CONTENTS PAGE NUMBERING C - Financial Report 2019.pdfHuman resource development fund 40,980 36,872...

Content Page 1

Federation Information 2

Statement by Council Members 3

Independent Auditors' Report 4 to 6

Financial Statements:

Statements of Financial Position 7

Statements of Income and Expenditure

Statements of Changes in Equity 11

Statements of Receipts and Payments

Policies and Notes to the Financial Statements

CONTENTS PAGE NUMBERING

8 to 10

12 to 14

(Registered under the Societies Act, 1966)

15 to 30

AND ITS SUBSIDIARY COMPANY

MALAYSIAN EMPLOYERS FEDERATION

1

PRESIDENT : TAN SRI AZMAN SHAH BIN DATO' SERI HARON

VICE PRESIDENTS : EN. ABDUL WAHAB ABU BAKAR

EN. RAMADASS A/L ARUMUGAM

DATO' S.S. SUBRAMANIAM

EN. CHRISTOPHER S. RAJ

HONORARY TREASURER : DATO' PALANIAPPAN A/L JOSEPH

ADDRESS : 3A06-3A07, BLOCK A

PUSAT DAGANGAN PHILEO DAMANSARA II

NO. 15, JALAN 16/11

OFF JALAN DAMANSARA

46350 PETALING JAYA

SELANGOR DARUL EHSAN

AUDITORS : ATAREK KAMIL IBRAHIM & CO.

TAX AGENT : ATAREK KAMIL IBRAHIM TAX SERVICES (M) SDN. BHD.

PRINCIPAL BANKERS : AFFIN ISLAMIC BANK BERHAD

: MALAYAN BANKING BERHAD

FEDERATION INFORMATION


MALAYSIAN EMPLOYERS FEDERATION(Registered under the Societies Act, 1966)

2

2019 2018 2019 2018

Notes RM RM RM RM

NON-CURRENT ASSETS

Property, plant and equipment 4 7,328,607 7,545,977 7,324,550 7,541,737 Investment in subsidiary company 5 - - 250,000 250,000

Total Non-Current Assets 7,328,607 7,545,977 7,574,550 7,791,737

CURRENT ASSETS

Trade and other receivables 6 2,664,789 2,795,153 2,262,636 2,584,536 Tax recoverable 62,616 59,535 46,863 - Cash and cash equivalent 7 18,404,939 16,773,314 16,284,262 15,073,464

Total Current Assets 21,132,344 19,628,002 18,593,761 17,658,000

TOTAL ASSET 28,460,951 27,173,979 26,168,311 25,449,737

ACCUMULATED FUND 23,720,049 22,808,401 21,634,983 20,727,819

CURRENT LIABILITIES

Other payables and accruals 8 4,740,902 4,315,456 4,533,328 4,671,796

Taxation - 50,122 - 50,122

Total Current Liabilities 4,740,902 4,365,578 4,533,328 4,721,918

TOTAL EQUITY AND LIABILITIES 28,460,951 27,173,979 26,168,311 25,449,737

MALAYSIAN EMPLOYERS FEDERATIONAND ITS SUBSIDIARY COMPANY

STATEMENTS OF FINANCIAL POSITION

AS AT 31 DECEMBER 2019

GROUP FEDERATION

The accompanying notes form an integral part of these financial statements.

7

2019 2018 2019 2018

Notes RM RM RM RM

INCOME

Allowance for doubtful debts

no longer required 18,787 24,062 18,787 24,062

Annual subscriptions 4,523,310 4,250,222 4,523,310 4,250,222

Dinners and conferences 2,199,869 1,976,744 2,199,869 1,976,744

Entrance fees 135,500 154,592 135,500 154,592

Income from cash management fund 184,682 - 176,234 -

Interest from fixed deposits 482,850 623,221 443,168 571,498

Rental of office premises 15,000 - 15,000 -

Representation receipts 1,206,274 1,267,795 1,206,274 1,267,795

Sale of publications 812,419 660,286 812,419 660,286

Income from insurance claims 64,903 67,790 57,219 45,902

Sundry income 152,403 159,695 151,953 159,695

Training courses and seminars 3,875,094 4,109,978 2,016,990 2,175,904

TOTAL INCOME 13,671,091 13,294,385 11,756,723 11,286,700

EXPENDITURE

COURSE AND SEMINAR EXPENSES 2,094,815 2,433,725 1,201,847 1,431,730

REPRESENTATION EXPENSES 75,596 79,714 75,596 79,714

PUBLICATION, RESEARCH AND

SURVEY EXPENSES 105,842 132,502 105,842 132,502

DINNER AND

CONFERENCES EXPENSES 1,513,234 1,170,267 1,513,234 1,158,722

PREMISES EXPENSES

Building and maintenance charges 73,691 75,646 73,691 75,646

Depreciation for office premises 184,323 184,307 184,323 184,307

Electricity and water charges 148,881 135,335 148,881 135,335

Quit rent and assessment 37,786 37,286 37,786 37,286

Upkeep of office 23,554 35,864 23,554 35,864

468,235 468,438 468,235 468,438


STATEMENTS OF INCOME AND EXPENDITURE FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2019

