Singapore FRS Compliance
In Singapore, there are two major reasons why accounting standards are developed. First, to fulfil public interest in supporting the country’s corporate governance; and secondly, in supporting the country’s reporting framework.
Compliance to Singapore Financial reporting standards (SFRS)
The Accounting Standards Council (ASC) is the statutory authority that oversees the accounting standards. It develops and disseminates accounting standards for companies, charities, co-operative societies as well as societies.
The obligation to enforce the accounting standards differs with respect to the various types of organizations, including the Accounting and Corporate Regulatory Authority for companies, the Commissioner of Charities, the Registrar of Co-operative societies, and the Registrar of Societies.
SFRS for Small Entities
What are the Singapore Financial Reporting Standards (FRS)?
According to the Singapore Companies Act, if your firm is incorporated in Singapore or is a foreign-based company with a branch in the city state, you must prepare and present financial statements in compliance with the Singapore FRS. All companies with financial period starting on or after 1 January 2003 have to comply with SFRS.
The FRS has set various accounting standards, which consist of principles and governing practices that oversee various financial transactions. These accounting standards measure and share the requirements pertaining to transactions and events of financial statements of businesses.
In Singapore, a number of FRS exist within each of the standards related to a specific topic, such as presentation of financial statements or accounting for inventories. You can refer to the full list of the FRS here. The Singapore FRS is based on the IFRS which is issued by the International Accounting Standards Board.
Singapore Financial Reporting Standards for Small Entities
If you are a small company incorporate in Singapore, you will adhere to a different set of reporting standards known as the Singapore Financial Reporting Standards (SFRS) for Small Entities. In simple terms, the SFRS for Small Entities is a simpler, less complicated version of the full Singapore Financial Reporting Standards.
Singapore FRS for Small Entities reporting periods began on 1 January 2011. Your company qualifies as a “small entity” if it is not publicly accountable and meets any two of the following mandatory criteria.
- Total annual revenue is not more than S$10 million;
- Total gross assets is not more than S$10 million; or
- Total number of employees is not more than 50 people.
The objective of the SFRS for SE is to provide some relief to small entities from complying with the full requirements of SFRS while at the same time making sure they adhere to quality, transparency and comparability, which goes a long way in benefitting the investment community as well as various stakeholders depending on their financial statements.
SFRS for Small Entities
It is important to note that if you own a small business, and you fail to meet the above criteria for two consecutive years, the ASC will automatically disqualify your company. Furthermore, if the company is considered as a group of companies, the criteria should be applied on a consolidated basis.
Differences between the Regular Singapore SFRS and the SFRS for Small Entities
Requirements for Regular SFRS
Requirements for SFRS for Small Entities
The equity method is required
Cost model is an available option
Disclosure of fair value and fair value measurement
Disclosure of fair value is not needed if cost model is adopted
Disclosure on Financial Risk Management
Property, Plant and Equipment
Opening and closing balance of the prior year is not required
How Can We Help?
Tianlong Services is here to guide you through accounting services in Singapore and provide professional advice on how your company can stay on track with FRS compliance. Contact us today for a free consultation.
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