Consolidation method for reporting investments in controlled entity by the federal government of Malaysia: Issues and challenges

Mohamed Zabri, Shafie and Rosman, Romzie and Ahmad, Kamilah and Mustafa, Siti Aisyah (2025) Consolidation method for reporting investments in controlled entity by the federal government of Malaysia: Issues and challenges. Technical Report. Jabatan Akauntan Negara Malaysia, Sabak Bernam, Selangor Darul Ehsan.

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Abstract

The objective of this study is twofold. The first objective focuses on the adoption of accounting practices, namely the equity method and consolidated method accounting for reporting investments in associates and joint ventures. The second objective, on the other hand, is to investigate the readiness, issues, and challenges of the adoption of the consolidated method for reporting investments in controlled entities by the federal government of Malaysia. In addition, the study also presents the readiness, issues and challenges of implementing CFRS from the perspective of preparers. The first objective involves a review of 21 published articles sourced from Scopus and the Web of Science (WoS) database, published from January 1980 to December 2022, using the Preferred Reporting Items for Systematic Reviews and Meta- Analyses (PRISMA) method for article retrieval. Based on the searched results, the empirical research was synthesized and segregated into three major domains: usefulness, value relevance, and level of compliance. Despite mixed empirical evidence across countries, the equity method is seen as more beneficial to investors due to its positive relationship with market values and lower volatility. On the other hand, the consolidation method was found to be crucial for creditors, significantly impacts financial statements, and explains price fluctuations. The survey among the controlled entities by the Federal Government of Malaysia was conducted in executing the second part of this study. The results show that respondents demonstrated positive feedback on equity and consolidation methods, indicating their general acceptance and applicability in financial reporting. The willingness or readiness of Consolidated Financial Reporting (CFR) is moderately high, as the reporting method should be in accordance with standard requirements. The correlation analysis demonstrates that IT support and facilities, staff adequacy and skills, top management commitment, and strategic considerations have significant and positive relationships with CFR implementation readiness. Conversely, reporting complexity appears to have a negative and significant relationship with CFR. The study also reveals that rules and regulations do not have a significant relationship with CFR readiness. This study contributes significantly to theory and practice as Malaysian policy makers and standard setters in transforming the government accounting system. The study also provides necessary information that facilitates more practical and effective policy-making, as well as CFRS adoption process support and promotion.

Item Type:	Monograph (Technical Report)
Additional Information:	8720/126760
Uncontrolled Keywords:	Consolidated Financial Reporting
Subjects:	H Social Sciences > HJ Public Finance > HJ9701 Public accounting
Kulliyyahs/Centres/Divisions/Institutes (Can select more than one option. Press CONTROL button):	Institute of Islamic Banking & Finance (IIiBF)
Depositing User:	PROF. DR. ROMZIE ROSMAN
Date Deposited:	05 Jan 2026 08:50
Last Modified:	05 Jan 2026 08:54
Queue Number:	2026-01-Q1574
URI:	http://irep.iium.edu.my/id/eprint/126760

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