By MIA Sustainability, Digital Economy and Reporting Team

The Malaysian accountancy profession enjoys excellent representation at global levels, thanks to strong stakeholder engagement and relationships.

Advocating for Malaysia at the global level is Deputy Accountant General of Malaysia Nor Yati Ahmad, who became a member of the International Public Sector Accounting Standard Board (IPSASB) in January 2023. She was nominated by the Accountant General’s Department of Malaysia under the Ministry of Finance, Malaysia. 

Nor Yati Ahmad

Her wealth of experience as a senior accountant at both the Federal and State Government levels equip her well for this global role. Prior to her appointment as Deputy Accountant General of Malaysia recently, she held various positions within the Accountant General’s Department of Malaysia, including Director in the Central and Agency Operations Division. This division is responsible for coordinating and preparing the Federal Government’s Financial Statements, which consists of 26 ministries using an accounting system called iGFMAS (Integrated Government Financial and Management Accounting System).

Nor Yati also served as the Director in the Accrual Accounting Implementation Team (the Team) where she led the implementation of accrual accounting in the Federal Government, State Government, and other public sector entities. “The primary objective of the Team is to develop the Malaysian Public Sector Accounting Standards (MPSAS) to be applied by all public sector entities in Malaysia. This process involved adapting international standards from the International Public Sector Accounting Standard (IPSAS) to suit the local jurisdiction. With the support of the AGD and the Ministry of Finance, MPSAS has been able to be adopted by public sector entities since 2016 with ongoing research and post-implementation reviews ensuring high-quality financial statement reports,” explained Nor Yati recently in an exclusive interview with the Malaysian Institute of Accountants (MIA) e-AT. 

“However, the presentation and the preparation of the Financial Statements of the Federal and State Governments in the Parliament and the respective state Legislative Assembly are under the cash basis of accounting until the proposed amendment to the Financial Procedures Act 1957 is approved in Parliament,” Nor Yati clarified.

Nor Yati also touched on the challenges and purpose of public sector accounting. “One of the key challenges in public sector accounting lies in balancing the delivery of public services to the people while effectively managing resources. Unlike the profit-oriented private sector, the public sector operates with a different objective. Public sectors are entrusted to deliver a wide range of public services and manage the public sector resources efficiently and effectively. In cash-modified accounting, certain information regarding assets and liabilities is not accounted for due to the basis of accounting used. Moving towards accrual accounting requires accountants to be proficient in incorporating accrual principles into their daily tasks, such as preparing financial statements and conducting analyses.”

Nor Yati expressed the aspiration that their experiences and contributions “will help elevate public sector accountants to a higher level, enabling them to efficiently deliver services and manage resources for the betterment of society”.

In addition to her many roles, Nor Yati is actively involved in various accounting committees, including the Public Sector Accounting Committee of Malaysian Institute of Accountants (MIA) and the Islamic Accounting Standard Research and Drafting Committee for Waqaf, Zakat and Baitulmal. Additionally, she serves as a board member in a Government-Linked Companies (GLC). 

Below, Nor Yati talks at length about the Malaysia’s adoption of accrual accounting, her role at IPSASB, IPSASB’s accomplishments and critically, the role of public sector accountants in driving sustainability and sustainable nation building. 

Why did Malaysia decided to adopt accrual accounting? What are the benefits of the adoption to Malaysia?

Adoption of accrual-based accounting is one of the steps identified under the implementation of the Discipline and Fiscal Reform Policy in the New Economic Model (NEM) in 2010. The NEM contains 8 Strategic Reform Initiatives, aimed at transforming Malaysia into a high-income, sustainable, and inclusive economy. The implementation of accrual accounting is seen as crucial in generating comprehensive financial reporting that provides a more comprehensive view of public sector financial sustainability. 

Malaysia, being a developing country facing uncertainty in the global economy, is under increasing pressure to ensure agile, competitive, and sustainable financial management, particularly in asset and liability management. Accrual-based accounting helps mitigate risks associated with limited information that can impact asset and liability management, such as exposure to increased contingent liabilities. By utilising accrual accounting, the management of public money becomes more transparent and effective through the analysis of fiscal aggregates, considering various perspectives to provide a true reflection of government operations.  It also provides additional information that offers a broader understanding of public sector financial sustainability, including financial position and analysis of actual activities with significant changes over time. This comprehensive information enables decision-makers to assess long-term fiscal sustainability and plan financial policies more effectively. 

Although accrual accounting has not yet been officially implemented, Malaysia has already experienced positive impacts by adopting accrual-based practices. Ministries have gained insights into recognising and recording assets, liabilities, accounts receivable, and accounts payable on an accrual basis. Gathering data on assets and liabilities to present a clearer government financial position has allowed ministries to identify under-utilised assets and dispose of unused assets. The detailed information provided by accrual accounting helps ministries better utilise financial resources, particularly in asset and liability management, and aids in decision-making processes related to asset acquisition

Based on your involvement in the Accrual Accounting Implementation team since 2011, what are the challenges faced in implementing accrual accounting in Malaysia? How did you address the challenges?

The main challenge in implementing accrual accounting in Malaysia is to convince and engage accountants, civil servants involved in financial management, and other stakeholders about the benefits of this approach. To address this challenge, numerous studies, awareness campaigns and briefings have been conducted, highlighting a comparison with other countries that have successfully implemented accrual accounting. It is essential for accountants at the federal and state government levels to understand the impact of accrual accounting on their work processes and the recognition and measurement of various items, transitioning from modified cash practices to accrual-based accounting practices. Another challenge is to ensure the financial statement prepared are of high quality, consistent and comply with the accounting standards. To address this challenge, a governance structure has been established to develop an implementation strategy, monitor the process, and issue public sector accounting standards (MPSAS) and guidelines. Additionally, efforts have been made to develop a comprehensive accounting system and a change management strategy.

