Singapore

The Singapore Companies Act outlines the framework for financial reporting in Singapore. This law requires the maintenance of company accounts and requires all companies (except for certain companies which qualify for audit exemption) to have their financial statements audited. Under the Singapore Companies Act, Singapore-incorporated companies are required to prepare their financial statements in accordance with the accounting standards formulated by the Accounting Standards Committee (AS Committee) under the Accounting and Corporate Regulatory Authority (ACRA).

Accounting Framework

Under the Accountancy Functions (Consolidation) Act 2022, the AS Committee is responsible for formulating accounting standards in Singapore.

The AS Committee issues Singapore Financial Reporting Standards (International) (SFRS(I)), which are equivalent to the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB). The following entities are required to apply SFRS(I) for annual periods beginning on or after 1 January 2018:

• Singapore and foreign companies listed on the Singapore Exchange (SGX) which were reporting under Singapore Financial Reporting Standards (SFRS)
• Registered Business Trusts which were reporting under SFRS
• Entities that would lodge prospectus with the Monetary Authority of Singapore (MAS) on or after 1 January 2018 for the purposes of issuing equity or debt instruments for trading on the SGX.

All other Singapore-incorporated companies are required to apply SFRS, also developed and issued by the AS Committee. The SFRS are substantially aligned with IFRS except for IFRIC 2 Members’ Shares in Co-operative Entities and Similar Instruments; and other modifications primarily relating to transition provisions and effective dates of the IFRS that were adopted. For charities in Singapore, they are required under the Charities Act to apply either the SFRS or the Charities Accounting Standard (CAS), developed and issued by the AS Committee.

A Singapore-incorporated company is required to obtain approval from ACRA for non-compliance with the Accounting Standards which includes preparing financial statements using an accounting framework other than the Accounting Standards. Accounting Standards refer to the Singapore Financial Reporting Standards (International), Singapore Financial Reporting Standards, Singapore Financial Reporting Standards for Small Entities or Charities Accounting Standards, as issued by the AS Committee, as may be applicable.  ACRA will generally not allow financial statements to be prepared solely in accordance with the IFRS. Companies can apply SFRS(I) and state simultaneous compliance with IFRS in the SFRS(I) financial statements.

Foreign companies with primary listings on the SGX are permitted to prepare their financial statements in accordance with SFRS(I), IFRS or US Generally Accepted Accounting Principles (US GAAP). For secondary listings, the financial statements need only be reconciled to SFRS(I), IFRS or US GAAP. Additionally, Singapore-incorporated listed companies are permitted to use IFRS if they are also listed on another stock exchange that requires IFRS.

The AS Committee also issues Singapore Financial Reporting Standard for Small Entities (SFRS for Small Entities). This is a separate set of accounting standards for use by small entities (subject to the criteria set out in ASC Statement on Applicability) in Singapore, and are substantially aligned with the IFRS for SMEs. Small entities in Singapore have the option of using SFRS for Small Entities or they can also apply SFRS(I) and SFRS.

Auditing Framework

In Singapore, all companies are required to be audited unless they meet two of three exemption criteria also known as “Audit Exemption for Small Companies.” These criteria include: (1) total annual revenue does not exceed SGD 10 million during the financial year; (2) total assets do not exceed SGD 10 million as at financial year end; and (3) number of employees does not exceed 50 as at financial year end.

All other companies are required to be audited following the Singapore Standards on Auditing (SSA) which are the ISA as issued by the International Auditing and Assurance Standards Board (IAASB) with minor modifications to reflect local legal requirements where appropriate.

The Institute of Singapore Chartered Accountants (ISCA), through its Auditing and Assurance Standards Committee (AASC), is responsible for setting auditing standards in Singapore. As part of the standard-setting process, the AASC submits the SSA to the ISCA Council for review and approval before submitting the standards to the Public Accountants Oversight Committee, under ACRA, for final approval.

In Singapore, the Singapore Accountancy Commission, established under the Singapore Accountancy Act, is a statutory body of the Singapore government that oversees the strategic direction and promotion of the accountancy sector while the Accounting Corporate Regulatory Authority (ACRA), established by the Accounting and Corporate Regulatory Authority Act, is responsible for regulating public accountants.

Under various sections of the Accountants Act, the Accountants (Public Accountants) Rules, and the Accounting and Corporate Regulatory Authority Act, the Public Accountants Oversight Committee (PAOC), operating under ACRA, is authorized to oversee all matters related to the registration of public accountants in Singapore. The PAOC is also responsible for administering a quality assurance (QA) mechanism, called the Practice Monitoring Program, executing an investigative and disciplinary (I&D) mechanism, setting ethical requirements for public accountants (all auditors and audit firms of public interest entities (PIEs)) , approving the adoption of auditing standards as developed by the Institute of Singapore Chartered Accountants (ISCA) Auditing and Assurance Standards Committee, and administering continuing professional development (CPD) programs for public accountants.

