KENANGA ANNUAL REPORT 2018

NOTES TO THE FINANCIAL STATEMENTS 31 December 2018 119 ANNUAL REPORT 2018 2. CHANGES IN ACCOUNTING POLICIES AND REGULATORY REQUIREMENT (CONT’D.) 2.1 New and amended Malaysian Financial Reporting Standards (“MFRSs”) adopted (cont’d.) (a) MFRS 9 Financial Instruments (cont’d.) (iii) In addition to the adjustments described above, upon adoption of MFRS 9, other items of the primary financial statements such as deferred taxes, investment in the associates (arising from the financial instruments held by the associates), retained profits and fair value reserves were adjusted as necessary. (b) MFRS 7 Financial Instruments: Disclosures To reflect the differences between MFRS 9 and MFRS 139, The Group and the Bank have complied with the disclosure requirements of MFRS 7 Financial Instruments: Disclosures and MFRS 9. Changes include transition disclosures as shown in Note 5, detailed qualitative and quantitative information about the ECL calculations such as the assumptions and inputs used are set out in Note 50(a). Reconciliations from opening to closing ECL allowances are presented in Notes 8, 10, 11 and 12. MFRS 7 also requires additional and more detailed disclosures for hedge accounting even for entities opting to continue to apply the hedge accounting requirements of MFRS 139. (c) MFRS 15 Revenue from Contracts with Customers MFRS 15 “Revenue from Contracts with Customers” replaces MFRS 118 “Revenue” and MFRS 111 “Construction Contracts” and related interpretations. MFRS 15 established a new five-step model that applies to revenue arising from contracts with customers, based on the underlying principle that an entity should recognise revenue in a manner which depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. MFRS 15 introduces a five-steps approach to recognising revenue: • Identify contracts with customers; • Identify the separate performance obligations; • Determine the transaction price of the contract; • Allocate the transaction price to each of the separate performance obligations; and • Recognise the revenue as each performance obligation is satisfied. In accordance with the transitional provision in MFRS 15, the Group and the Bank have adopted the standard using the modified retrospective approach without any restatement to the comparative information. The adoption of MFRS 15 does not have any material financial impact because the Group and the Bank have been recognising their revenue in a manner consistent with the principles of MFRS 15.