Malaysian Private Entity Reporting Standard (MPERS) serves as a new reporting framework to private entities and significant milestones to the capital market. This enables the entities to assert the financial statements with full compliance with the International Financial Reporting Standard (IFRS). Thus, the focus of this paper is to discuss the conceptual framework on the impact of external pressure and environmental uncertainty on the quality of financial reporting by Small and Medium Enterprises (SMEs) in Malaysia. The effect of the Covid-19 pandemic on environmental uncertainty has an impact on the quality of financial reporting. It is expected that the Malaysia’s authority and regulator will anticipate the impact of the Covid-19 pandemic, given the outbreak has created disruption in all business chains including the SMEs in Malaysia

Malaysian Private Entity Reporting Standard (MPERS) serves as a new reporting framework to private entities and significant milestones to the capital market. This enables the entities to assert the financial statements with full compliance with the International Financial Reporting Standard (IFRS). Thus, the focus of this paper is to discuss the conceptual framework on the impact of external pressure and environmental uncertainty on the quality of financial reporting by Small and Medium Enterprises (SMEs) in Malaysia. The effect of the Covid-19 pandemic on environmental uncertainty has an impact on the quality of financial reporting. It is expected that the Malaysia’s authority and regulator will anticipate the impact of the Covid-19 pandemic, given the outbreak has created disruption in all business chains including the SMEs in Malaysia.

Malaysia has introduced the latest framework of financial report for private entities, which is the Malaysian Private Entity Reporting Standard (MPERS), and for the capital market, it is a very important pillar. This enables the entity to verify its financial statements adhere to all International Financial Reporting Standards (IFRS). MPERS can enable the concentration and comparison of local and foreign enterprises with some adaption to the Malaysian business climate. As a result, the purpose of this study is to analyze the conceptual framework for the impact of the MPERS on the financial reporting quality, relevance, and timeliness of Malaysian Small and Medium Enterprises (SMEs). Furthermore, it will identify the MPERS relationship and the financial reporting quality regarding relevance and value of timeliness. As a result, it will help relevant parties to understand the importance of relevance and timeliness in financial reporting and identify appropriate strategies to educate and add knowledge to accounting practitioners. The findings of this study can attract the interest of relevant parties to set standards and SMEs in Malaysia and other countries.

Private Entity Reporting Standard (PERS) was not been updated since 2006 even though there are changes in the business environment, so Malaysia needs a new standard in order to regulate the private entities reporting in Malaysia. Malaysian Private Entity Reporting Standard (MPERS) serves as a new reporting framework for private entities and significant milestones in the capital market. This thesis investigates the relationship between the adoption and the use of MPERS on financial reporting quality for SMEs in Malaysia by providing empirical evidence. The study of SMEs was covered by all sectors. The sectors were selected based on the SME landscape of Malaysia following the adoption of MPERS on 1st January 2016. This research was aimed to (1) establish whether SMEs have adopted MPERS using percentage frequencies; (2) access the quality of financial reporting by SMEs using descriptive statistics; and (3) ascertain the relationship between MPERS adoption and financial reporting quality by SMEs in Malaysia, and these would be analysed using correlation and regression analysis. The sample of the study is the accounting practitioners, such as accountants, auditors, and tax agents, comprising 384 respondents who implement and experience MPERS in their financial reporting; nevertheless, only 310 of them can be reached. Findings of the study indicate all variables of financial reporting quality, which are relevance, timeliness, comparability, understandability, and reliability, were positively correlated with MPERS adoption, according to the correlation analysis. According to the results of the regression analysis, reliability, relevance, and understandability have a higher positive linear association with MPERS adoption. It showed that the financial statements prepared were demonstrably relevant to users, presenting within the decision time frame, presenting the information understandable, exuding completeness, neutrality, and accuracy, and could be easily compared between periods, similar businesses, and the whole industry, and financial statements were reliable, free from material error and bias. In general, most SMEs followed MPERS on average, suggesting that SMEs had implemented the MPERS framework. MPERS adoption made sense because it improved financial reporting quality, which should lead to even more SMEs adopting the MPERS framework. This study is different from prior studies, in that it makes a significant contribution toward enhancing one’s knowledge of the relationship between MPERS adoption and financial reporting quality in Malaysia. This study is important as it provides additional knowledge about the impact of MPERS adoption, and improves financial reporting, as well as improves the quality of the financial reporting.

The Malaysian Private Entity Reporting Standard (MPERS) is a latest reporting standard that replaces Private Entity Reporting Standard (PERS) and is only applicable to private entities. This study examines the relationship of MPERS implementation and the financial reporting quality: evidence from Small and Medium Enterprises (SMEs) in Malaysia since the adoption of MPERS in January 2016. It is expected to help relevant parties to understand the relationship between MPERS and financial reporting quality and provide additional knowledge to accounting practitioners. The findings of this study can attract the interest of relevant parties to set standards and SMEs in Malaysia and other countries. A total of 310 accounting practitioners participated in this study by answering a questionnaire in which they used and understood MPERS in the implementation of financial reporting. The research measurements are on the basis of the variables indicated in the literature review that affect the variables, and the study were analyzed using a correlation and linear regression. The finding shows that most SMEs had adopted MPERS for their financial reporting and MPERS have a positive linear relationship with the quality of financial reporting. For further research, it is therefore recommended to investigate the relationship between financial reporting quality which adopted MPERS with SME's failure rate.