Jurisdiction - Singapore
Reports and Analysis
Singapore – Financial Reporting Obligations Intensified Under ACRA’s Surveillance.

4 August, 2014

 

 

The Financial Reporting Surveillance Programme (“FRSP“) was established in 2011 by the Accounting and Corporate Regulatory Authority (“ACRA“) to uphold the transparency, integrity, reliability and quality of financial reporting in Singapore. Under the FRSP, ACRA will review the financial statements of selected companies to determine if they comply with the relevant accounting standards issued by the Accounting Standards Council and if they give a true and fair view of the profit and loss and state of affairs of the company.


As part of ACRA’s efforts to strengthen the quality of financial reporting, on 16 January 2014, ACRA and the Institute of Singapore Chartered Accounts (“ISCA“) announced the signing of a memorandum of understanding under which ACRA and ISCA will collaborate and share expertise to increase the breadth and depth of the FSRP regime.


The expanded scope of the FRSP will cover financial statements of listed companies and non-listed companies that are of public interest, where previously the FRSP largely concentrated on financial statements of listed companies with “modified” audit reports (i.e. reports with qualified or adverse opinions or a disclaimer of opinion). Accordingly, even financial statements with a “clean” audit report may be subject to review.


On 23 April 2014, ACRA issued a Practice Direction entitled “Directors’ Duties in Relation to Financial Reporting and Review and Sanction Process of the Financial Reporting Surveillance Programme Administered by the Accounting and Corporate Regulatory Authority“. The Practice Direction outlines the duties of a director in relation to financial reporting and the review and sanction process of the FRSP, and it applies to the financial statements reviewed under the FRSP with effect from 1 April 2014. The Practice Direction provides guidance to matters such as the preparation and review of financial statements, financial literacy and the knowledge, competence, experience and integrity of senior management.


During the period from 1 April 2014 to 31 May 2015, ACRA will be reviewing selected financial statements for the financial years ended between 1 January 2013 and 31 December 2013. Directors, who are primarily responsible for ensuring that the financial statements are properly prepared, are thus reminded of the risks of misstatements and/or non-disclosures in the financial statements as well as the information needs of shareholders.


If ACRA determines that a company has failed to prepare the financial statements in accordance with the requirements under the Companies Act (Chapter 50) of Singapore, it will consider taking action against the directors of that company. The enforcement actions that may be taken by ACRA include issuing advisory or warning letters and prosecution leading to fines and/or imprisonment.


It is thus important that directors exercise care, competence and diligence in the review of the financial statements that are presented to shareholders and subsequently filed with ACRA. In doing so, directors should ensure that the management of the company implements a sound internal control and audit systems, and that suitable finance personnel with an appropriate level of expertise and knowledge of the relevant accounting standards are engaged to prepare the financial statements. When in doubt, directors should seek legal advice to clarify the scope of their duties in carrying out these financial reporting duties.

 

ATMD Bird & Bird

 

For further information, please contact:

 

Khairil Suhairee, ATMD Bird & Bird

khairil.suhairee@twobirds.com

 

Homegrown Banking & Finance Law Firms in Singapore

 
 

Comments are closed.