MPERS (2025): What has changed, and what should entities be aware of for Financial Reporting in 2027?
By: Louis Teh, Audit Director
The Malaysian Accounting Standards Board (MASB) issued MPERS (2025) in October 2025, which is the updated version of the accounting standard used by private entities in Malaysia.
Why has MPERS been revised?
The revision follows the third edition of the IFRS for SMEs Accounting Standard, issued by the International Accounting Standards Board (IASB) in February 2025 following its comprehensive review of the Standard.
The third edition of the IFRS for SMEs introduces significant changes in several areas, including concepts and pervasive principles, revenue recognition, financial instruments, fair value measurement, consolidation, and business combinations. The changes are intended to improve the usefulness of financial information while maintaining a simplified reporting framework for private entities without public accountability.
Key Changes under MPERS (2025)
MPERS (2025) introduces amendments across a few areas. The following table highlights some of the key changes under MPERS (2025) for financial reporting purpose: -
Section | Existing MPERS | MPERS (2025) |
Section 2 – Concepts and Pervasive Principles | Based on previous conceptual framework with limited guidance. | Revised to align with the Conceptual Framework that issued by IASB in 2018. This section does not introduce entirely new accounting concepts. Instead, it brings the accounting standard in line with concepts that have already existed in the Conceptual Framework.
Incorporates guidance on measurement, presentation, and disclosure as well as guidance on derecognition of assets and liabilities. |
Section 9 – Consolidated and Separate Financial Statements | Control was assessed under the existing MPERS requirements.
Focused on indicators of control such as majority shareholding, voting rights, board appointments rights when determine whether a subsidiary should be consolidated. | Updated definition of control, which aligns with MFRS 10, it introduces a single basis for consolidation based on control.
Introduced new requirements where a parent company losses control over its subsidiary, the parent company must measure any retained interest in the former subsidiary at fair value on the date control is lost and recognise any gain or loss in profit or loss.
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Section 11 – Financial Instruments
| Financial instruments were addressed under separate Section 11, Basic Financial Instruments, and Section 12, Other Financial Instrument Issues.
An option to apply the recognition and measurement requirements of MFRS 139 was also available. | Added a principle that supplements the classification and measurement of financial instruments and new disclosure requirements for financial assets and financial liabilities.
The impairment requirements in Section 11 continue to be based on an incurred loss approach which recognise the impairment when there is objective evidence of impairment.
Required to disclose a maturity analysis of financial liabilities, a disclosure requirement aligned with MFRS 7, which focuses on helping users assess an entity's liquidity risk by showing when financial obligations fall due.
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Section 12 – Fair Value Measurement (New Section) | Fair value measurement requirements were spread across various sections of MPERS. | Consolidates fair value requirements in a single section, making the guidance easier to apply.
Provides a definition of fair value that consistent with MFRS 13. Fair value is defined as the price that entity would be received entities sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date.
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Section 23 – Revenue from Contracts with Customers | Revenue recognition requirements were based on the previous MPERS revenue model, which was derived from the earlier IAS 11 and IAS 18 requirements. | Revised based on principle of MFRS 15.
Introduces a comprehensive framework for revenue recognition, with incorporating simplified five-steps model that to be more practical and accessible for entities.
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Section 34- Specialised Activities
| Specific guidance for property development activities was included in Section 34. | Removed property development activities guidance previously contained section 34. As a result, entities involved in property development activities will now apply section 23 for its revenue recognition.
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Note: The above table provides a high-level summary of selected significant changes and is not intended to replace the detailed requirements of MPERS (2025). Entities should refer to the revised Standard for the specific accounting and transition requirements applicable to their circumstances.
What Actions Should Entities Take?
a) Understand the changes
Entities should understand the key changes and consider the implications for their financial reporting by referring to the MPERS (2025) on MASB website.
b) Perform gap analysis
Compare the existing accounting policies and practices against the requirements of MPERS (2025).
The assessment should cover accounting policies, accounting system processes, financial reporting, data requirements, and financial statement disclosures.
c) Changes to the financial reporting
Entities should identify potential changes are required to the financial reporting structure, accounting systems, or financial reporting templates to capture information required under MPERS (2025).
d) Information needed
Entities should determine what additional information may be required to apply the revised requirements under MPERS (2025).
e) Costs and resources required
Entities should consider the resources and costs involved in implementing the revised requirements under MPERS (2025). For example, some fair value measurements may require additional costs to engage external valuation experts.
f) Brief management and those charged with governance
The finance team should brief their senior management, and those charged with governance, including the board, on the key changes, potential financial reporting implications, implementation timeline, and resources required.
g) Engage experts early
Where specialist knowledge is required, entities should consider engaging relevant experts early.
h) Assess transition and restatement requirements
Entities should identify whether the relevant changes require retrospective or prospective application, whether transitional reliefs are available, and whether comparative information or opening balances need to be adjusted.
The applicable requirements should be assessed with reference to Appendix A – Effective Date and Transition and the relevant provisions of MPERS (2025).
When does MPERS (2025) apply?
MPERS (2025) will apply to annual periods beginning on or after 1 January 2027, with early adoption permitted. In practical term, the key is to look at the first day of the entity’s financial year.
For example:
• An entity with a financial year from 1 July 2026 to 30 June 2027 → Existing MPERS
• An entity with a financial year from 1 January 2027 to 31 December 2027 → MPERS (2025)
• An entity with a financial year from 1 July 2027 to 30 June 2028 → MPERS (2025)
Final message
With the effective date approaching, entities should start identifying which amendments are relevant to their businesses and financial reporting.
Starting the assessment early will give entities sufficient time to identify gaps, obtain the necessary information, address implementation issues, and prepare effectively for the transition to MPERS (2025).