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Understand Accounting in Singapore
After grasping your tax obligations, it is also crucial to ensure that your accounting practices adhere to Singapore’s regulations.
In Singapore, accounting standards are referred to as Singapore Financial Reporting Standards (SFRS), which are aligned with the International Financial Reporting Standards (IFRS). All companies with a financial period beginning on or after January 1, 2003, are required to follow SFRS.
The SFRS includes various standards, each designated as Financial Reporting Standard (FRS) X, such as FRS 1. Each standard addresses a particular topic, like the presentation of financial statements, revenue recognition, and inventory accounting. You can access the SFRS on the Institute of Singapore Chartered Accountants (ISCA) website.
SFRS for Small Entities
The SFRS for Small Entities (SE) offers an alternative framework to the full SFRS for qualifying entities in Singapore. This standard provides an optional financial reporting framework specifically for small entities, applicable for reporting periods starting on or after January 1, 2011.
The objective of the SFRS for SE is to provide some relief to small entities from compliance with the full SFRS, while ensuring quality, transparency, and comparability, which can benefit the investment community and other users of financial statements.
You may be eligible to apply the SFRS for SE, provided your business:
- Is not publicly accountable
- Publishes general-purpose financial statements for external users
- Is a small entity. An entity qualifies as a small entity if it meets at least two of the three following criteria:
- Total annual revenue does not exceed SG$10 million
- Total gross assets do not exceed SG$10 million
- Total number of employees is 50 or less
An entity that qualifies under these criteria may adhere to the standards until it falls out of the size threshold for two consecutive reporting periods. In such cases, the company must follow the full SFRS.