As an entrepreneur, it is crucial to know how to handle various accounting matters for your company. This includes learning how to prepare a financial statement in Singapore. This document displays a company’s financial performance and position.
In Singapore, all companies are required to submit financial statements annually, following the rules of Singapore Financial Reporting Standards (SFRS) and Accounting and Corporate Regulatory Authority (ACRA).
This article covers the 5 key aspects of preparing a financial statement in Singapore.
Whether you own a small business or a large corporation, understanding how to prepare a financial statement in Singapore can aid in making better business decisions and complying with legal regulations.
After going through this article, you will acquire information about the types of businesses that need to submit financial statements, the process of filing them, and the subsequent actions that need to be taken.
What Is A Financial Statement In Singapore?
A financial statement in Singapore refers to written documentation that conveys a company’s financial performance and business activities.
It plays a critical role in evaluating a company’s worth as it provides an accurate representation of its profits, losses, position, and performance over the course of a fiscal year.
A financial statement in Singapore also allows potential partners, creditors, or investors to see how profitable the business is and make informed decisions for future financial years.
Under the Financial Reporting Surveillance Programme, ACRA examines the financial statements of companies incorporated in Singapore to ensure they adhere to the relevant accounting standards established in Singapore.
In accordance with the SFRS, a comprehensive set of financial statement in Singapore for the preceding or current financial year should contain the following:
- Statement of financial position (balance sheet)
- Statement of changes in equity
- Statement of comprehensive income
- Cash flow statement
- Notes, which is a section in financial statements that includes important accounting policies and additional explanations. These notes are often used to summarize significant information related to financial reporting.
- Comparative information, which is necessary to have a data comparison between the current records and the ones from the previous year.
All statements should cover at least two financial years, including last year’s and the current year’s data, so readers can learn about the company’s profitability or loss.
Financial statements are submitted to ACRA, a governmental body that regulates business entities in Singapore.
The Singapore Companies Act outlines the requirements for directors of companies incorporated in Singapore Singapore when preparing financial statements that are in compliance with the Accounting Standards (also known as Financial Reporting Standards).
Exemptions For Filing A Financial Statement In Singapore
The following types of businesses are not required to file a financial statement in Singapore. However, it is still necessary for corporate secretaries to file Annual Returns internally:
- Sole proprietorships
- Dormant unlisted – Companies that have been dormant since the end of the previous fiscal year or since their formation.
- Exempt Private Companies (EPCs)
Solvent EPCs are not obligated to submit their financial statements, but it is recommended that they do so. This is due to the fact that EPCs must still create and distribute the financial statement to shareholders, similar to other companies.
In contrast, other types of business entities like partnerships and sole proprietorships are not mandated to file financial statements, but they must keep accurate accounting records and prepare Statement of Accounts after each accounting cycle.
What to Prepare Before Filing a Financial Statement in Singapore
To file a financial statement in Singapore with ACRA, it is necessary to have the financial statements audited and approved by shareholders at an Annual General Meeting (AGM). Along with the financial statements, an auditor’s report must also be presented.
However, small entities as defined above are not required to have their financial statements audited. It is important to note that unaudited financial statements do not meet the minimum standards in Singapore.
Only after a licensed external auditor has thoroughly examined and approved the financial statements, can they be considered audited.
Auditing the Financial Statement in Singapore
Prior to filing the financial statement in Singapore, it is important for the directors to have them audited. The auditor’s report must also be attached to the financial statements.
This must be completed at least 14 days prior to the AGM, where the financial statements will be presented to the shareholders. Once this process is complete, the financial statements can be filed with ACRA.
Required Formats for Filing Financial Statements
All public and private companies, regardless of whether they are unlimited or limited by shares, are obligated to submit the complete financial statements. They must also use the eXtensible Business Reporting Language or XBRL format.
How to File a Financial Statement in Singapore
To file a financial statement in Singapore, the process involves several steps, such as:
- Using the BizFinx Preparation Tool to align the pertinent items in their financial statements with the appropriate tags in ACRA’s taxonomy.
- Fulfilling the minimum requirement list, as stated below.
- Validating and submitting the financial statements through the BizFinx Preparation Tool.
- Submitting the business’s annual returns by the specified deadline.
The ACRA website outlines the complete ACRA taxonomy and the minimum requirements. The list of minimum requirements from ACRA include:
- Text block component that incorporates the complete set of financial statements in Singapore that corresponds to the ones sent to the respective shareholders.
- Comprehensive information components for the specific sections of the financial statements in Singapore, such as balance sheets, statutory reports, and income statements.
Who is responsible for filing the financial statement in Singapore?
There are no specifications from ACRA regarding who should be in charge of creating or submitting the financial statement in Singapore. However, the company’s directors are responsible for guaranteeing that the statements are precise and devoid of mistakes.