GROUP FEDERATION


8

2019 2018 2019 2018

Notes RM RM RM RM

EXPENDITURE

STAFF AND PAYROLL EXPENSES

Bonus 968,161 1,003,550 857,998 891,382

EIS contribution 3,531 3,389 2,954 2,825

EPF contributions 806,174 749,963 703,918 655,208

Insurance premium 151,852 155,947 138,412 130,472

Medical expenses 277,752 312,778 261,727 260,304

Salaries and allowances 4,703,939 4,254,317 4,135,272 3,725,157

SOCSO contributions 38,467 36,786 33,418 31,858

Staff long service award 109,626 - 96,606 -

Staff training expenses 14,967 4,779 12,069 4,779

7,074,469 6,521,509 6,242,374 5,701,985

GENERAL AND OFFICE

ADMINISTRATIVE EXPENSES

Affiliation fees 74,588 73,104 74,588 73,104

Auditors' remuneration 15,500 15,500 8,500 8,500

Bank charges 2,531 3,893 2,160 3,020

Depreciation of property, plant and

equipment 194,866 196,869 192,394 195,113

General insurance 33,250 30,944 28,110 25,936

General office expenses 39,039 43,602 39,039 43,602

Gift and donations 6,167 14,500 - -

Internet access and homepage expenses 38,465 37,487 38,465 37,487

Licensing - 530 - -

Family day expenses 48,378 61,832 44,124 54,561

Newspapers, periodicals and

government publications 18,480 18,583 17,330 17,363

Postage and stamps 5,221 10,331 5,221 10,131

Printing and stationery 53,679 40,075 53,679 40,075

Balance c/f 530,164 547,250 503,610 508,892



GROUP FEDERATION

(Continued)


9

2019 2018 2019 2018

Notes RM RM RM RM

EXPENDITURE

GENERAL AND OFFICE

ADMINISTRATIVE EXPENSES

Balance b/f 530,164 547,250 503,610 508,892

Professional fees 22,077 15,205 13,639 3,900

Provision for doubtful debts 86,588 93,160 71,611 71,481

Secretarial fees 2,120 2,040 - -

Telephone and fax 57,429 54,014 57,429 54,014

Upkeep of office and equipment 83,503 107,371 83,503 106,901

781,881 819,040 729,792 745,188

TRAVEL, HOTEL AND

MEETING EXPENSES

Entertainment expenses 1,095 1,421 1,095 1,421

Meeting expenses 145,871 286,373 145,871 286,373

Membership drive expenses 7,260 5,092 7,260 5,092

Membership fee 1,000 1,000 - -

Overseas seminars and conferences 186,133 177,684 81,284 102,390

Public relation expenses 20,100 13,700 20,100 13,700

Travelling expenses 128,495 134,175 111,323 117,165

489,954 619,445 366,933 526,141

TOTAL EXPENDITURE 12,604,026 12,244,640 10,703,853 10,244,420

SURPLUS OF INCOME OVER

EXPENDITURE BEFORE TAXATION 1,067,065 1,049,745 1,052,870 1,042,280

TAXATION 9 (155,417) (237,332) (145,706) (234,148)

SURPLUS OF INCOME OVER

EXPENDITURE AFTER TAXATION 911,648 812,413 907,164 808,132



GROUP FEDERATION

(Continued)


10

Accumulated

fund

RM RM

GROUP

Balance at 1 January 2018 21,995,988 21,995,988

Surplus of income over expenditure after taxation 812,413 812,413

Balance at 31 December 2018 22,808,401 22,808,401



FEDERATION

Balance at 1 January 2018 19,919,687 19,919,687





Total


STATEMENTS OF CHANGES IN EQUITY

FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2019


11

2019 2018 2019 2018

Note RM RM RM RM

CASH AND BANK BALANCES

AS AT 1 JANUARY

Cash in hand 10,518 10,518 9,000 9,000Cash at bank 3,623,802 722,716 3,329,752 592,595

