss and etc. Financial statements required true and fair view and required compliance with interpretations. Disclosure of dividends per share and earnings per share are to be shown in the financial statement. Financial statement is needed to include disclosure notes and policies.
For example, balance sheet items are to be presented in order of liquidity, separation of operating and non-operating items are required in income statement.
Moreover, the standard mentions only recognized gains and losses that are not reported in income statement, for instance, foreign currency translation gain and losses and changes in fair values of financial instruments shown in the notes. MASB 1 stated the supporting information in the notes form act as an additional requirement to be disclosed in the main financial statements.
The Standards compliance with all 3 companies is fair presentation and compliance with financial reporting standards. The items shown in the financial statements of the organizations must be consistency as for the purpose of comparative with each other. The presentation and classification of items in the financial statements should be retained from one period to the next.
The items shown in income statement are always the same in different companies. There would be Revenue, profit before tax, profit after tax, shareholders' funds, EPS, DPS, total assets, total equity and etc in order to understand the company's financial performance and position. The information is comparative and reliable. However, each material item should be presented separately in the financial statement as not to misleading the result.
Although the business nature of the above said company are not similar , yet the presentation of the financial statement as we can see are still the same. There are consists of Income statement, balance sheet, cash flows statement and statement of changes in equity. The assets and liabilities; incomes and expenses must shown separately, there are not allow to be offsetting. Comparative information should be disclosed for numerical information with include of narrative when it is to understanding of the current and previous period's financial statements.
In addition, the reporting period should be in 12 months basis, from the 3 companies above. As the said companies are listed in Bursa Saham board, audited annual reports information are very much more reliable.
Similarities and Differences
The differences between the YTL's Cement Bhd , The store Corporation Bhd and Public Bank Bhd are as shown in the statement, as the YTL business nature is manufacturing , they are producing cement so that their PPE (heavy equipments) are much higher compare to the 2 other companies. The Store Corporation Bhd would consist of high value of inventory; finally the Public Bank doesn't show inventory but extremely high value in their securities, loan and cash.
The similarities of the 3 companies as shown in the financial statement are income tax, deferred tax, earning per share, dividend per share, and their sources of income are from different items although the term they are using as revenue but in different form of incomes.
Basically, the companies will have many types of investments, and they could have identical business related or different. Goodwill is very important for the company to build good reputation, eventually it also has to state in the financial statement.
Usefulness of financial statements
Financial statements serve as the principal method of communicating financial information about a business entity or an individual to outside parties such as banks and investors. It summarizes all the accounting process and provides a tabulation of account titles and amounts of money. Financial statements showed the financial position or financial status of a business. The basic purpose of financial statements is to communicate to internal and external parties' information about financial decisions that have been made. However, it is also provide information about the financial position, performance and cash flows of an enterprise that is useful to wide range of users in making economic decision.
The financial statement will enable internal stakeholders to understand the financial position of the enterprise. If the financial state of the company is good, the employees would have more confidence toward the company. This may influence them to perform better. For the higher management officers, they will be able to change the management according to the financial state of the company. For example, they can reduce the expenses of the company if the company is facing losses. It is also easier for them to make decision either long-term or short-term when they know the financial state of the company. For example, if the company is facing financial crises the management can reduce the number of the employees. Moreover, the company can analyze it own performance over the period of time through financial statement analysis.
As for external stakeholders, the financial statement would help them to gauge the financial condition of the company. They can invest more if the company is earning. The financial statement also assists external stakeholders in predicting the enterprise's future cash flows and in particular, the timing and certainty of the generation of cash and cash equivalents. Besides, the external stakeholder like investors, they can get enough idea to decide about the investment of their funds in the specific company. Through the financial statement, regulatory authorities like International Accounting Standards Board can ensure and analysis whether the company is following accounting standards or not. In additional, the financial statements analysis can help the government agencies to analyze the taxation due to the company.
Conclusions and Recommendations.
In conclusion, the information in the annual report are very useful for stakeholders. For shareholders, they could refer to the dividend per share to judge the value of their share and seek to enhance the share price. In addition, the responsibilities of the shareholders are to hold AGMs for the purpose to ensure that the company business structures are comply with company law.
Other stakeholders would be loan creditors, they have to monitor and analyze the financial position and statement to control the company financial performance to avoid excess risk or to prevent risky project. They act as financial controller return principal as agreed and pay interest on time.
Customers and the public as a whole would refer to the annual reports of the companies to acquire their share price. Therefore, reliable and accurate information in financial statement are very important for their investment purpose. Customers only will deal with honest and company with corporate social responsibility.
The audited annual report is required for the investors to pump in the capital and expand the business. Therefore , the accounting board create the accounting standard for the purpose of the presentation are applied internationally and identical, so that even the foreign investors would be able to read and understand the companies situation and financial performance to make a confirm judgment with the annual report.
The supplier of the companies will depend on the financial statement in order to decide if they want to deal with the related company depending on their financial status. If the financial statement shows a positive cash flows and a healthy financial position . They might have higher chances to consider having a business relationship with them. Or some are using as a annual revising to review the company financial position.
Government will also need an annual report to ensure the company is complying with all laws scrupulously. Government act as a tax collectors to collect tax from them base on their profit before tax and given some expenses which are tax deductible and it's beneficial to their residences and corporate social as a whole.