Financial Reporting Standards
In Singapore, the accounting framework is governed by the Singapore Financial Reporting Standards (SFRS). Essentially, a company’s financial statements in Singapore must comply with either SFRS or SFRS for small entities. The standards are similar to the International Financial Reporting Standards (IFRS), and help to ensure financial integrity and consistency. Now, this is just an overview of what matters most when looking at SFRS. SFRS still has loads of complexities that may be hard to navigate. However, when done right, SFRS can help one obtain valuable financial insights and can also help to set a foundation for strategic growth.
Financial statements must be in compliance with either SFRS:
Full Singapore Financial Reporting Standards (SFRS)
Full SFRS applies to most companies registered in Singapore, primarily medium to large enterprises. It covers topics such as Revenue Recognition, Leases, and Financial Instruments.
Charities Accounting Standards (CAS)
CAS is only for non-profit organisations and charities in Singapore. CAS standards put an emphasis on transparency and accountability to your donors and stakeholders.
SFRS for Small Entities
This version of SFRS has simplified standards for small companies with limited activities. To be eligible, the entity must have:
- an annual revenue of less than SGD $10 million
- total assets of less than $10 million
- less than 50 employees
Also, the entity should not be publicly accountable. SFRS for small entities reduces your compliance costs and simplifies reporting.
Auditing
Stay compliant with ACRA and IRAS
We can’t stress this enough. Accounting and Corporate Regulatory Authority (ACRA) and Inland Revenue Authority of Singapore (IRAS) are the two big parents of business entities in Singapore. You must strictly adhere to their deadlines and tax submissions to avoid penalties.
Understand the Audit Requirements
To be a good accountant in Singapore, you have to know the audit requirements like the back of your hand. Every company must get its financial statements audited unless it is a small company. (To be a small company, the entity must have an annual revenue of ≤ SGD $10 million, total assets of ≤ $10 million, and it must have ≤ 50 employees.)
What do Financial Statements consist of?
Balance Sheet
This shows your entity’s assets, liabilities, and equity at a specific date. Basically, it highlights how well you’re currently doing in terms of finances.
Cash Flow Statement
This statement reports cash inflows and outflows. It basically tells you where your money comes from and where your money is spent.
Notes to the Financial Statements
These notes provide in depth information about significant transactions and contingencies.
Profit & Loss Statement (P&L)
Your P&L statement highlights profitability over a given period of time. It reflects key details such as revenue, expenses, cost of goods sold, gross profit, expenses, and net profit. The statement begins with sales figures, then deducts expenses and other transactions to calculate the net profit, providing insight into the entity’s tax obligations.
Statement of Change in Equity
This statement tracks changes in the entity’s equity, and includes retained earnings, share capital, and reserves. It shows how much belongs to your parent company and how much is allocated to non-controlling interests.
Wow, that’s a long list. Don’t forget, you still have to get your financial statements audited by a registered accountant, such as our team here at ScAilable. Alternatively, we can file everything for you!
A Step-by-Step Guide to Auditing
Step 1: Appoint an Auditor
Step 2: Compile Financial Statements
Step 3: Audit Fieldwork
When doing this, you have to make sure your financial statements comply with the SFRS.
Step 4: Audit Report
Annual Filing with ACRA
All entities must file their Annual Return with ACRA within 5 or 7 months after their financial year-end (depending on your FYE and AGM), which is also 1 month after your AGM. The Annual Return should contain the company details, shares, financial statements, and the date of the AGM. Remember to submit the documents in XBRL format to ACRA’s online BizFile+ portal. Don’t be late or there’ll be penalties!