3,634,320 733,234 3,338,752 601,595

Receipts from Operating Activities

Conference and dinner receipts 2,177,336 2,010,027 2,177,336 2,010,027

Entrance fees 114,000 151,500 114,000 151,500

Interest from term deposits 506,829 495,686 504,748 493,946

Proceeds from training courses

and seminars 3,651,325 3,364,874 1,591,177 1,603,654

Rental of office premises 15,000 - 15,000 -

Representation receipts 1,394,342 1,684,691 1,394,342 1,684,691

Sale of publications 475,860 510,347 475,860 510,347

Subscriptions 4,973,351 4,388,212 4,973,351 4,388,212

Sundry income 111,743 206,956 99,599 206,956

Sundry receipts 110,669 133,221 110,669 133,221

Tax refund 29,734 - - -

Insurance claim 37,028 45,902 37,028 45,902

13,597,217 12,991,416 11,493,110 11,228,456

Payments from Operating Activities

Amount owing to subsidiary company 508,921 343,965 508,921 343,965

Affiliation fees 74,588 69,043 74,588 69,043

Auditors' remuneration 8,500 15,800 8,500 8,500

Bank charges 2,301 3,214 2,106 2,832

Books and periodicals 8,597 11,676 7,419 10,459

Building maintenance charges 73,791 75,249 73,791 75,249

Conference and dinner expenses 1,128,955 973,181 1,128,955 973,181

Deposit for postage 2,153 5,300 2,153 5,300

Donations and gifts - 11,500 - -

Electricity and water charges 149,940 140,660 149,940 140,660

Entertainment expenses 1,095 1,467 1,095 1,467

EIS Contributions 3,531 3,631 2,954 3,067

1,962,372 1,654,686 1,960,422 1,633,723


STATEMENTS OF RECEIPTS AND PAYMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2019

GROUP FEDERATION

Balance c/f


12

2019 2018 2019 2018

Note RM RM RM RM


Balance b/f 1,962,372 1,654,686 1,960,422 1,633,723

EPF contributions 732,776 661,482 629,558 570,626

Family day expenses 78,978 39,608 65,685 36,609

General office expenses 36,322 49,320 36,321 49,320

Human resource development fund 40,980 36,872 40,980 36,872

230,567 219,026 210,567 184,026

Internet access and

homepage expenses 38,735 38,833 38,735 38,833

Insurance premium 103,741 94,256 85,159 63,698

Licensing - - - -

Medical expenses 273,387 343,822 257,819 291,883

Meeting expenses 145,101 291,308 140,283 286,623

Membership drive expenses 26,710 19,933 26,710 19,933

Overseas seminars and

conference expenses 129,327 147,321 81,252 102,752

Postage and stamps 20,234 15,605 8,154 9,191

Prepayments of seasonal car

parking expenses and others 142,025 157,458 142,025 157,458

Printing and stationery 137,005 122,628 101,552 92,976

Printing newsletter and

Annual Report - 3,300 - 3,300

Professional and legal fees 24,468 30,725 13,639 3,900

Purchase of property,

plant and equipment 161,517 87,126 159,228 81,826

Quit rent and assessment 37,607 37,464 37,607 37,464

Representation expenses 74,329 80,451 74,329 80,451

Research and survey expenses 107,994 137,003 107,994 137,003

Salaries, bonuses and allowances 5,780,097 4,991,001 5,119,824 4,401,097

SOCSO contributions 39,296 36,786 34,247 31,858

Staff training expenses 12,938 2,332 10,500 2,332

Subscription fees - 1,000 - -

Sundry deposits - 30 - 30

Sundry payables and accrued

charges 569,442 261,236 516,875 223,336

Balance c/f 10,905,948 9,560,612 9,899,465 8,577,120


STATEMENTS OF RECEIPTS AND PAYMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2019

(Continued)

GROUP FEDERATION

Income tax paid


13

2019 2018 2019 2018

Notes RM RM RM RM


Balance b/f 10,905,948 9,560,612 9,899,465 8,577,120

Telephone and fax 57,640 57,424 57,640 57,424

Training courses and seminars

expenses 675,899 994,108 - 1,000

Transport expenses 132,082 114,585 119,203 100,168

Upkeep of office and equipment 112,206 131,578 112,207 130,578

Vehicle loan for staff 184,270 104,000 184,270 104,000

GST return - 335,659 - 301,613

SST return 151,456 3,902 116,911 3,902

12,219,501 11,301,868 10,489,696 9,275,805

Surplus of Receipts Over Payments

from Operating Activities 1,377,716 1,689,548 1,003,414 1,952,651

Cash Flow from Investing Activities

Withdrawal of fixed deposits 15,510,201 12,861,538 14,961,495 12,434,506

Placement of fixed deposits (9,520,000) (11,650,000) (9,020,000) (11,650,000)

