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