Full Convergence with International Financial Reporting Standards (IFRS) in Singapore
On 29 May 2014, the Singapore Accounting Standards Council (“ASC”) announced that Singapore-incorporated companies (“Singapore companies”) listed on Singapore Exchange (“SGX”) will apply a new financial reporting framework identical to IFRS (“full IFRS convergence”) with effect from 1 January 2018 onwards. Early application is not permitted.
Please click here for ASC announcement in May 2014.
On 30 November 2016, the ASC reminds Singapore companies that have issued, or is in the process of issuing, equity or debt instruments for trading in a public market in Singapore (i.e. SGX) of full IFRS convergence in 2018.
When the new financial reporting framework identical to IFRS (“IFRS-identical Financial Reporting Standards”) is first applied, Singapore companies, currently reporting on Singapore Financial Reporting Standards (“SFRS”), are required to apply all the specific transition requirements in IFRS 1 First-time Adoption of IFRS.
Notwithstanding that early application is not permitted for the IFRS-identical Financial Reporting Standards, Singapore companies that are in the process of issuing equity or debt instruments for trading in SGX are permitted to apply this for annual periods before 1 January 2018.
The ASC further affirms that other Singapore-incorporated companies can continue to apply the existing financial reporting frameworks, including SFRS and SFRS for Small Entities.
1) ISCA’s Collaboration with ASC on Singapore IFRS Convergence
Recognising the importance of IFRS convergence in Singapore, ISCA have collaborated with ASC in developing a set of Q&As to assist directors and chief financial officers of Singapore listed companies acquaint themselves with full IFRS Convergence, the key principles underpinning IFRS 1 and some of the potential implications.
Please click here for the Q&As published in November 2016.
2) SGX’s Communiqué to Listed Issuers
In SGX’s communiqué issued in December 2016, the following development in Singapore accounting standards was shared:
“Full IFRS Convergence in 2018
All SGX-listed companies and Business Trusts, regardless of their place of incorporation currently reporting under SFRS, will be required by SGX to adopt the IFRS-identical Financial Reporting Standards. This will ensure consistent reporting standard for all listed issuers.
Real estate investment trusts (“REITs”) must comply with the Code on Collective Investment Schemes issued by the Monetary Authority of Singapore, and will continue to prepare their financial statements in the manner prescribed under ISCA’s Statement of Recommended Accounting Practice 7 (“RAP 7”) Reporting Framework for Unit Trusts. RAP 7 requires that the accounting policies generally comply with SFRS principles relating to recognition and measurement, unless prescribed by RAP 7.”
3) MAS Press Release on Financial Reporting for Business Trusts and Collective Investment Schemes
In the press release issued by MAS on 19 January 2017, the following financial reporting frameworks will be applicable to BTs and authorised CIS for annual periods beginning on or after 1 January 2018, and entities that lodge prospectus with MAS on or after 1 January 2018.
Authorised CIS: Statement of Recommended Accounting Practice 7 (RAP 7) Reporting Framework for Unit Trusts as issued by ISCA which is consistent with practices in other major fund jurisdictions such as UK & USA; and
Entities that lodge prospectus, including BTs: Restatement of up to three years of historical audited financial statements in accordance with the IFRS-identical financial reporting framework in the prospectus. Transitional relief for historical financial statements in prospectuses will be provided. Please see Appendix A of MAS' press release for more information on the transitional relief.
4) Poll on Readiness Level of Listed Companies to issue IFRS compliant interim results in 2018 - Report Findings
To obtain a general sense of how ready listed companies are for IFRS Convergence, ISCA conducted a poll of audit partners from 8 public accounting firms on their assessment of their listed clients' readiness to issue their first IFRS compliant interim financial statements in 2018.
In collaboration with the Singapore Institute of Directors (SID), ISCA through its Financial Reporting Committee's Core Sub-Committee, has developed this publication to provide guidance on how to navigate the maze of accounting change that IFRS Convergence exercise requires. It also highlights key considerations for entities converging to SG-IFRS.