Placement of cash management funds (10,650,000) - (10,000,000) -

(4,659,799) 1,211,538 (4,058,505) 784,506

CASH AND BANK BALANCES

AS AT 31 DECEMBER

Cash in hand 10,518 10,518 9,000 9,000Cash at bank 341,719 3,623,802 274,661 3,329,752

7 352,237 3,634,320 283,661 3,338,752


(Continued)

GROUP FEDERATION


STATEMENTS OF RECEIPTS AND PAYMENTS


14

1 GENERAL INFORMATION

2 SIGNIFICANT ACCOUNTING POLICIES

2.1 Basis of preparation

2.2


The subsidiary company is consolidated using the acquisition method of accounting. Under the

acquisition method of accounting, the result of the subsidiary company acquired or disposed of is

included from the date of acquisition up to the date of disposal. At the date of acquisition, the fair

value of the subsidiary company's net assets is determined and this value is reflected in the

consolidated financial statements.

Basis of consolidation

The consolidated financial statements include the audited financial statements of the Federation

and its subsidiary company made up to 31 December 2019.


The financial statements of the Group and of the Federation have been prepared under the

historical cost basis, except for the revaluation of certain assets and liabilities.

POLICIES AND NOTES TO THE FINANCIAL STATEMENTS

A subsidiary company is defined as an enterprise in which the Federation has the power, directly

or indirectly to exercise control over the financial and operating policies so as to obtain benefits

from its activities.

The financial statements of the Group and of the Federation have been prepared in accordance with

Malaysian Private Entities Reporting Standard ("MPERS") and the provisions of the Societies Act, 1966.


The Federation principal place of business is located at 3A06-3A07, Block A, Pusat Dagangan Phileo

Damansara II, No. 15, Jalan 16/11, Off Jalan Damansara, 46350 Petaling Jaya, Selangor Darul Ehsan.

The principal activity of the Federation is to promote and safeguard the rights and interests of private

sector employers who are members of the Federation. The principal activities of the Federation's wholly-

owned subsidiary company are as stated in Note 5 to the financial statements. There have been no

significant changes in the nature of these principal activities during the financial year.

The principal accounting policies adopted are set out below.

15





2 SIGNIFICANT ACCOUNTING POLICIES (Continued)

2.2

2.3 Financial assets

i) Financial assets that are debt instruments measured at amortised cost

After initial recognition, financial assets are classified into one of three categories: financial assets

measured at fair value through profit or loss, financial assets that are debt instruments measured

at amortised cost, and financial assets that are equity instruments measured at cost less

impairment.

After initial recognition, debt instruments are measured at amortised cost using the effective

interest method. Debt instruments that are classified as current assets are measured at the

undiscounted amount of the cash or other consideration expected to be received.

Effective interest method is a method of calculating the amortised cost of financial assets

and of allocating the interest income over the relevant period. The effective interest rate is

the rate that exactly discounts estimate future cash receipts through the expected life of the

financial assets or, when appropriate, a shorter period, to the carrying amount of the financial

assets.

Basis of consolidation (Continued)

Financial assets are recognised in the statements of financial position when the Federation

become a party to the contractual provisions of the instrument.

On initial recognition, financial assets are measured at transaction price, include transaction costs

for financial assets not measured at fair value through profit or loss, unless the arrangement

constitutes, in effect, a financing transaction for the counterparty to the arrangement.

Intragroup transactions, balances and unrealised gains on transactions is eliminated, unrealised

loss is also eliminated unless cost cannot be recovered. Where necessary, adjustment is made to

the financial statements of the subsidiary company to ensure consistency of accounting policies

with those of the Group.

16






2.3 Financial assets (Continued)

ii) Financial assets that are debt instruments measured at amortised cost

iii) Financial assets that are equity instruments measured at cost less impairment

2.4 Property, plant and equipment

Years

Leasehold office premises 99

Freehold office premises 50

Furniture and fittings 5

Office equipments 5

Computer hardware and software 2 - 3

Renovation 5

Effective interest method is a method of calculating the amortised cost of financial assets

and of allocating the interest income over the relevant period. The effective interest rate is

the rate that exactly discounts estimate future cash receipts through the expected life of the

financial assets or, when appropriate, a shorter period, to the carrying amount of the financial

assets.

Equity instruments that are not publicly traded and whose fair value cannot otherwise be

measured reliably without undue cost or effort, and contracts linked to such instruments that,

if exercised, will result in delivery of such instruments, are measured at cost less impairment.

