Accounting standards in Singapore stand out from those of other countries due to its unique economic and regulatory landscape. As a global financial hub with diverse industries, Singapore's standards prioritize transparency, investor confidence, and alignment with international practices. Unlike some other countries that may prioritize specific regulatory frameworks or cultural norms, Singapore adopts a principles-based approach that allows for greater flexibility and adaptability to changing business landscapes. Additionally, the Accounting Standards Council (ASC) in Singapore plays a pivotal role in tailoring regulations to suit local needs while ensuring comparability with global standards. This ensures that Singapore's accounting standards strike a delicate balance between regulatory rigidity and adaptability and make them well-suited for the country's dynamic and diverse economic environment.
The Accounting Standards Committee (AS Committee) under the Accounting and Corporate Regulatory Authority (ACRA) formulates and promulgates accounting standards in Singapore. These accounting standards include the Singapore Financial Reporting Standards (International) (SFRS(I)s), the Financial Reporting Standards (FRS), and the Singapore Financial Reporting Standard for Small Entities (SFRS for Small Entities). In addition to prescribing accounting standards for companies, the AS Committee prescribes accounting standards for charities, cooperative societies, and societies. There are around 41 different Singapore financial accounting standards. They are named FRS X. Every accounting standard in this covers a topic, including accounting inventories, revenue recognition, etc.
SFRS largely converges with IFRS (International Financial Reporting Standards). It ensures alignment with global accounting practices while accommodating local business needs and regulatory requirements. These standards handle preparing and presenting financial statements and ensure consistency and transparency. SFRS aims to provide relevant and reliable information to stakeholders, facilitate informed decision-making, and enhance the credibility of financial statements.
This subset of SFRS provides simplified accounting requirements tailored for small and medium-sized entities (SMEs) in Singapore. SFRS for SE allows eligible entities to apply reduced disclosure and recognition requirements, making financial reporting more cost-effective and less burdensome for smaller businesses.
SFRS for Charities is a specialized set of accounting standards designed specifically for non-profit organizations and charities in Singapore. These standards address unique accounting and reporting considerations relevant to the not-for-profit sector while ensuring transparency and accountability in the use of funds and resources.
FRS 109 prescribes the accounting treatment for financial instruments, including recognition, measurement, classification, and derecognition. It requires entities to reflect the economic substance of financial transactions and assess the fair value of financial instruments on the basis of their characteristics and market conditions.
FRS 115 establishes principles for recognizing revenue from customer contracts, emphasizing the transfer of control over goods or services to customers as the basis for revenue recognition. It provides guidance on contract identification, performance obligations, and revenue measurement.
FRS 116 outlines the accounting treatment for leases, requiring lessees and lessors to recognize lease assets and liabilities on the balance sheet. It brings in a single lessee accounting model and eliminates the differences between finance and operating leases for lessees.
FRS 102 guides the measurement, valuation, and disclosure of inventories. It requires entities to recognize inventories at the lower cost and net realizable value, with the cost determined using appropriate valuation methods such as FIFO (first-in, first-out) or weighted average cost.
The Singapore Financial Reporting Standards (SFRS) outline key principles that govern financial reporting practices in Singapore. Here are the key principles of SFRS:
Businesses operating in Singapore are subject to various compliance requirements and reporting obligations to ensure accountability and legal compliance. These requirements are enforced by regulatory bodies such as the Accounting and Corporate Regulatory Authority (ACRA), the Inland Revenue Authority of Singapore (IRAS), and other industry-specific regulators. Here are some of the key compliance requirements and reporting obligations for businesses in Singapore:
As Singapore progresses towards becoming a global financial hub, its accounting standards are poised for further refinement and adaptation to evolving business landscapes. In future there might be greater convergence with international standards like IFRS to enhance transparency and comparability. Additionally, advancements in technology may drive automation and digitization, revolutionizing financial reporting and compliance. However, businesses may face initial challenges in adjusting to new standards and technologies, requiring investment in training and systems upgrades. This is where trusted third-party partners will step in to help businesses meet these requirements and ensure them improved efficiency and reliability in financial reporting.
At Invensis, we help businesses in Singapore comply with regulatory requirements and reduce the risk of errors or inaccuracies in their financial reporting. Our experts have end-to-end knowledge of SFRS for small entities, SFRS for charity, Financial Reporting Standards (FRS) 116, Financial Reporting Standards (FRS) 115 and more. . Contact us to simplify your finance and accounting services.
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