Financial Statement Preparation
- a22162
- Apr 20
- 6 min read
Updated: May 25
Singapore Financial Statement Preparation Guide
In Singapore, the preparation of financial statements is a crucial compliance requirement for all Singapore-incorporated companies, with a few exemptions. Here's a breakdown of the key aspects:
1. Regulatory Bodies and Standards:
Accounting and Corporate Regulatory Authority (ACRA): The primary regulatory body overseeing financial reporting in Singapore. ACRA administers the Financial Reporting Surveillance Programme (FRSP) to ensure companies comply with prescribed accounting standards.
Singapore Financial Reporting Standards (SFRS): Most businesses in Singapore must follow SFRS, which are largely based on the International Financial Reporting Standards (IFRS). This ensures consistency and comparability with global reporting practices.
SFRS for Small Entities (SFRS for SE): Eligible small entities have the option to apply SFRS for SE, which simplifies the preparation process and reduces disclosure requirements. To qualify, a company must meet at least two of the following three criteria for the past two consecutive financial years:
Total annual revenue of not more than S$10 million.
Total assets of not more than S$10 million.
Total number of employees of not more than 50.
The company is not publicly accountable and publishes financial statements for external users.
Singapore Financial Reporting Standards (International) (SFRS(I)): Required for listed companies, these are fully aligned with IFRS.
2. Key Financial Statements: A complete set of financial statements in Singapore typically includes:
Statement of Financial Position (Balance Sheet): Reflects a company's assets, liabilities, and equity at a specific point in time.
Statement of Comprehensive Income (Profit & Loss Statement): Shows a company's revenue, expenses, gains, losses, and income tax over a period, reflecting its financial performance.
Statement of Changes in Equity: Displays transactions between the company and its shareholders, changes to share capital, profits, and dividends.
Statement of Cash Flows: Details how cash movements occur across operating, investing, and financing activities.
Notes to the Financial Statements: Provide additional information, accounting policies, contingencies, and other relevant details for better understanding.
3. Directors' Responsibilities: Directors of Singapore-incorporated companies have significant responsibilities regarding financial reporting, regardless of their role or financial expertise. They are required to:
Present financial statements that comply with prescribed accounting standards and give a true and fair view of the company's financial position and performance.
Maintain a system of internal accounting controls and keep proper accounting records.
Review and understand the financial statements, ensuring clarity, completeness, and consistency.
4. Preparation Process: The general steps involved in preparing financial statements include:
Gathering Financial Data: Compiling all relevant records, including income, expenses, assets, and liabilities.
Adjustments and Reconciliations: Making necessary adjustments to ensure accuracy and reconciling accounts.
Compliance with SFRS: Ensuring the statements adhere to the applicable Singapore Financial Reporting Standards.
Preparation of the Financial Statements: Drafting the balance sheet, income statement, cash flow statement, and statement of changes in equity.
Disclosure Notes: Preparing the accompanying notes that explain accounting policies and other relevant details.
Review and Audit (if applicable): Companies may be required to have their financial statements reviewed or audited by a certified public accountant. Small companies meeting specific criteria may be exempt from audit.
Filing with ACRA: Companies must file their financial statements with ACRA, typically within 7 months after their financial year-end. Since 2014, Singapore companies are required to file their financial statements in eXtensible Business Reporting Language (XBRL) format, except for those that are exempted.
5. Who Can Prepare Financial Statements: While directors are ultimately responsible, they are not expected to be accounting experts. Many companies choose to:
Prepare them in-house: If they have a competent and adequately resourced finance function with knowledge of accounting software and SFRS.
Engage professional accounting firms or filing agents: This is a common practice, especially for smaller companies or those without in-house expertise. Professional firms can ensure compliance with SFRS, prepare XBRL financial statements, and provide audit support.
Important Considerations:
Timely Filing: Companies must file their annual returns with ACRA within the statutory timeline to avoid penalties.
Accuracy and Completeness: Inaccuracies can lead to penalties and legal consequences.
Dormant Companies: Companies considered dormant by ACRA (no accounting transactions) or IRAS (no revenue/income) have different filing requirements.
It's highly recommended to consult with a qualified accountant or corporate secretarial service provider in Singapore to ensure full compliance with all relevant regulations.
How Bestar can Help
Bestar in Singapore plays a role in helping businesses operate smoothly and remain compliant with local regulations.
Bestar focuses on the financial health and reporting of a company. Our services are crucial for accurate record-keeping, financial analysis, and tax compliance. We also focus on ensuring a company's compliance with the Singapore Companies Act and other regulatory requirements, particularly those set by ACRA. Here's how we can help:
1. Financial Statement Preparation:
Bookkeeping: Maintaining accurate and up-to-date records of all financial transactions (income, expenses, assets, liabilities). This forms the foundation for all financial statements.
