The Capital Market Advisory Committee (“CMAC”) of the Malaysian Institute of Accountants (“MIA”) has prepared a list of Frequently Asked Questions (“FAQs”) for members’ reference. These FAQs are not meant to be exhaustive and do not constitute an authoritative or official pronouncement of the MIA. Reference to the laws and regulations which include the MIA By-Laws (On Professional Ethics, Conduct and Practice) (“MIA By-Laws”) should always be made.
Interim Financial Information
Key Audit Matters
Prospective Financial Information
Combined Financial Statements and Pro Forma Financial Information
Example A: An illustration of when combined financial statements and pro-formafinancial information should be used
The following illustrates a scenario in which combined financial statements are prepared for part of a group that are under common control and pro forma financial information is prepared for the other part of the group that are not under common control.
A group of six (6) entities engage in an initial public offering exercise. Three (3) of the entities, i.e. Co.1, Co.2 and Co.3 are under common control and the other three (3) entities, i.e. Co.4, Co.5 and Co.6 are not under common control.
In this circumstance, combined financial statements are prepared for Co.1, Co.2 and Co.3 and pro forma financial information is prepared for Co.4, Co.5 and Co.6.
|Year 1||Year 2||Year 3|
|Under Common Control||Co.1||Co.1
|Combined financial statements|
|Not Under Common Control||–||–||Co.4
|Pro-forma financial information|
Example B: An illustrative of combined financial statements and pro-forma financial information
The following illustrates a scenario in which combined financial statements are prepared for part of a group that are under common control and pro-forma financial information is prepared for the other part of the group that are not under common control.
Promoter P planned to list a group of entities as part of a listing scheme via a new List Co. All of the entities had been in operations for more than five (5) years.
- Promoter P controlled Entity A for the past five (5) years.
- Promoter P took control of Entity B in Year 2 and subsequently took control of Entity C in Year 3.
- Promoter P held 20% equity interest in Entity D whilst his partners own the balance. However, Promoter P and his partners agreed to include Entity D as part of the listing scheme.
- To complement the group business, Promoter P planned to acquire Entity E, in which neither Promoter P nor his partners held any equity stake.
- In addition, Promoter P also planned to dispose of Entity F, a subsidiary of Entity A, as part of the listing scheme.