However, for other public sector entities that have already adopted accrual accounting, the challenge is relatively less compared to Federal and State government. This is because these entities only need to apply MPSAS, which allows them to better represent their financial statement to reflect the unique nature of public sector transactions and provide a true view of the entity as a public sector entity. 

Why did you get involved in IPSASB?

By getting involved in IPSASB, my contribution might help them to develop International Public Sector Accounting Standards (IPSAS) by providing our views and insights from the Malaysian context. It also gives me the opportunity to exchange views with other IPSASB members in implementing IPSAS in their jurisdictions. Further, it will give us first-hand information on what, why and how the development of IPSAS (is done) in such a way. This is beneficial to us in developing our MPSAS (which is based on IPSAS) and assists public sector financial statements preparers prepare financial statements without compromising the quality of financial reporting. Thus, it assists the decision-maker in sound decision making by providing them with high quality financial reporting.

As a member of the IPSASB, how does the work of the IPSASB contributes to public financial management?

The IPSASB works to strengthen public financial management globally through developing and maintaining accrual-based International Public Sector Accounting Standards (IPSAS) and other high-quality financial reporting guidance for use by Governments and other public sector entities. It also raises awareness of IPSAS and the benefits of accrual adoption¹. 

Could you share some of the significant works of IPSASB in the recent years?

The IPSASB has made several significant developments in its standard-setting and implementation projects by issuing the following:

IPSAS 44, Non-current Assets Held for Sale and Discontinued Operations specifies the accounting for assets held for sale and the presentation and disclosure of discontinued operations. 
IPSAS 45, Property, Plant and Equipment replaces IPSAS 17, Property, Plant and Equipment. Itintroduces current operational value as a measurement basis within the updated current value model for assets within its scope. The standard also identifies the characteristics of heritage and infrastructure assets and provides new guidance on their recognition and measurement. 
IPSAS 46, Measurement which consolidates measurement guidance into a single standard, introducing a public sector-specific current value measurement basis for assets held for operational capacity, as well as including generic guidance on fair value. 
Approved Project brief of Sustainability Reporting – Climate-related Disclosure for the public sector and develop the standard. 

  All the above can be accessed through the IPSASB webpage.   

What is the role of the IPSASB in advancing public sector sustainability reporting?

Respondents to the IPSASB’s Consultation Paper on Advancing Public Sector Sustainability Reporting agreed that the public sector urgently needs its own sustainability reporting standards and that the IPSASB, with its 25 years of standard setting experience, should lead the development. To enhance transparency, accountability, and comparability in addressing climate change and other sustainability challenges, the IPSASB is working towards developing public-specific sustainability reporting standards. The IPSASB has decided to proceed with the development of a Climate-Related Disclosures standard and has published a project brief outlining this important initiative². 

The IPSASB will establish a Climate-related Topic Working Group which will provide specialised expertise and advice to support the development and implementation of the standard. Additionally, a Sustainability Reference Group will be formed to provide guidance on the overall sustainability reporting standards development program.  

What is the current stage of public sector sustainability reporting in Malaysia? 

Malaysia has aligned and integrated Sustainable Development Goals (SDGs) into the 12th Malaysia Plan and is linking the Malaysia Plan to ministries, programs, and activities. In terms of costing the SDGs, Malaysia has adopted a practical approach by integrating both public and private flows into annual and medium-term plans. The costing of SDGs has been incorporated into the detailed costing of SDG baselines, thus providing comprehensive understanding of the financial requirements. 

The Government of Malaysia has taken a more catalytic role in accelerating the progress of SDGs. The Ministry of Natural Resources, Environment and Climate Change (NRECC) is leading the efforts towards Sustainable Malaysia 2030 where it issued a roadmap in 2020 titled Environmental Sustainability in Malaysia 2020-2030 outlining 30 initiatives.

In support of the roadmap, the AGD has undertaken a study of the Integrated Reporting (IR) Framework that identifies disclosures related to the creation and preservation of value that benefits all stakeholders.  The study also aims to create a reporting scope that reflects increased accountability, stewardship and trust to relevant stakeholders.   It also emphasizes the use of technology to improve information flow and transparency in business operations. Based on this study, a guideline has been issued as a reference for the preparation of IR at the ministry-level.

What are the roles of public sector accountants in sustainability? 

Sustainability reporting is crucial for public sector entities in decision-making and future planning on ESG issues. Public sector accountants undoubtedly will lead sustainability reporting as the report will address the sustainability efforts and performance of the entity by providing financial and non-financial data and information. Besides, they also give advice on sustainability reporting and its requirements. They need to analyse costs and impacts of related ESG projects and help their entity’s decision-making process more efficiently due to the transparency relationship between financial information including the sustainability efforts and performance information. Thus, this will help the entities’ decision-making processes become more efficient that will influence long-term and short-term management strategy, policy and business plan, and at the same time reduce risk by implementing internal controls that will lead to reduced waste and significant cost saving. Accountants are also expected to provide auditing and assurance to public sector entities that will ensure reliable and transparent sustainability reporting for informed decision-making and ESG planning.

¹ International Public Sector Accounting Standards Board (IPSASB). (2023, June 26). About IPSASB.
² “IPSASB Begins Development of Climate-Related Disclosures Standard for the Public Sector”, 14 June 2023;

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