Financial Reporting: Preparing the full set of financial statements (Statement of Financial Position, Statement of Comprehensive Income, Statement of Changes in Equity, Statement of Cash Flows, and Notes to the Financial Statements) in accordance with Singapore Financial Reporting Standards (SFRS) or SFRS for Small Entities (SFRS for SE).
XBRL Filing: Converting financial statements into the eXtensible Business Reporting Language (XBRL) format, which is required for ACRA filing for most companies. This can be a complex and time-consuming process for businesses without specialized software or expertise.
2. Tax Compliance and Planning:
Corporate Income Tax: Calculating corporate income tax, preparing Estimated Chargeable Income (ECI) and Form C/Form C-S, and filing them with the Inland Revenue Authority of Singapore (IRAS).
Goods and Services Tax (GST): Assisting with GST registration, preparing and filing quarterly or monthly GST returns, and advising on GST implications for business transactions.
Tax Planning: Providing advice on tax-efficient strategies to minimize tax liabilities within legal frameworks.
Personal Income Tax: For individuals, especially business owners, they can assist with personal income tax filing.
3. Payroll Services:
Processing Payroll: Calculating employee salaries, CPF contributions, and other deductions.
Statutory Filings: Ensuring timely and accurate submission of CPF contributions and other relevant payroll-related filings to the authorities.
IR8A Preparation: Preparing annual income statements (Form IR8A) for employees.
4. Financial Advisory and Analysis:
Management Reporting: Providing customized financial reports and insights to help management make informed business decisions.
Cash Flow Management: Advising on strategies to optimize cash flow and manage working capital.
Budgeting and Forecasting: Assisting with the creation of budgets and financial forecasts to set financial goals and track performance.
Business Valuation: Providing valuation services for various purposes like mergers, acquisitions, or fundraising.
5. Audit Support:
Liaison with Auditors: Assisting in preparing documents and providing information to external auditors during the annual audit process (if required).
Pre-audit Review: Conducting internal reviews to ensure records are audit-ready and to identify potential issues before the official audit.
6. Company Incorporation and Setup:
Company Name Reservation: Assisting with checking and reserving the company name with ACRA.
Document Preparation: Preparing all necessary incorporation documents (Memorandum & Articles of Association, business profile, etc.).
Filing with ACRA: Submitting the incorporation application to ACRA and obtaining the Certificate of Incorporation.
Registered Office Address: Providing a registered office address in Singapore, which is a statutory requirement.
7. Statutory Compliance and Governance:
Appointment of Company Secretary: A Singapore-incorporated company must appoint a company secretary within 6 months of incorporation. Bestar can act as the named company secretary, fulfilling this legal requirement.
Maintaining Statutory Registers: Keeping and updating statutory registers (e.g., Register of Directors, Register of Shareholders, Register of Secretaries, Register of Charges).
Annual General Meetings (AGM): Preparing notices, agendas, and minutes for AGMs, and ensuring they are held within statutory deadlines.
Annual Return (AR) Filing: Preparing and filing the company's Annual Return with ACRA, which is a mandatory annual submission.
Advising on Corporate Governance: Providing guidance to directors on their statutory duties, corporate governance best practices, and compliance with the Companies Act.
Monitoring Regulatory Changes: Keeping the company informed about changes in corporate laws and regulations and advising on necessary adjustments.
8. Managing Company Changes:
Changes in Company Particulars: Preparing and filing documents with ACRA for changes to company name, registered address, nature of business, financial year-end, etc.
Changes to Directors/Shareholders: Preparing and filing documents for the appointment, resignation, or removal of directors and secretaries, and for share transfers, allotments, or capital reduction.
Maintaining Resolutions: Preparing and maintaining accurate records of board and shareholder resolutions.
Common Seal Management: Advising on the proper use and safekeeping of the company's common seal.
9. Ad-hoc Services:
Dormant Company Status: Assisting with applications for dormant company status if the company is not actively trading.
Striking Off/Liquidation: Guiding and assisting with the process of striking off a company or its voluntary liquidation.
Due Diligence: Assisting with corporate due diligence processes for transactions.
Bestar in Singapore offers both accounting and corporate secretarial services as a combined package. This "one-stop shop" approach can be highly beneficial for businesses, especially SMEs, because:
Streamlined Communication: A single point of contact for financial and compliance matters.
Integrated Solutions: A better understanding of the company's overall operations allows for more holistic advice.
Efficiency: Coordinated efforts can reduce duplication of work and ensure consistency between financial records and statutory filings.
Cost-Effectiveness: Often, bundled services are more cost-effective than engaging separate providers.
Reduced Compliance Risk: Having Bestar manage both aspects significantly lowers the risk of missing deadlines or non-compliance with either ACRA or IRAS.
In essence, Bestar ensures your money is managed well and reported accurately for financial and tax purposes, while ensuring your company adheres to all legal and administrative requirements of being a registered entity in Singapore. Both are indispensable for a compliant and well-governed business.
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