The cost of an item or property, plant and equipment is recognised as an asset when it is probable

that future economic benefits associated with the item will flow to the Group and the Federation

and the cost of the item can be measured reliably. After recognition as an asset, an item of

property, plant and equipment are measured at cost less any accumulated depreciation and any

accumulated impairment losses.

Depreciation is provided on a straight-line method so as to write off the depreciable amount of the

following assets over their estimated useful lives, as follows:

After initial recognition, debt instruments are measured at amortised cost using the effective

interest method. Debt instruments that are classified as current assets are measured at the

undiscontinued amount of the cash or other consideration expected to be received.

17






2.4 Property, plant and equipment (Continued)

Depreciation of an asset begins when it is ready for its intended use.

2.5 Impairment of assets, other than and financial assets

If there is an indication of a significant change in factors affecting the residual value, useful life or

asset consumption pattern since the last annual reporting date, the residual values, depreciation

method and useful lives of depreciable assets are reviewed, and adjusted prospectively.

If the recoverable amount of an asset or a cash-generating unit is less than the carrying amount,

an impairment loss is recognised to reduce the carrying amount to its recoverable amount. An

impairment loss for a cash-generating unit is firstly allocated to reduce the carrying amount of any

goodwill allocated to the cash-generating unit, and then, to the other non-current assets of the unit

pro rata on the basis of the carrying amount of each appropriate asset in the cash-generating unit.

Impairment loss is recognised immediately in profit or loss, unless the asset is carried at a

revalued amount, in which case it is treated as a revaluation decrease.

When there is an indication that an asset may be impaired but it is not possible to estimate the

recoverable amount of the individual asset, the Group and the Federation estimate the

recoverable amount of the cash-generating unit to which the asset belongs.

The recoverable amount of an asset and a cash-generating unit is the higher of the fair value less

costs to sell and value in use. In assessing value in use, the estimated future cash flows are

discounted to their present value using a pre-tax discount rate that reflects current market

assessments of the time value of money and the risks specific to the asset.

The carrying amounts of items of property, plant and equipment are derecognised on disposal or

when no future economic benefits are expected from their use or disposal. Any gain or loss arising

from the derecognition of items of property, plant and equipment, determined as the difference

between the net disposal proceeds, if any, and the carrying amounts of the item, is recognised in

profit or loss. Neither the sale proceeds nor any gain on disposal is classified as revenue.

At each reporting date, the Group and the Federation assess whether there is any indication that

an asset may be impaired. If any such indication exists, the recoverable amount of the asset is

estimated.

18






2.5 Impairment of assets, other than financial assets (Continued)

2.6

2.7 Cash and cash equivalents

2.8 Financial liabilities

i) Financial liabilities

The recoverable amount is the higher of an asset's or cash-generating unit's fair value less to sell,

value in use and zero.

On initial recognition, financial liabilities are measured at transaction price, include

transaction costs for financial liabilities not measured at fair value through profit or loss,

unless the arrangement constitutes, in effect, a financing transaction for the Company to the

arrangement.

Investment in subsidiary company and a jointly controlled entity are stated at cost in the balance

sheet of the Federation, and are reviewed for impairment at the end of the financial year if events

or changes in circumstances indicate that their carrying values may not be recoverable.

An impairment loss recognised in prior periods for an asset or the appropriate assets of a cash-

generating unit is reversed when there has been a change in the estimates used to determine the

asset's recoverable amount. An impairment loss is reversed to the extent that the asset's carrying

amount does not exceed the carrying amount that would have been determined, net of

depreciation, if no impairment loss had been recognised in prior periods. A reversal of an

impairment loss is recognised immediately in profit or loss, unless the asset is carried at revalued

amount, in which case it is treated as a revaluation increase.

For the purposes of the cash flow statements, cash and bank balances consist of cash in hand

and at bank which are readily convertible to known amount of cash and subjected to an

insignificant risk of change in value, and net of outstanding bank overdraft.

Financial liabilities are recognised in the statements of financial position when the Company

become a party to the contractual provisions of the instrument.

Investment in subsidiary company

19






2.8 Financial liabilities (Continued)

i) Financial liabilities (Continued)

ii) Financial liabilities measured at amortised cost

iii) Derecognition of financial liabilities

2.9 Provisions

A provision is recognised when the Group and the Federation has an obligation at the reporting

date as a result of a past event, it is probable that a transfer of economic benefits will be required

to settle the obligation and a reliable estimate can be made of the amount of the obligation.

The risks and uncertainties are taken into account in reaching the best estimate of a provision.

