Businesses all over the globe report their performance via reporting to the relevant authorities and governing bodies. The layout of this reporting procedure varies in different countries and many factors influence this format; for example, legal infrastructure, political and economical environment etc. In Singapore, the relevant legal entity is considered liable for any error or discrepancy in the financial reporting process. Failure to follow the rules and regulation may result in fine, imprisonment or both.
According to the Singaporean law, companies can outsource tax and accounting services, and it is highly recommended to get things done with the help of professionals, to mitigate the risks. The format of financial reports is determined by the accounting standards of that country. As Singapore has become a global financial hub in last couple of years, thousands of local and multinational companies are operating in the country. This exponential growth enforces governing bodies to implement financial standards to ensure the smooth functioning of markets.
Why You Need Tax And Accounting Services In Singapore?
Accounting standards are the basic rules of documenting, presenting and disclosing the financial information consisting to all the business transactions and the cash flow. Financial reporting has direct connections with investors, customers, creditors, lenders, employees and everyone else remotely connected with the company. Singapore has its own regulatory authority known as ACRA (Accounting and Corporate Regulatory Authority) however things are under control of IASB (International Accounting Standard Board) and IFRS (International Financial Reporting Standards).
The localized version of IFRS is SFRS (Singapore Financial Reporting Standards) that implements all the accounting standards in the country. SFRS started working in 2003 but it was mainly designed for enterprises and considering the evolving market, eventually accounting standards became complicated. In that environment, it was almost impossible for small businesses to comply with the standards.
Considering SMEs have a large market share in Singapore, the situation was unacceptable. Finally in 2009, IFRS made accounting standards specifically for SMEs in Singapore. SFRS for SE (Small Entities) was specifically designed to give small and mid-sized businesses some room to grow while complying with regulations simultaneously. Businesses in Singapore can apply for SFRS for SE if they are eligible based on the following criteria.
- The company is not publically accountable
- The company is a small entity. A company would be considered small entity if,
- It has less than $10 million of annual revenue
- It has less than $10 million of assets
- It has less than 50 employees
SFRS for SE was fully implemented in 2011 that means most of the companies that were registered before 2011 are following SFRS full standards instead of SFRS for SE. Of course these new standards offer lots of advantages however companies following the full standard must consider few points before making a transition to SFRS for SE. Especially, companies that are about to exceed the size limitation mentioned above, should comply with full standard instead of going back and forth between SFRS and SFRS for SE. Companies must consider transition cost, future goals and financing before making the transition.