MPERS 2025: What Changes for Malaysian Private Companies from 2027

On 10 October 2025, the Malaysian Accounting Standards Board (MASB) issued MPERS (2025), a revised Malaysian Private Entities Reporting Standard. It applies to annual periods beginning on or after 1 January 2027, with earlier application permitted, and replaces MPERS (2016) from that date.

MPERS (2025) is based on the third edition of the IFRS for SMEs Accounting Standard, issued by the International Accounting Standards Board (IASB) in February 2025, and follows it except for scope and applicability. It is the first major revision since MPERS was introduced in 2015, and it updates almost every section.

For a company with a December year-end, the first financial statements under MPERS (2025) will be for the year ending 31 December 2027. Because the amended requirements are generally applied retrospectively, the comparative figures for 2026 are affected too, so the preparation work starts earlier than many expect.

These are the changes most likely to matter to Malaysian private companies.

1. Revenue: a new five-step model (Section 23)

Section 23 has been rewritten and renamed Revenue from Contracts with Customers. It now follows the five-step model in MFRS 15, with simplifications for smaller entities:

1. Identify the contract with the customer.
2. Identify the performance obligations in the contract.
3. Determine the transaction price.
4. Allocate the transaction price to the performance obligations.
5. Recognise revenue when, or as, each performance obligation is satisfied.

This is the change most likely to affect reported profit. Companies with bundled sales (for example, equipment sold together with installation or maintenance), customer rebates and volume discounts, milestone billing or long-term contracts should check whether revenue will be recognised at the same time and in the same amounts as before.

Property developers

MPERS (2016) contained Malaysia-specific guidance on property development activities in Section 34. MASB has removed this guidance because the revised Section 23 now covers these contracts. Property developers will need to assess their sale and purchase agreements under the five-step model, including whether revenue is recognised over time or at a point in time.

Transition relief is available for revenue. Companies should confirm which transition approach suits their contracts before preparing their comparative figures.

2. Consolidation: a single definition of control (Section 9)

The definition of control now follows MFRS 10. An investor controls an investee when it has power over the investee, is exposed to variable returns from it, and can use that power to affect those returns. Holding a majority of the voting rights is still presumed to give control, but the presumption can be rebutted.

Groups should revisit borderline cases, such as entities in which they hold half or less of the voting rights but have other rights (for example, the right to appoint directors or contractual arrangements), and entities in which they hold a majority but do not actually direct the relevant activities. A different conclusion changes which entities are consolidated.

When a parent loses control of a subsidiary, any interest it retains is now measured at fair value at the date control is lost.

3. Financial instruments: one section, same impairment model (Section 11)

The former Sections 11 and 12 have been merged into a single Section 11, with some classification and measurement principles drawn from MFRS 9. The option to apply the recognition and measurement requirements of the full financial instruments standard instead has been removed.

Three points are worth noting:

• Impairment model unchanged: Impairment of financial assets measured at amortised cost still follows the incurred loss model. MPERS (2025) does not introduce the expected credit loss (ECL) model of MFRS 9, so this remains a key difference for companies moving to MFRS.
• New disclosures: These include an ageing analysis of financial assets and a maturity analysis of financial liabilities.
• Financial guarantees: Financial guarantee contracts issued for no consideration are now dealt with in Section 21, Provisions and Contingencies.

4. Fair value: a new standalone section (Section 12)

Fair value requirements that were previously spread across the standard are now gathered in a new Section 12, based on MFRS 13. It introduces the fair value hierarchy, which classifies valuation inputs into Levels 1, 2 and 3 according to how observable they are, together with related disclosures.

Companies that measure investment property, biological assets or certain financial instruments at fair value should expect more structured valuation documentation. Section 12 applies prospectively, so prior period fair value measurements are not restated.

5. Business combinations: closer to MFRS 3 (Section 19)

• Definition of a business: Aligned with MFRS 3, which affects whether a purchase is accounted for as a business combination or as an acquisition of assets.
• Acquisition-related costs: Legal, due diligence, valuation and similar fees are recognised in profit or loss when incurred, instead of being included in the cost of the combination.
• Contingent consideration: Amounts such as earn-outs are measured at fair value at the acquisition date, where this can be done without undue cost or effort.
• Step acquisitions: New requirements apply when control is obtained in stages.
• Goodwill: Goodwill continues to be amortised under MPERS, unlike MFRS, where it is tested for impairment instead.

Section 19 applies prospectively to business combinations from the date of initial application, so past acquisitions are not restated.

Other changes worth knowing

• Statement of cash flows (Section 7): A reconciliation of liabilities arising from financing activities, and new disclosures on supplier finance arrangements.
• Concepts and pervasive principles (Section 2): Updated to reflect the 2018 Conceptual Framework, including revised definitions of assets and liabilities.
• Foreign currency (Section 30): New requirements for when a currency is not exchangeable into another currency.
• Share-based payment and employee benefits (Sections 26 and 28): Targeted clarifications, including the treatment of vesting conditions.

What has not changed: leases

The lease section has received editorial amendments only. Under MPERS (2025), lessees continue to keep operating leases off the balance sheet, so lease accounting remains one of the biggest differences between MPERS and MFRS 16.

Transition: start with your comparative year

The amended sections are generally applied retrospectively in accordance with Section 10, which means the comparative figures in the first MPERS (2025) financial statements are restated. There are reliefs: Sections 12 and 19 apply prospectively, and transition relief is available for revenue.

For a December year-end company, the first MPERS (2025) financial statements cover the year ending 31 December 2027, with comparatives for 2026. The 2026 financial year is therefore the practical starting point for gathering information.

A practical preparation plan:

1. Review significant customer contracts against the five-step model, starting with bundled, variable-price and long-term contracts.
2. For property developers, reassess the revenue pattern of sale and purchase agreements now that the Section 34 guidance has been withdrawn.
3. Revisit group structures and control conclusions, especially for entities held at or below 50%.
4. Identify assets and liabilities measured at fair value and confirm that valuations meet the new Section 12 requirements.
5. Check loan covenants, bonus schemes and budgets that refer to reported profit, since changes in revenue timing can affect them.
6. Update accounting policies, systems and disclosure templates, and agree the transition approach with your auditor early.

MPERS (2025) or MFRS?

MPERS (2025) brings private entities closer to MFRS in several areas, especially revenue. Important differences remain, however, including lease accounting, the impairment of financial assets and the amortisation of goodwill. Companies planning a listing, or joining a group that reports under MFRS, should still plan for a full MFRS conversion. Our article on moving from MPERS to MFRS explains the areas that most often change reported profit.

Conclusion

MPERS (2025) is the most significant change to private entity reporting in Malaysia since MPERS was introduced. Revenue recognition, group consolidation, fair value measurement and business combinations all move closer to MFRS, while lease accounting and the impairment model stay as they are.

Companies that review their contracts, group structures and fair value measurements during 2026 will face fewer surprises when their first 2027 financial statements are prepared. At WS Group, we can help assess how MPERS (2025) affects your financial statements and plan the transition with you.