When the effect of the time value of money is material, the amount recognised in respect of the

provision is the present value of the expenditure expected to be required to settle the obligation.

After initial recognition, financial liabilities are classified into one of three categories: financial

liabilities measured at fair value through profit or loss, financial liabilities measured at

amortised cost, or loan commitments measured at cost less impairment.

Financial liabilities are derecognised when the obligation specified in the contract is

discharged, cancelled or expires.

Any difference between the carrying amounts of the financial liabilities derecognised and the

consideration paid is recognised in profit or loss.

After initial recognition, financial liabilities other than financial liabilities at fair value through

profit or loss are measured at amortised cost using the effective interest method. Gains or

losses are recognised in profit or loss when the financial liabilities are derecognised or

impaired.

Effective interest method is a method of calculating the amortised cost of financial liabilities

and of allocating the interest expense over the relevant period. The effective interest rate is

the rate that exactly discounts estimate future cash payments through the expected life of

the financial liabilities or, when appropriate, a shorter period, to the carrying amount of the

financial liabilities.

20






2.10 Income tax

Deferred tax liabilities and assets reflect the tax consequences that would follow from the manner

in which the Group and the Federation expect to recover or settle the carrying amounts of their

assets and liabilities and are measured at the tax rates and laws that are expected to apply to the

period when the asset is realised or the liability is settled, based on tax rates that have been

enacted or substantially enacted by the reporting date.

Deferred tax is provided in full on temporary differences which are the differences between the

carrying amounts in the financial statements and the corresponding tax base of an asset or liability

at the end of the reporting period.

Deferred tax liabilities are recognised for all taxable temporary differences that are expected to

increase taxable profit in the future. Deferred tax assets are recognised for all deductible

temporary differences that are expected to reduce taxable profit in the future and the carryforward

of unused tax losses and unused tax credits.

Deferred tax liabilities and assets are not recognised in respect of the temporary differences

associated with the initial recognition of an asset or a liability in a transaction that is not a business

combination and at the time of the transactions, affects neither accounting profit nor taxable profit.

Tax expense is recognised in profit or loss, except that a change attributable to an item of income

or expense recognised as other comprehensive income is also recognised in other comprehensive

income.

Tax payable on taxable profit for current and past periods is recognised as a current tax liability to

the extent unpaid. If the amount paid in respect of the current and past periods exceeds the

amount payable for those periods, the excess is recognised as a current tax asset.

Current tax assets and liabilities are measured at the amounts expected to be paid or recovered,

using the tax rates and laws that have been enacted or substantially enacted by the reporting

date.

Current tax liabilities and assets are offset if, and only if the Group and the Federation have a

legally enforceable right to set off the amounts and plan either to settle on a net basis, or to realise

the asset and settle the liability simultaneously.

21






2.11 Revenue recognition

Other revenues are recognised on the following basis :

a) Rental income :

b)

2.12 Employee benefits

i) Short-term employment benefits

ii) Defined contribution plan

The expected cost of accumulating compensated absences are recognised when the

employees render services that increase their entitlement to future compensated absences.

The expected cost of non-accumulating compensated absences, such as sick and medical

leaves, are recognised when the absences occur.

Revenue, other than revenue from members' subscriptions and entrance fees which are

recognised as revenue upon receipt by the Group and the Federation, are recognised on an

accrual basis.

Interest income :

The expected cost of profit-sharing and bonus payments are recognised when the Group

and the Federation have a present legal or constructive obligation to make such payments

as a result of past events and a reliable estimate of the obligation can be made. A present

obligation exists when the Group and the Federation have no realistic alternative but to make

the payments.

Contributions payable to the defined contribution plan are recognised as a liability and an

expense when the employees have rendered services to the Group and the Federation.

as it accrues unless probability of collection is remote.

on a time apportionment basis taking into account the principal

outstanding and the interest rate applicable.

Short-term employment benefits, such as wages, salaries and other benefits, are recognised

at the undiscounted amount as a liability and an expense when the employees have

rendered services to the Group and the Federation.

22





3 CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

3.1 Critical judgements in applying the accounting policies

i) Fair value of other financial assets and liabilities

3.2 Key sources of estimation uncertainty

i) Measurement of a provision

The fair value for certain other financial assets and financial liabilities are obtained from the

quoted price in an active market, if quoted prices are unavailable, the price of a recent

transaction for an identical financial assets or liabilities provides evidence of fair value as

long as there has not been a significant change in economic circumstances or a significant

lapse of the time since the transaction took place.

