There are more than 40 Financial Reporting Standards (FRS) issued in Singapore.
Each of the accounting standards covers a specific topic and hence, not all the standards will be relevant to a particular business. However, by following the standards, financial transactions will be recorded and disclosed based on a consistent set of principles and guidelines. This will allow the information presented in financial statements to be comparable across companies. This will in turn allows users of the financial statements to make more informed decision about the performance, cash flow and financial position of a particular company.
The full set of Singapore FRS (SFRS) is available at Accounting Standards Council website.
The ASC has also issued the Singapore–Financial–Reporting– Standard for–Small–Entities (SFRS for Small Entities) in December 2010 for financial reporting period beginning on or after 1st January 2011. This standard is modeled after the IFRS for SMEs, with modified scope and applicability. It is an alternative to the Singapore FRS for the preparation and presentation of financial statements.
An entity is eligible to apply this standard if it is not publicly accountable and meet at least two of the following criteria:
- Annual revenue of not more than S$10 million
- Gross assets of not more than S$10 million
- Number of employees of not more than 50
Although SFRS for Small Entities are more streamlined and simplified for small and medium enterprises (SME), SMEs should still weigh carefully the cost and benefits of adopting it. There may be retraining costs for the finance staff as well as impact of future growth to be considered.
Brief description of each SFRS:
Presentation of Financial Statements
Guideline and minimum requirement for the presentation of financial statements, which consist of:
Guideline for accounting for inventories, including how to determine the cost of the inventories (for example, weighted average costing) and requirement for inventories to be measured at the lower of cost or net realizable value.
Cash Flow Statements
Requirements for the preparation of a cash flow statement, classifying the cash flows from operating, investing and financing activities.
Accounting Policies, Changes in Accounting Estimates and Errors
Criteria for selecting and applying accounting policies, as well as the accounting treatment and disclosure of changes in accounting policies, accounting estimates and correction of prior period errors.
Events after the Balance Sheet Date
Accounting and disclosure of events AFTER the balance sheet date, which may impact whether the financial statements should be prepared on a going concern basis.
Accounting and allocating the revenue and costs of construction contracts into the appropriate accounting periods in which construction work is being performed
Accounting treatment for income taxes, including recognition of deferred taxes and disclosure of income taxes in the financial statements.
Property, Plant and Equipment
Accounting treatment for property, plant and equipment, including determining the carrying value, depreciation charges as well as impairment losses, if any.
Accounting treatment for leases, for both lessees and lessors.
Accounting treatment for revenue, including when to recognize the revenue and how much to recognise.
Accounting treatment and disclosure for employee benefits, including recognizing and accruing for short-term employee benefits when the employee has rendered services in exchange for those benefits.
Accounting for Government Grants and Disclosure of Government Assistance
Accounting treatment and disclosure for governments grants and other government assistance.
The Effects of Changes in Foreign Exchange Rates
Accounting for foreign currency transactions and foreign operations in the financial statements as well as presentation of financial statements in foreign currency.
Accounting for borrowing costs, including the type of borrowing costs and the type of assets that qualify the related borrowing costs to be capitalized.
Related Party Disclosures
Disclosure of related parties relationships, transactions, outstanding balances and commitments in the financial statements.
Accounting and Reporting by Retirement Benefit Plan
Accounting and reporting by retirement benefit plans, this is regarded as a separate reporting entity from the employers of the participants of the plan.
Separate Financial Statements
Accounting and disclosure for investment in subsidiaries, joint ventures and associates, where separate financial statements are prepared.
Investments in Associates and Joint Ventures
Accounting for investments in associates and requirement for equity accounting in investment in associates and joint ventures.
Financial Reporting in Hyperinflationary Economies
Financial statements requirements when the functional currency is the currency of a hyperinflationary economy.
Interests in Joint–Ventures
Accounting for all interests in the joint–ventures, which includes joint venture income reporting, expenses, assets and liabilities in the investors’ financial statements.
Financial Instruments: Presentation
Presentation of financial instruments (unless specifically exempted by the standard) as liabilities and equities, and for offsetting financial assets and financial liabilities.
Earnings per Share
Presentation and disclosure of earnings per share (EPS) in the financial statement, focusing on determining the denominator of the EPS calculation.
Interim Financial Reporting
Minimum requirement when preparing interim financial reports.
Impairment of Assets
Accounting for impairment of assets and ensuring assets are carried at no more than their recoverable amount.
Provisions, Contingent–Liabilities and–Contingent–Assets
Recognition–criteria and measurement to be applied to contingent liabilities, contingent–assets and provisions.
Accounting for intangible assets, including how to measure the carrying amount and the related disclosures.
Financial Instruments: Recognition and Measurement
Principles for recognizing and measuring financial assets, financial liabilities and some contracts to buy or sell non-financial items.
Accounting and disclosure for investment property, using either fair value model or cost model.
Accounting and disclosure for agricultural activity.
First-time Adoption of Financial Reporting Standards
Requirements for entities preparing their first financial statements according to SFRS.
Disclosure for share-based payment transactions in the financial statements.
Accounting for business combinations from the perspective of the acquirer.
Accounting for insurance contracts from the perspective of the insurer.
Non-current Assets Held for Sale and Discontinued Operations
Requirements for the classification, measurement and presentation of non-current assets held for sale.
Exploration for and Evaluation of Mineral Resources
Reporting for the exploration and evaluation of mineral resources, including accounting for the expenditure incurred during the exploration and evaluation processes.
Financial Instruments: Disclosure
Disclosure for all types of financial instruments (unless specifically exempted).
Reporting requirements for operating segments, including providing guidelines for determining an operating segment
Consolidated Financial Statements
Presentation and preparation of consolidated statements, when consolidated financial statements should be prepared and how they should be prepared.
Reporting principles for entities that have an interest in arrangements that are controlled jointly.
Disclosure of Interests in Other Entities
Disclosure of significant assumptions an entity made in determining the nature of interest in another entity or arrangement, including interest in subsidiaries, joint arrangements, associates and unconsolidated structured entities.
Fair Value Measurements
Definition of fair value, its measurement and disclosures.
Other than FRS 110, 111, 112 and 113 which are for accounting period on or after 1st January 2013, the rest of the accounting standards are already effective. However, there are some standards which have been amended and of which the amendments are only effective on or after 1st January 2013.
The panel of service providers selected by Singapore Accounting is well versed in Singapore FRS. You can rest assured that the accounting records will comply with Singapore FRS requirements. Please refer to Accounting and Bookkeeping Services for further information on the services offered.