Singapore Financial Reporting Standards
Companies in Singapore that have a financial period starting after January 1, 2003 must use the Singapore Financial Reporting Standards (SFRS), which are based on the IFRS.
Financial statements are prepared under the accrual basis of accounting, which is a one of the main principles of the accounting standards in Singapore. Under this accounting method, revenues are recorded when a transaction occurs rather than when the payment is received.
When the International Accounting Standards Board (IASB) issued the IFRS for small entities (SE) in 2009, the Accounting Standards Council of Singapore introduced the SFRS for small entities (SE) in 2010. The SFRS for SE provides an alternative framework to the full SFRS for SEs reporting periods beginning on or after January 1, 2011.
Businesses that are eligible to apply for SFRS for SE are:
- Classified as a small entity, meaning they must also qualify in two of the three aforementioned criteria under audit exemptions, being:
- Total revenue of not more than S$10 million (US$7.3 million);
- Total assets of not more than S$10 million (US$7.3 million); or
- Total number of employees of not more than 50.
- The company is not publicly accountable; and
- It publishes financial statements for external
Some of the advantages for small companies abiding by the SFRS for SE are that the process for preparing a company’s financial statements are much simpler, and there is a reduction in the disclosure requirements.
Singapore’s authorities require companies to submit their estimated chargeable income within three months from the financial year-end.
This accounting should include the following:
- Statement of comprehensive income (profit and loss accounting);
- Company details;
- Balance sheet;
- Shareholder details;
- Dates of annual returns and AGM;
- Detail of company officers;
- Cash flow statement; and
- Statement of changes in equity.
Penalties for non-compliance
Businesses that fail to hold an AGM and are late to file financial statements are at risk of fines, summons, and even an arrest warrant issued by ACRA.
Failing to file tax returns for two years or more will result in a Court summons, and upon conviction, the company will be ordered to pay a penalty that is twice the amount of tax and a fine of up to S$1,000 (US$730).