2. SUMMARY OF MATERIAL ACCOUNTING POLICIES (CONTINUED) 2.1 Basis of preparation (continued) (a) Statement of compliance (continued) Standards, amendments to published standards and interpretations to existing standards that are applicable to the Group and the Bank but not yet effective; (continued) • MFRS 18, ‘Presentation and Disclosure in Financial Statements – effective 1 January 2027 The Group and the Bank currently applies the following accounting policies for transactions settled via electronic payment systems and cheques: – receivables are derecognised before cash flow rights expire (i.e. before the receipt of cash); and – payables are derecognised before the settlement date (i.e. before cash is delivered) Upon adoption of the amendments, the Group and the Bank will change the accounting policy on the timing of derecognition for receivables from electronic payment systems. The Group and the Bank intends to use the optional exception provided by the amendments for settlements of liabilities that meet specific criteria, allowing it to continue derecognising payables earlier than the settlement date, in line with its current practices. The Group and the Bank will also need to change its accounting policy related to the timing of derecognition for both receivables and payables arising from payments and receipts via cheques upon adopting the amendments. This is the new standard on presentation and disclosure in the financial statements, which replaces IAS 1, with a focus on updates to the statement of profit or loss. The key new concepts introduced in MFRS 18 relate to: i. The structure of the statement of profit or loss with defined subtotals; ii. Requirement to determine the most useful structure summary for presenting expenses in the statement of profit or loss; iii. Required disclosures in a single note within the financial statements for certain profit or loss performance measures that are reported outside an financial statements (that is, management-defined performance measures); and iv. Enhanced principles on aggregation and disaggregation which apply to the primary financial statements and notes in general. • MFRS 19: 'Subsidiaries without Public Accountability: Disclosures' – effective 1 January 2027 This new standard works alongside other MFRS Accounting Standards. An eligible subsidiary applies the requirements in other MFRS Accounting Standards except for the disclosure requirements; and it applies instead the reduced disclosure requirements in MFRS 19. MFRS 19’s reduced disclosure requirements balance the information needs of the users of eligible subsidiaries’ financial statements with cost savings for preparers. MFRS 19 is a voluntary standard for eligible subsidiaries. A subsidiary is eligible if: i. It does not have public accountability; and ii. It has an ultimate or intermediate parent that produces consolidated financial statements available for public use that comply with MFRS Accounting Standards. The adoption of the accounting standards, amendments to published standards and interpretations to existing standards that are applicable to the Group and the Bank but not yet effective above are not expected to give rise to any material financial impact to the Group and the Bank, except for the adoption of MFRS 9, MFRS 7 and MFRS 18, of which there will be further enhanced disclosures going forward. Bank Islam Malaysia Berhad ◆ Integrated Annual Report 2024 294 Notes to the Financial Statements for the financial year ended 31 December 2024
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