Analysis Of The Financial Reports Of AHB Holdings Berhad And Astino Berhad

AHB Holdings Berhad

Question:

Discuss about the Financial report of AHB Holdings Berhad and Astino Berhad.

The main purpose of this assignment is to analyze the financial reports of the company AHB Holdings Berhad and Astino Berhad and comment on the disclosure requirements of the company (Weygandt, Kimmel & Kieso, 2015). The analysis will be focusing on the disclosure requirements as per the standards MASB 1 or FRS 101.

AHB Holdings Berhad

AHB Holdings Berhad is an investment based company which has its headquarters in Malaysia and the company was founded in 1965. The company is engaged in the process of making interior products for companies like office furniture, computer appliances and other interior designing stuffs. The company has developed worktops for computer which can be used in offices and which is also called System Tx. The company has various subsidiaries some of which are AHB Technology Sdn. Bhd., AHB Marketing Sdn. Bhd., Create Space Sdn. Bhd. As per the financial reports of the company as on 2017, the company has a net profit after tax of the amount of $ 513,644. The cash inflows for the year from all the activities as shown in the cash flow statement is $ 23729 ("AHB Group of Company", 2018).

Astino Berhad

The company was established in the year 2000 and the listing of Astino Berhad on Bursa Malaysia in the year 2003. The company has it headquarters situated in Malaysia. The company is engaged in manufacturing of metal roofing sheets and also other building materials. As per the financial report of the company the net profit of the company as shown is $ 34445330. The net cash inflow of the company as per the cash flow statement of the company shows that there is a net cash flow decrease as shown by the negative figure of $ 14083861 (Astino Berhad, 2018).

MASB 1 was issued by Malaysian Accounting Standard Board and the standard deals with the disclosure requirement which are required in a financial report of the company. The opening paragraph states the scope of the standard which is applicable to each and every company for the effective presentation of the financial report (Yaacob & Che-Ahmad, 2012). As per the standard any financial report should consist a statement of profit and loss, statement of financial changes, a statement showing change in equity, Cash flow Statement and Notes to accounts and accounting policy explanation (Cotter, 2012).

Astino Berhad

AS per Para 11 of MASB 1, the financial statement should be presented in such a way that the statements clearly reflect the financial status, indicators and cash flow situation of the company. As per Para 12 if any company is using any particular standard should recognize and mention the standard in the financial statements. As per the MASB 1, para 20 of the standard states that the management should apply accounting policies which complies with the other MASB Standards (Akhtaruddin & Haron, 2012). Whenever there is no requirements which are specifically mentioned, the top level management should develop accounting policies so that the financial reports provide relevant information to the users of the accounts and such information provided must be reliable. Para 23 clearly states that the organization must determine whether an entity will  continue as a going concern or not. The standard also explains that the financial reports should be prepared by the management on a going concern basis or other wise the intentions of the business of liquidating. The company if facing uncertainties which can affect the going concern principle of the company then the companies should disclose the same in the financial reports of the company. Furthermore, if the financial reports of the company is not prepared following the going concern basis then the same should be disclosed. The standard also states that the entity should prepare the financial statements except the cash flow information on accrual basis of accounting (Muniandy & Ali, 2012). As per the standard the financial statements of the company should be prepared on an annual basis. The standard also states that the company should be disclose all the current assets and liabilities of the business along with the non-current asset and liabilities of the company. The standard also requires entities to prepare and disclose proper notes to accounts.

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FRS 101 is an accounting standard which deals with Reduced Disclosure Framework which was introduced Financial Reporting Council (Abdul Rahman & Hamdan, 2017). The objective of this standard is to allow exemptions for disclosure purposes for individual financial statements for subsidiary companies. as per Para 7 of the standard an entity which is a financial institution may adopt the disclosure exemptions in order to take advantage of the situation, except for standards like IFRS 7 which is on financial instrument, the disclosure exemptions from IFRS 13 which is fair value measurement, the disclosure exemptions from paragraph 134 to 136 of IAS 1 Presentation of Financial Statements. As per the para 8 an entity can advantage of the disclosure exemptions for para 45(b) and para 46 to para 52 of IFRS 2 Share Based Payments, the requirement of IFRS 7 financial Instruments, the requirements of para 91 to 99 of IFRS 13 Fair Value Measurement, IAS 7 Statement of Cash Flow’s requirements, para 30 and 31 of IAS 8 and other similar disclosure requirements. In some of the disclosures mentioned above an equivalent disclosure must be included in the consolidated Financial Statements. As per para 10 of FRS 101, an entity which is adopting FRS 101 must disclose the same in the financial statements. An entity which is applying international standards for the first time must ensure that the assets and liabilities of the company are in compliance with the FRS 101 (Nor et al., 2016). Moreover, the Accounting Councils are expecting certain amendments which will be made to the disclosure requirements of the company as the council is considering to record fair value gains and losses relating to credit risks in other comprehensive incomes as per the IFRS 9 which is newly introduced (Zainuddin, Togok & Isa, 2015). The council is also of the view that the company law will permit the use of equity method for financial statements and thus amendments will not be necessary to FRS 101 in order to comply with the company law.  