If the statements fail to present a fair and accurate depiction of the company or do not adhere to SFRS guidelines, the directors could be held accountable for a violation and face a penalty of up to S$50,000.
Consequently, it is strongly advised that the individuals responsible for preparing the financial statements possess a high level of expertise and experience.
What to Prepare after Filing a Financial Statement in Singapore
Once the financial statements have been submitted, companies are required to file their annual returns with ACRA.
In addition, companies must provide their financial statements as supporting documentation when they are filing corporate tax returns with IRAS or the Inland Revenue Authority of Singapore.
If your company is required to file financial statements, you must also file annual returns with ACRA. The annual returns provide an update on your company’s particulars, such as its directors, shareholders, and auditors.
This information is required by ACRA to maintain an accurate and up-to-date record of your company. Filing your annual returns on time is important to avoid penalties and ensure that your company maintains its good standing with ACRA.
In addition to filing annual returns, you may also be required to file other documents with ACRA, such as changes to your company’s particulars or financial statements.
These documents are important for maintaining compliance with ACRA regulations and ensuring that your company operates within the legal frameworks set out by the Singapore government.
Corporate Tax Returns
Companies must include their financial statements as supporting documents when they are filing their corporate tax returns with IRAS. It is important that these statements are prepared in accordance with the accounting standards set out by ACRA in Singapore.
Failure to do so may result in penalties or fines from the authorities. In addition, companies should ensure that their financial statements are audited by a qualified auditor before filing them with IRAS.
This is to ensure that the financial statements are accurate and reliable, and that they reflect the true financial position of the company.
How We Can Help - Our Accounting Services
A financial statement in Singapore offers an accurate representation of a company’s losses, profits, performance, and position during the fiscal year, making them valuable for overall company valuation.
However, preparing and filing financial statements can be a complex and time-consuming process. This is why many businesses in Singapore seek professional accounting services to help them navigate the process.
SJH Advisory’s accounting services offer a comprehensive range of solutions to support your business needs, including bookkeeping, payroll, and preparation and filing of financial statements.
With our help, you can be confident that your financial statements are accurate, reliable, and compliant with local regulations. In addition to our expert accounting services, SJH provides personalized support to help you make informed financial decisions.
Whether you need help managing your cash flow more effectively, identifying potential cost savings, or optimizing your tax strategy, our team of experienced accountants can provide the guidance you need to achieve your goals.
At SJH Advisory, we pride ourselves on delivering a high level of service and support to our clients. We understand that every business has unique concerns and needs, which is why we take great pride in going the extra mile to customize our services for you.
From the moment you contact us, we’ll work closely with you to understand your specific needs, challenges, and goals, and develop a tailored solution that meets your requirements.
Contact us today to learn more about how our accounting services can support your business and help you achieve financial success.
Financial Statement In Singapore - Frequently Asked Questions
ACRA does not provide a specific instruction on who should prepare or file the financial statements. However, it is the responsibility of the directors to guarantee the financial statements’ accuracy and reliability, as well as prevent any errors.
In Singapore, the accounting standard utilized is called the Singapore Financial Reporting Standards (SFRS), which is modeled after the International Financial Reporting Standards (IFRS).
Companies that have financial periods starting on or after 1 January 2003 are required to adhere to the SFRS. A key feature of Singapore’s accounting standards is the use of accrual-based accounting.
Companies that are public or private are obligated to submit the complete compilation of financial statements, with the exception of EPCs. The filing of these financial statements must be done using the XBRL format (eXtensible Business Reporting Language).
If there is a case where the financial statement in Singapore is not in compliance with the SFRS or that they do not provide an accurate view of the company, the directors may face a fine of up to $50,000.
It is advisable for those responsible for preparing financial statements to have relevant expertise, such as company secretaries or professional accountants, to avoid errors or misstatements.
The directors of a company in Singapore must guarantee that the financial statements are audited and accompanied by an auditor’s report within 14 days prior to presenting them to the AGM with shareholders.
You have the option to prepare your own financial statements for your company in Singapore, but it is important to meet the necessary requirements to ensure their accuracy and compliance with ACRA regulations.
Seeking advice from an accountant or financial expert can be helpful, as can using software programs to prepare the statements.
However, it is recommended that companies engage a professional accountant to prepare their financial statements, as they will have the expertise and knowledge to ensure accuracy and compliance with SFRS.
Partnerships, sole proprietorships, EPCs, and dormant unlisted companies are exempt from filing a financial statement in Singapore. However, it is recommended that EPCs file their financial statements despite the exemption.
Meanwhile, other types of businesses like sole proprietors and partnerships do not have to file a financial statement in Singapore, but they are obligated to maintain accurate account records, as well as create a Statement of Account after every accounting period.