A new accounting standard is set to change how certain regulated businesses report their finances in Malaysia. In August 2026, the Malaysian Accounting Standards Board issued MFRS 20, Regulatory Assets and Regulatory Liabilities, which follows the international version issued earlier that year by the International Accounting Standards Board.

This standard applies to companies operating under a formal regulatory agreement, meaning a legal arrangement where a regulator sets the rates the company is allowed to charge. This typically includes sectors such as utilities, energy, and transportation, like electricity providers or toll operators.

The main issue MFRS 20 addresses is a timing gap. Sometimes a company supplies goods or services in one period but is only allowed to include the cost of that supply in customer rates during a later period. In other cases, customers pay through their rates before the company has fully delivered the related service. Under the old rules, these timing differences were not clearly shown in the financial statements.

MFRS 20 requires companies to recognise this gap using two new categories. A regulatory asset reflects amounts the company is entitled to add to future rates because it has not yet been compensated for something already supplied. A regulatory liability reflects amounts the company must deduct from future rates because it has already been compensated for something not yet supplied. Changes in these amounts are recorded separately in the profit and loss statement.

For Malaysian companies, this may be a significant shift. The earlier related standard had limited application locally, so many regulated entities have had little exposure to this type of accounting. The new standard takes effect from 1 January 2029, with early adoption permitted.

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