The Accounting Profession of Singapore



The Institute of Certified Public Accountants of Singapore (ICPAS) is the

national body representing the accounting profession in Singapore. It maintains

a register of qualified accountants comprising mainly local graduates. Membership

is open to members of the Institutes of Chartered Accountants of England and

Wales, Australia, Scotland, Ireland and a number of other accounting bodies.

Generally, prior to being admitted as a full member, they must attend a week-long

pre-admission course. Members are designated as certified public accountants

(CPA).

The Public Accountants Board, whose council members are appointed by the Ministry

of Finance, licenses and registers accountants who wish to practise. It also

handles practice monitoring, disciplinary matters and regulations on professional

conduct.

Accounting Records in Singapore

All companies incorporated under the Companies Act are required to maintain

books of accounts that sufficiently explain the transactions and financial

position of the company.

The books may be kept either at the company's registered office or at another

place the directors think fit. If the books are maintained outside Singapore,

sufficient records must be maintained in Singapore to facilitate the preparation

and/or audit of financial statements that reflect accurately the company's

financial position.

Sources of Accounting Principles

Financial Periods Commencing before 1 January 2003 The principal source of

accounting principles in Singapore, namely Statements of Accounting Standards

(SAS) and Interpretation of Statements of Accounting Standards (INT), are issued

by ICPAS. These standards are essentially International Accounting Standards

(IAS) modified for certain transitional provisions. They provide guidelines

on the accounting measurements and disclosure requirements. Businesses may

depart from such standards if the standards conflict with disclosure exemptions

granted by law. Otherwise, ICPAS may take disciplinary action against any of

its members who are in violation of the standards.

Rules on accounting measurements are generally established by SAS and INT.

Disclosure requirements are governed by SAS, INT and the Companies Act.

ICPAS is a member of the International Accounting Standards Committee (IASC).

Compliance with IASC standards are not mandatory, but the institute supports

the IASC objectives of formulating and publishing standards for observance

during presentation of audited financial statements and promoting worldwide

acceptance of such standards.

Financial Periods Commencing on or after 1 January 2003 With the implementation

of section 37 of the Companies (Amendment) Act 2002, SAS issued by ICPAS will

not be used with effect from annual financial periods commencing on or after

1 January 2003. Instead, Singapore Financial Reporting Standards (FRS), issued

by the new accounting standards-setting body, the Council on Corporate Disclosure

and Governance (CCDG), are now effective. FRS are essentially adopted from

International Financial Reporting Standards (IFRS). The previous SAS were adopted

from the same set of IFRS (formerly referred to as IAS) but with modification

to certain transitional provisions. Consequently, there are differences between

FRS and SAS.

Interpretations of Standards are authoritative guidance on the application

of the relevant standards. CCDG adopted all international interpretations as

Interpretations of FRS (INT FRS) with effect from financial periods beginning

on or after 1 January 2003.

Compliance with FRS is a statutory requirement whereby any non-compliance

amounts to a breach of the Companies Act by the directors.

Financial Reporting in Singapore

The Companies Act requires that an audited set of financial statements, made

up to not more than six months before every Annual General Meeting, is to be

presented to the shareholders at the meeting. Generally if a company incorporated

in Singapore has one or more subsidiaries, it must prepare consolidated financial

statements unless it meets certain criteria as provided for in FRS 27 Consolidated

and Separate Financial Statements. Currently, financial statements under the

Companies Act consist of the balance sheet, income statement together with

explanatory notes. With the Companies (Accounting Standards) Regulations 2002

coming into operation for financial periods on or after 1 January 2003, a complete

set of financial statements will comprise the balance sheet, income statement,

statement of changes in equity, cash flow statement and explanatory notes.

The financial statements must be accompanied by the directors' and auditors'

reports and by a statement from the directors declaring that the financial

statements show a true and fair view and that it is reasonable to believe that

the company can reasonably pay its debts as they become due.

Companies which meet specific provisions in the Companies Act may be exempt

from having their accounts audited but nevertheless must prepare financial

statements that comply with the Companies Act.

Annual Requirements for Companies in Singapore

The Companies Act requires every company, except for those exempted in accordance

with the provisions in the Act, to appoint one or more auditors qualified for

appointment under the Accountants Act to report on the company's financial

statements. The auditors are to ascertain whether proper books of accounts

have been kept and whether the financial statements agree with the company's

records. They will then report on the trueness and fairness of the financial

statements to the shareholders at the Annual General Meeting.

Audit Exemption Starting with the financial year beginning

on or after 15 May 2003, the following companies are no longer required to

have their accounts audited. However, they are still required to prepare accounts

(and consolidated accounts where applicable) that comply with FRS.

•Small exempt private companies An exempt private

company with revenue in a financial year below S$5m is exempted from appointing

auditors and from audit requirements. Revenue is defined according to the statutory

accounting standards, i.e. the FRS.

•Dormant companies A dormant company is exempted from

appointing auditors and from the audit requirements if it has been dormant

either (a) from the time of its formation or (b) since the end of the previous

financial year. A company is considered dormant during a period in which no

accounting transaction occurs, and the company ceases to be dormant on the

occurrence of such a transaction. For this purpose, transactions arising from

the following are disregarded:

• Taking of shares in the company by a subscriber to the memorandum



• Appointment of company secretary



• Appointment of auditor



• Maintenance of a registered office



• Keeping of registers and books



• Fees, fines or default penalties paid to the Registrar of Companies