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Navigating Accounting for Digital Assets: The Mediating Role of Regulatory Clarity in Enhancing Financial Reporting Quality in Malaysia

Author

Listed:
  • Siti Sakinah Azizan

    (Faculty of Accountancy, Universiti Teknologi MARA Kedah Branch Malaysia)

  • Marzlin Marzuki

    (Faculty of Accountancy, Universiti Teknologi MARA Kedah Branch Malaysia)

  • Muslimah Mohd Jamil

    (Faculty of Accountancy, Universiti Teknologi MARA Kedah Branch Malaysia)

  • Roshidah Safeei

    (Faculty of Accountancy, Universiti Teknologi MARA Kedah Branch Malaysia)

Abstract

The emergence of digital resources in the form of cryptocurrencies has presented major challenges to financial reporting particularly in emerging economies like Malaysia where regulatory structures are still developing. One of the key problems is the lack of standardized accounting treatments, which contributes to inconsistencies in recognition, measurement, and disclosure, compromising the quality of financial reporting and stakeholder confidence. This study aims to develop a conceptual framework to examine the relationship between accounting for digital assets and financial reporting quality, with regulatory clarity as the mediating variable. The study utilizes a narrative review approach and draws conclusions based on the results of 22 peer-reviewed articles acquired through the Scopus database, guided by the Institutional Theory, and backed by the Decision-Usefulness Theory. Several themes identified in the review are the benefits of IFRS alignment, issues that exist in classification and measurement of digital assets, and the importance of transparent and effective regulatory frameworks to enhance transparency and comparability. Studies have indicated that the absence of regulatory transparency can increase reporting disparities and decrease the usefulness of financial disclosures. Nonetheless, companies are in a better position to generate quality, transparent and credible reporting, which has enforceable and clearly defined rules. Theoretically, this study extends Institutional Theory to the evolving domain of digital asset reporting. Practically, it calls on Malaysian regulators and standard-setters to issue comprehensive guidance for digital assets. The proposed framework not only provides a foundation for future empirical research but also supports Malaysia’s strategic objective of becoming a regional leader in digital finance through strengthened financial reporting standards and practices.

Suggested Citation

  • Siti Sakinah Azizan & Marzlin Marzuki & Muslimah Mohd Jamil & Roshidah Safeei, 2025. "Navigating Accounting for Digital Assets: The Mediating Role of Regulatory Clarity in Enhancing Financial Reporting Quality in Malaysia," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 9(9), pages 3829-3837, September.
    • Handle: RePEc:bcp:journl:v:9:y:2025:issue-9:p:3829-3837
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    References listed on IDEAS

    as
    1. Muniandy, Balachandran & Ali, Muhammad Jahangir, 2012. "Development of financial reporting environment in Malaysia," Research in Accounting Regulation, Elsevier, vol. 24(2), pages 115-125.
    2. Marziana Madah Marzuki & Abdul Rahim Abdul Rahman & Ainulashikin Marzuki & Nathasa Mazna Ramli & Wan Amalina Wan Abdullah, 2021. "Issues and challenges of IFRS 9 in Malaysian Islamic financial institutions: recognition criteria perspective," Journal of Islamic Accounting and Business Research, Emerald Group Publishing Limited, vol. 12(2), pages 239-257, February.
    3. Hasnah Shaari, 2024. "Value Relevance of Fair Value Measurement on Investment Property: Malaysian Evidence," GATR Journals afr234, Global Academy of Training and Research (GATR) Enterprise.
    4. David Yermack, 2017. "Corporate Governance and Blockchains," Review of Finance, European Finance Association, vol. 21(1), pages 7-31.
    5. Muh. Fathir Maulid Yusuf & Dian Mayafaty Rauf & Ahmad Hamid & Wiwin Sultraeni & Ilham Akbar Garusu, 2024. "Managing digital finance: The role of cryptocurrency in financial reporting," Edelweiss Applied Science and Technology, Learning Gate, vol. 8(5), pages 2007-2037.
    6. Adel Ali Al-Qadasi & Hamdan Amer Ali Al-Jaifi & Ahmed Hussein Al-Rassas & Ayad Ahmed Al-Qublani, 2022. "The financial reporting systems quality (FRSQ) and institutional investors: The case of an emerging market," Cogent Business & Management, Taylor & Francis Journals, vol. 9(1), pages 2050019-205, December.
    7. Mei Luo & Shuangchen Yu, 2024. "Financial reporting for cryptocurrency," Review of Accounting Studies, Springer, vol. 29(2), pages 1707-1740, June.
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