Guide to Filing Financial Statements for Singapore Business Owners
Unless exempted, companies are required to file their financial statements with the Accounting and Corporate Regulatory Authority (ACRA).
The financial statements must comply with the Singapore Financial Reporting Standards (SFRS) issued by the Accounting Standards Council and give a true and fair view of the financial position and performance of the company.
If you are a business owner of a Small and Medium-Sized Enterprise (SME), you may be more directly involved in the filing of financial statements in your business, whether it is because the company is a family business, or due to a lack of manpower or both.
Here is a brief look at which businesses need to file financial statements, how to file them, and what to do after the filing of financial statements.
What are Financial Statements?
According to the SFRS, a complete compilation of financial statements should comprise the following documents. Note that the information required is of the financial year that is ending or has just passed:
- A statement of financial position (otherwise known as a balance sheet), which includes the company’s assets, liabilities and equity.
- A statement of comprehensive income, which includes the revenue, capital gains and losses, financing costs of the company as well as other comprehensive income (full list available in the Singapore Financial Reporting Standards for Small Entities, under paragraph 5.4(b)).
- A statement of changes in equity, which includes the different classes of shares issued by the company, changes to the company’s share capital at the beginning and end of the financial year, and transactions between the company and its shareholders.
- A statement of cash flows, which includes cash or cash equivalents flowing in or out of the company due to its operating, financing and investing activities (details on what each kind of activities entails can be found on SFRS (I) 1-7 Statement of Cash Flows, under paragraphs 10 to 17).
- Notes on significant accounting policies and other explanatory information.
- Comparative information of the above statements and notes on the preceding period.
If the company has changed its accounting methods retrospectively, or is making a retrospective restatement of items in its financial statements, a statement of financial position (reflecting this change) as at the beginning of the previous period is also needed.
For example, if a company changed its accounting methods for information in FY 2019, in its statement of financial position, it should provide information as at:
- The end of the current period (FY 2019)
- The beginning of the preceding period (FY 2018)
- The end of the preceding period (FY 2018)
Financial statements for “small entities”
For “small entities”, the financial statements should include items (1) to (4) above.
For item (2), the small entity can either present a single statement of comprehensive income displaying all items of income and expenses (statement of profit or loss included) or two statements – income statement and comprehensive income statement.
Unlike a comprehensive income statement would include gains and losses from the fluctuations of the company’s assets (e.g. derivatives). An income statement does not include such gains and losses as they are not commonly encountered in small entities.
“Small entities” (which include “small companies”) are defined in the SFRS as having fulfilled at least 2 of the 3 criteria at the end of the financial year:
- Total annual revenue not exceeding S$10 million;
- Total assets of not more than S$10 million; or
- Having not more than 50 employees.
Which Business Entities are Exempted From Filing Financial Statements?
The following types of business entities are exempted from filing financial statements:
- Sole proprietorships
- Partnerships (and limited partnerships)
- Solvent Exempt Private Companies (EPCs)
- Dormant unlisted companies which are dormant from the time of its formation, or since the end of the previous financial year
EPCs are private companies which have a maximum of 20 shareholders and no beneficial interest (meaning no shares or shares on trust) is held directly or indirectly by any corporation, or private companies wholly owned by the Government which the Minister declares to be an EPC.
Although solvent EPCs are exempted from filing their financial statements, solvent EPCs are still encouraged to do so. This is in light of how EPCs are still required to prepare and send the financial statements to its shareholders, like any other company.
While other business entities such as sole proprietors or partnerships need not file financial statements, they are still required to keep proper records of their accounts and prepare a Statement of Account at the end of each accounting period.
Prior to Filing Financial Statements
Auditing of financial statements
Before the financial statements are filed with ACRA, the directors must ensure that the financial statements are duly audited within 14 days before being sent to the shareholders at the AGM, with the auditor’s report attached to the financial statements.
“Small companies” as defined above are exempted from this audit requirement.
Which formats are businesses required to file their financial statements in?
Both public and private companies (limited or unlimited by shares), except EPCs, are required to file the full set of financial statements mentioned above. This should be done in the eXtensible Business Reporting Language (XBRL) format.
On the other hand, insolvent EPCs must either file:
- A full set of financial statements in XBRL format; or
- Financial statements highlights in XBRL format plus a PDF copy of the financial statements.
Financial statements highlights are data elements that provide relevant information of the company.
Preparing of financial statements in XBRL format
Companies can use the BizFinx Preparation Tool to file their financial statements or financial highlights in XBRL format. This tool can also be used to:
- File PDF copies of financial statements or financial statements highlights, if XBRL format cannot be used for some reason
- File for exemptions to remove certain filing requirements
After the financial statements/highlights have been filed, they have to be validated using the BizFinx Multi-Upload Tool, which will show any errors to be corrected.
By when do the financial statements need to be filed?
Filing of financial statements is part of a larger process of filing annual returns with ACRA to update ACRA on important particulars of the company. Therefore, the timeline for filing financial statements is similar to the timeline for filing annual returns.
For non-listed companies having a share capital and keeping a branch register outside Singapore, their annual returns (and hence their financial statements) have to be filed within 8 months after the financial year end.
For other non-listed companies, they will file within 7 months after the financial year end.
Note that annual returns can only be filed:
- For companies required to hold an AGM: After an AGM has been held (where the financial statements will be presented during the AGM)
- For companies not required to hold an AGM: After the financial statements have been sent to shareholders
- For private dormant relevant companies: After the financial year end (Private dormant relevant companies are dormant companies that are neither listed nor a subsidiary of a listed company, and whose total assets do not exceed S$500,000.)
Companies not required to file financial statements will have to submit an online declaration indicating that they are solvent when filing their annual returns.
Who files the financial statements?
Although ACRA does not prescribe who is to file or prepare the financial statements, it is the prerogative of the directors to ensure the quality of the financial statements and that they are not erroneous.
If the financial statements do not comply with the SFRS or do not present a true and fair view of the company, the directors of the company will be guilty of an offence and may be fined up to $50,000.
Therefore, it is recommended that the personnel preparing financial statements should be officers with relevant experience (such as qualified accountants or company secretaries).
How to File Financial Statements
The process of filing financial statements with ACRA mainly consists of the following steps:
- Companies (specifically, the preparers of the financial statements) can use the BizFinx Preparation Tool and map the relevant items in the financial statements to the relevant tags in the ACRA taxonomy.
- The preparer should also fulfil the minimum requirement list (see below).
- Then, they validate and submit the financial statements using the BizFinx Multi-Upload Tool.
- Lastly, the preparer should file the company’s annual returns by the stipulated deadline for doing so.
The full list of ACRA taxonomy and the minimum requirement list can be found on the ACRA website. The minimum requirement list consists of:
- A text block element that includes the entire set of financial statements matching what was sent to the shareholders; and
- The detailed information elements for more information regarding the individual parts of the financial statements. This includes:
- Statutory reports
- Balance sheet
- Income statement
- Cash flow statement
- Disclosure notes (see full list here)
What Needs to be Done After the Filing of Financial Statements?
Filing of annual returns
As stated above, the filing of the annual returns should be done after the filing of financial statements.
Submitting the financial statements with the corporate tax returns
When filing their corporate tax returns with the Inland Revenue Authority of Singapore (IRAS), companies are required to include their financial statements in the supporting documents.
Although you may be directly involved in the filing of the financial statements of your business, you may want to outsource this to corporate secretarial or accounting firms so you can focus on the crucial aspects of the company – growing the business.
Learn more about our competitive rates for the preparation of financial statements here.
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