Disclosure Requirements and Standards

The financial report of the company for the year 2017 shows that the company has prepared the financial statements in conformity with the MFRS 101. The company has started following FRS 101. As per the Basis of preparation as shown in the financial statement the company has followed MFRS 101 along with the amendments which was done to the standard. The notes to account shows that the company does not follow IFRS 7 which is on Financial Instruments and does not show disclosure for the same (Ismail, 2013). However, the provisions of FRS 101 requires an alternative disclosure for financial Instruments which is shown in the notes to account by MFRS 9 on Financial Instruments. As per the Standard any qualifying entity can apply the reduced disclosure framework even if the financial statements are prepared based on the standard issued by International Accounting Standard Board. In this case, AHB holdings has followed the same principle and also incorporated amendments and also plans to implement those amendments which have not yet been implemented next year. As per the requirement of the FRS 101, the company must disclose the structure of the group and also the name of the parent company. The annual report of AHB holdings Berhad shows the structure of the group and in addition to this the company shows a consolidated balance sheet of the parent company as a whole which is in conformity with the disclosure requirements of FRS 101.  The financial reports of the AHB Holding shows that the financial statement depicts the various standards which the company has followed while preparing the annual reports. In addition to this the company has also listed out the various amendments which was implemented in the current year and also those amendments which are to be implemented next year. Thus from the analysis of the financial report of AHB Holdings Berhad, it can be concluded the financial statement is in conformity with FRS 101 and all its relevant disclosures as applies to the company.

The financial report as prepared by the management of Astino Berhad Company for the year 2017 shows that the company follows MFRS standards. As per the notes to accounts of the account, the financial reports are prepared considering MFRS 101 which deals with disclosure initiatives. The significant accounting policies section of the balance sheet makes it clear that the standard MFRS 101 became effective from the reporting date on or after 1^st January 2016. The company in the mean time is following MFRS 139 which is on Financial instruments: Recognition and Measurement as MFRS 9 was not introduced during the reporting period and thus from next year on basis MFRS 9 will be replacing MFRS 139 for recognizing and measuring financial instruments. The financial statement of Astino Berhad shows the structure of the group or the subsidiaries along with the financial statements are merged to prepare a consolidated financial statement. This is a principle and a disclosure requirement which is stated in FRS 101. In addition to this the notes to accounts as shown in the financial reports of the company discloses appropriately the fair value measurement in case of impairment of assets. FRS 101 allows the company to take advantage of the disclosure exemption in case of fair value measurement and other disclosures. Moreover the company clearly has depicted the various amendments which was implemented in the current year and also those amendments which are to be implemented next year. Thus from the analysis of the financial statements of Astino Berhad company, it can be concluded that the financial statements of the company are prepared in conformity with the FRS 101 which is on Disclosure initiatives (Abdullah et al., 2015).   

Conclusion

Thus from analyzing the financial statements of both the company, it can be said that both the companies are consistent in following the reporting standard which deals with disclosure initiatives. AHB Holdings Berhad and Astino Berhad both follow FRS 101 which is clearly stated in the notes to accounts of the financial statements as prepared by the companies for the year 2017. The financial reports of both the listed companies are prepared on the basis of Malaysian accounting standards

References

Abdul Rahman, A., & Hamdan, M. D. (2017). The extent of compliance with FRS 101 standard: Malaysian evidence. Journal of Applied Accounting Research, 18(1), 87-115.

Abdullah, M., Evans, L., Fraser, I., & Tsalavoutas, I. (2015, December). IFRS Mandatory disclosures in Malaysia: the influence of family control and the value (ir) relevance of compliance levels. In Accounting Forum (Vol. 39, No. 4, pp. 328-348). Elsevier.

AHB Group of Company. (2018). Ahb.com.my. Retrieved 17 February 2018, from https://www.ahb.com.my/

Akhtaruddin, M., & Haron, H. (2012). Mandatory compliance by publicly listed companies in Malaysia. International Journal of Accounting, Auditing and Performance Evaluation, 8(4), 303-335.

Astino Berhad - Our Products. (2018). Astino.com.my. Retrieved 17 February 2018, from https://astino.com.my/

Cotter, D. (2012). Advanced financial reporting: A complete guide to IFRS. Financial Times/Prentice Hall.

Ismail, R. (2013). Risk management disclosure in Malaysian Islamic financial institutions: pre-and post-financial crisis. Journal of Applied Business Research, 29(2), 419.

Muniandy, B., & Ali, M. J. (2012). Development of financial reporting environment in Malaysia. Research in Accounting Regulation, 24(2), 115-125.

Nor, N. M., Bahari, N. A. S., Adnan, N. A., Kamal, S. M. Q. A. S., & Ali, I. M. (2016). The effects of environmental disclosure on financial performance in malaysia. Procedia Economics and Finance, 35, 117-126.

Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2015). Financial & managerial accounting. John Wiley & Sons.

Yaacob, N. M., & Che-Ahmad, A. (2012). Adoption of FRS 138 and audit delay in Malaysia. International Journal of Economics and Finance, 4(1), 167.

Zainuddin, S., Togok, S., & Isa, C. R. (2015). ERM Adoption in Malaysia A Disclosure Approach. In Proceedings of the Asia Pacific Conference on Business and Social Sciences