The key assumptions concerning the future, and other key sources of estimation uncertainty at the

reporting date, that have a significant risk of causing a material adjustment to the carrying

amounts of assets and liabilities within the next financial year are as follows:

The Federation use a "best estimate" as the basis for measuring a provision. Management

evaluates the estimates based on the Federation's historical experiences and other inputs or

assumptions, current developments and future events that are reasonably possible under the

particular circumstances. In the case when a provision relates to large population of

customers (such as warranty provision), a probability-weighted estimate of the outflows

required to settle the obligation is used. In the case of a single estimate (such as a provision

for environmental restoration costs), a referenced contractor's price or market price is used

as the best estimate. If an obligation is to be settled over time, the expected outflows are

discounted at a rate that takes into account the time value of money and the risk that the

actual outcome might differ from estimates made.

The judgements, that the management has made in the process of applying the accounting

policies and that have the most significant effect on the amounts recognised in the financial

statements, are as follows:

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3

ii) Loss allowances of financial assets

iii)

The Federation recognises impairment losses for loans and receivables using the incurred

loss model. Individually significant loans and receivables are tested for impairment

separately by estimating the cash flows expected to be revorables. All others are grouped

into credit risk classes and tested for impairment collectively, using the Federation's past

experiences of loss statistics, ageing of past due amounts and current economic trends. The

actual eventual losses may be different from the allowance made and this may affect the

Federation's financial position and results.

CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY(Continued)

The cost of an item of plant and equipment is depreciated on the straight-line method or

another systematic method that reflects the consumption of the economic benefits of the

asset over its useful life. Estimates are applied in the selection of the depreciation method,

the useful lives and the residual values. The actual consumption of the economic benefits of

the plant and equipment may differ from the estimates applied at this may lead to a gain or

loss on a eventual disposal of an item of plant and equipment.

Depreciation of plant and equipment

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4 PROPERTY, PLANT AND EQUIPMENT

GROUP 01/01/2019 Additions Disposal 31/12/2019

Cost RM RM RM RM

Office premises 9,918,039 - - 9,918,039

Furniture and fittings 672,821 10,366 - 683,187

Office equipment 1,374,930 17,914 - 1,392,844

Computer hardware and software 2,575,186 127,625 - 2,702,811

Renovation 737,503 5,914 - 743,41715,278,479 161,819 - 15,440,298

01/01/2019 Depreciation Disposal 31/12/2019

Accumulated depreciation RM RM RM RM

Office premises 2,661,541 184,323 - 2,845,864




Renovation 615,040 84,556 - 699,5967,732,502 379,189 - 8,111,691

01/01/2019 Last year 31/12/2019

Net book value depreciation Net book value

RM RM RM

Office premises 7,256,498 184,307 7,072,175

Furniture and fittings 32,922 17,326 28,273

Office equipment 57,691 31,681 46,267

Computer hardware and software 76,403 55,690 138,071

Renovation 122,463 92,172 43,8217,545,977 381,176 7,328,607

FEDERATION 01/01/2019 Additions Disposal 31/12/2019

Cost RM RM RM RM

Office premises 9,918,039 - - 9,918,039




Renovation 737,503 5,914 - 743,41715,189,250 159,530 - 15,348,780

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4 PROPERTY, PLANT AND EQUIPMENT (Continued)

FEDERATION (Continued)

01/01/2019 Depreciation Disposal 31/12/2019

Accumulated depreciation RM RM RM RM

Office premises 2,661,541 184,323 - 2,845,864




Renovation 615,040 84,556 - 699,5967,647,513 376,717 - 8,024,230

01/01/2019 Last year 31/12/2019

Net book value depreciation Net book value

RM RM RM

Office premises 7,256,498 184,307 7,072,175

Furniture and fittings 32,920 17,299 28,271

Office equipment 57,691 31,681 46,267

Computer hardware and software 72,165 53,961 134,016

Renovation 122,463 92,172 43,8217,541,737 379,420 7,324,550

5 INVESTMENT IN SUBSIDIARY COMPANY

2019 2018

RM RM

250,000 250,000

2018 Principal Activities

MEF Academy 100%

Sdn. Bhd. #

#

2019

100%

Name of the Company

Provision of training and academic education for

employers in the management of human

resources, industrial relations, occupational

safety and health.

Audited by Atarek Kamil Ibrahim & Co.

