We facilitate the adoption of accounting, auditing and assurance, and ethical standards through the promulgation of new standards and development of technical resources to support our members.
We continue to contribute to technical excellence through the work of our committees and technical department. We shape the formulation of accounting, auditing and assurance, and ethical standards via comment letters on exposure drafts to the IASB, IAASB and IESBA for deliberation in their standard-settings process. We facilitate the adoption of new standards through our outreach efforts and development of technical resources to support our members.
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2018 is an important year for the profession, as it must be ready for full convergence of Singapore Financial Reporting Standards (SFRS) with IFRS and the implementation of two new important accounting standards – FRS 115 “Revenue from Contracts with Customers” and FRS 109 “Financial Instruments”. To prepare the profession for the impending developments, we organised an outreach seminar in November 2016, focusing on the issues and challenges in practice. The IFRS Convergence Sub-committee, comprising practitioners as well as representatives from Monetary Authority of Singapore (MAS), SGX and Securities Investors Association (Singapore), was set up to raise awareness among various stakeholders of the impact and implications of IFRS Convergence. In partnership with ASC, we issued the publication IFRS Convergence – Are you on track?, dedicated to the directors and CFOs of Singapore-incorporated companies listed on the Singapore Exchange to acquaint themselves with IFRS Convergence, the key principles underpinning IFRS 1 “First-time Adoption of International Financial Reporting Standards” and some potential implications.
We strive to support our members in addressing challenges in every possible way. We issued the Technical Bite Size guidance on the new revenue and financial instruments standard. Focusing on emerging topics and new standards, the Technical Bite Size guidance is intended to share the application of accounting principles in an easy-to-read manner. In addition, our technical team receives and responds to inquiries from our members through our technical helpdesk.
The new leases standard, FRS 116 Leases, was issued in 2016 and will take effect from 1 January 2019 onwards. The implementation challenges can be significant for companies with a substantial number of operating leases. To equip our members with the knowledge and expertise to address the potential implementation challenges, we have discussed the subject extensively in three articles in the IS Chartered Accountant journal during the year. We also held a panel discussion on the new leases standard at the Singapore Accountancy Convention in August 2016. In October 2016, we conducted a technical clinic with SMPs to share the requirements of the new leases standard and understand potential challenges faced in its implementation. We also held two outreach sharing sessions in November and December 2016 with preparers to share and discuss implementation challenges of this standard.
Singapore’s dampened property market has resulted in some developers facing charges from authorities for failing to sell all units within the stipulated time period in relevant legislations. Noting the significance of the accounting implications for developers, our Financial Reporting Committee held a dialogue with impacted developers from the Real Estate Developers’ Association of Singapore (REDAS) to share the relevant accounting principles and hear industry views on this issue. In order to promote consistency in accounting practices in Singapore, we issued a practical guidance ‘Accounting for Qualifying Certificate Extension Charges and Additional Buyer’s Stamp Duty’ to share these principles and deliberations.
Recognising the importance of capital requirements for the banking industry, MAS requires auditors to provide assurance on the submission of capital adequacy returns by Singapore-incorporated banks from 31 December 2016 onwards. ISCA’s Banking and Finance committee developed a “Terms of Reference”, in close consultation with MAS. This Terms of Reference serves as guidance to auditors for their performance of assurance work on the preparation of the capital adequacy returns.
In 2016, we also issued practical guidances for the profession and these include “Material Inconsistencies in Other Information under SSA 720 (Revised) - Guidance with regard to Directors’ Statement” and AGS 11: Comfort Letters and Due Diligence Meetings”. AGS 11 is intended to provide guidance to reporting auditors on their roles and responsibilities when providing assistance to issue managers, sponsors, managers and/or underwriters during a fund raising exercise such as the offering of shares or debts. AGS 11 also provides examples of comfort letter, bring-down letter and arrangement letter.
In 2016, ISCA issued several new auditing and assurance standards, which included the SSA 800 (Revised), Special Considerations – Audits of Financial Statements Prepared in Accordance with Special Purpose Frameworks, SSA 805 (Revised), Special Considerations – Audits of Single Financial Statements and Specific Elements, Accounts or Items of a Financial Statement and standards relating to disclosure initiatives. SSA 800 (Revised) and SSA 805 (Revised) were revised largely to align the enhanced auditor reporting requirements in SSA 700 (Revised), Forming an Opinion and Reporting on Financial Statements. The disclosure initiatives draw the auditor’s attention on disclosures throughout the audit process. It also provides guidance to drive changes in the auditor’s approach and improve consistency in practice especially on qualitative disclosures to enhance the value of the audit.
We also issued a questionnaire to help group engagement teams obtain a deeper understanding of their component auditors during group audits. The questionnaire provided guidance to the profession on the nature and extent of documentation required.
Since the issuance of the new and revised auditor reporting standards in July 2015, we continued to roll out relevant initiatives to support the profession in this area. In 2016, through different platforms such as outreach forums and talks, we continued to engage the different key stakeholders, including auditors, directors, preparers, and retail and institutional investors, on what these changes mean to them in their respective capacity. To familiarise the auditing profession with an early adopter’s experience, we invited the United Kingdom (UK) Financial Reporting Council (FRC) to share their experience of the enhanced auditor reporting regime.
A joint report, titled All Aboard the Transparency Express!, was published in May 2016. The report draws on a roundtable hosted by ISCA, the IAASB and ACCA. Held in Singapore in November 2015, the roundtable also involved audit committee members, regulators and the international and local auditing standard setters.
We established the Corporate Reporting Committee, comprising industry leaders on sustainability reporting. This committee works closely with various stakeholders including the SGX to raise awareness and quality of sustainability reporting. The Committee is in the process of developing an appropriate implementation roadmap to help companies implement a robust process to support a quality sustainability report.
On 7 October 2016, we organised a Sustainability Reporting Forum, where CFOs and delegates from over 80 companies gathered to discuss practical aspects of implementing sustainability reporting. To equip stakeholders with the necessary tools for implementing sustainability reporting, we organised technical sessions, and published a series of articles in the IS Chartered Accountant journal.
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