FEDERATION

Unquoted shares - at cost

Details of the subsidiary company, incorporated in Malaysia, are as follows:

of Ownership

Effective percentage

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6

2019 2018 2019 2018

RM RM RM RM

379,054 853,947 379,054 853,947

- - - -

379,054 853,947 379,054 853,947

626,753 439,998 183,385 197,756

(77,238) (72,921) (18,857) (29,517)

549,515 367,077 164,528 168,239

685,704 585,738 685,704 585,738

(58,635) (57,259) (58,635) (57,259)

627,069 528,479 627,069 528,479

387,090 394,484 387,090 394,484

(50,740) (52,255) (50,740) (52,255)

336,350 342,229 336,350 342,229

441,407 376,088 428,805 376,088

331,394 327,333 326,830 315,5542,664,789 2,795,153 2,262,636 2,584,536

Subscription fee receivable

TRADE AND OTHER RECEIVABLES

FEDERATION

prepaid expenses

Provision for doubtful debts

Sundry deposits and

Course fee receivable

GROUP


The trade receivables comprise receivables from services rendered. The credit period granted is 30 days

(2018 : 30 days).


Sundry receivables

Representation fee receivable

Other receivables


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7

2019 2018 2019 2018

RM RM RM RM

10,518 10,518 9,000 9,000

341,719 3,623,802 274,661 3,329,752

352,237 3,634,320 283,661 3,338,752

Fixed deposits with local licensed

banks 7,218,019 13,138,994 5,824,366 11,734,712

Cash management funds 10,834,683 - 10,176,235 -

18,404,939 16,773,314 16,284,262 15,073,464

The average effective interest rates per annum are as follows:

2019 2018

% %Local licensed banks 3.10 - 4.40 2.9 - 4.18

8 TRADE PAYABLES, OTHER PAYABLES AND ACCRUALS

2019 2018 2019 2018

RM RM RM RM

123,391 67,740 - -

Other payables 1,441,411 1,258,258 1,417,250 1,317,888

2,393,784 2,161,154 2,393,784 2,161,154

Accruals 782,316 828,304 607,822 683,233

Amount due to

subsidiary company - - 114,472 509,5214,740,902 4,315,456 4,533,328 4,671,796

GROUP AND FEDERATION

Amount due to subsidiary company which arose mainly from course fees, seminar fees, administration

fees and advances payable to the Academy, is unsecured, interest free and repayable on demand.

Fixed deposits of the Group and of the Federation have an average maturity period ranging from 90 to

365 days (2018 : 60 to 365 days).

GROUP

Cash at bank

CASH AND CASH EQUIVALENT

Cash in hand

GROUP

Trade payables

Refundable Representation

Deposit

FEDERATION

FEDERATION

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9 TAX EXPENSES

2019 2018 2019 2018

RM RM RM RM

Current taxation 151,060 208,966 145,706 203,766

Under/(Over) provision

in previous year 4,357 28,366 - 30,382

155,417 237,332 145,706 234,148

Effective tax rate in percentage (%) 14.56 22.61 13.84 22.46

2019 2018 2019 2018

RM RM RM RM

272,759 272,337 273,746 270,993

52,179 40,956 45,132 36,547

(181,587) (112,136) (171,852) (102,756)

(2,026) (1,571) (1,320) (1,018)

9,735 9,380 - -

4,357 28,366 - 30,382

155,417 237,332 145,706 234,148

10 RELATED PARTY DISCLOSURE

a) Related parties and relationships

The related parties and their relationship with the Federation are as follows:

Related parties Relationship

MEF Academy Sdn. Bhd. Subsidiary company

in previous year

normal tax rate

Reconciliation of current taxation to the accounting profits multiplied by applicable tax rates:

GROUP FEDERATION

Non-deductible expenses

Utilisation of capital allowances

Under/(Over) provision

Other income subjected to tax

GROUP FEDERATION

Non-taxable income

Accounting profits on

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10 RELATED PARTY DISCLOSURE (Continued)

b) Significant related party balances and transactions

Balances 2019 2018

RM RM

Amount due to subsidiary company 114,472 509,521

Transactions

Course fees, seminar fees and administration fees

paid and payable by the Federation 659,527 679,420

11 STAFF COSTS AND NUMBER OF EMPLOYEES

2019 2018 2019 2018

RM RM RM RM

Staff costs 7,074,469 6,521,509 6,242,374 5,701,985

Number of employees 58 58 51 51

For the purpose of these financial statements, the Federation is considered to be related to the

party if the party has the ability, directly or indirectly, to control the Federation or exercise significant

influence over the Federation in making financial and operating decisions, or vice versa, or where

the Federation and the party are subject to common control or common significant influence.

Staff costs include all forms of remuneration including contributions to Employee Provident Fund of the

Group and the Federation of RM806,174 (2018: RM749,963) and RM703,918 (2018: RM655,208)

respectively.

GROUP FEDERATION

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