In Singapore, only a public accountant or an accounting entity approved by ACRA can conduct audits of financial statements. As a prerequisite to registering as a public accountant with ACRA and practicing as an auditor, individuals must be a Chartered Accountant (CA) and a member of ISCA. This requirement and the use of the CA designation is protected under the Singapore Accountancy Commission Act, which outlines additional provisions related to the registration and discipline of holders of this designation (e.g., educational requirements, examinations, and practical experience). Registration as a public accountant is also required for other services that, by law, must be conducted by a public accountant; for example, appointment as a judicial manager under the Accountants Act. There is no requirement to register as a public accountant to provide other accountancy services in Singapore, such as accounting, tax, and corporate advisory work, unless a law indicates that a public accountant must perform the task. Membership of ISCA is therefore voluntary for all other professional accountants.

ISCA is the national professional accountancy organization, and its responsibilities include setting auditing standards to be applied in Singapore, setting ethical requirements to be observed by its members, administering the Singapore Chartered Accountant Qualification, establishing CPD requirements that all members are required to adhere to, and administering its I&D mechanism. ISCA also administers a voluntary QA review mechanism that members are encouraged to participate in to ensure quality of work conducted. Work conducted by public accountants who are members of ISCA but audit non-public interest entities are reviewed by ISCA under the direction and authority of the PAOC. Reviews of these members are shared with the PAOC for additional action.

The Accounting Corporate Regulatory Authority (ACRA), established by the Accounting and Corporate Regulatory Authority Act, serves as the independent audit oversight authority in Singapore. Its role and responsibilities are further described in the Regulation section.

ACRA is a founding member of the International Forum of Independent Audit Regulators and the ASEAN Audit Regulators Group.

The Institute of Singapore Chartered Accountants (ISCA) was established in 1963 and is recognized under the Singapore Accountancy Commission Act. ISCA’s responsibilities include setting auditing standards to be applied in Singapore, setting ethical requirements to be observed by its members, administering the Singapore Chartered Accountant Qualification, establishing CPD requirements for its members, and administering its investigative and disciplinary mechanism. ISCA also administers a voluntary quality assurance review mechanism that members are encouraged to participate in to ensure quality of work conducted. Membership with ISCA is mandatory to register as a public accountant and to practice as an auditor in Singapore. Membership is voluntary for all other professional accountants.

In addition to being a Member of IFAC, ISCA is also a full member of the ASEAN Federation of Accountants.

The responsibility for quality assurance (QA) reviews in Singapore rests with the Public Accountants Oversight Committee (PAOC), operating under the authority of the Accounting and Corporate Regulatory Authority.

Under the Accountants Act, all public accountants and public accounting entities are subject to mandatory QA reviews under the Practice Monitoring Program (PMP), which is administered by the PAOC. The scope of PMP reviews is to verify whether public accountants and public accounting entities have complied with applicable standards—such as the Singapore Standard on Quality Management (SSQMs) 1, which are based on ISQM 1, and Singapore Standards on Auditing (SSAs), which are based on the ISA—and procedures and requirements in the provision of public accountancy services. For inspections of audits of non-PIEs, the PAOC delegates PMP review responsibilities to ISCA’s Practice Monitoring Division. Both the PAOC and ISCA’s PMP is aligned with SMO 1 requirements.

ISCA also operates a voluntary Quality Assurance Review (QAR) Program for other segments of its membership. This QA program is reviewed regularly. The program involves the review of engagement file(s) for compliance with the SSAs and firm-level quality management for compliance with SSQMs. Upon completion of the QAR Programme, a QAR Memo which includes the findings and proposed action plans will be furnished to the public accountant. The QAR program is aligned with SMO 1 requirements.

Current Status: Adopted

In Singapore, the Accountants Act and the Singapore Accountancy Commission Act establishes initial professional development (IPD) and continuing professional development (CPD) requirements for public accountants.

The entities that are responsible for the implementation of IPD and CPD requirements for public accountants are the Singapore Accountancy Commission (SAC), the Accounting and Regulatory Authority (ACRA), and the Institute of Singapore Chartered Accountants (ISCA). ISCA reports that education requirements in Singapore are aligned with the latest IES requirements as of 2022.

To become a Chartered Accountant in Singapore, individuals are required to complete the Singapore Chartered Accountant (CA) Qualification. The Singapore CA Qualification was developed based on a learning outcome approach and the learning outcomes have been updated based on the revised IES. In addition to the Singapore CA Qualification, which consists of different educational modules, individuals are also required to complete practical experience requirements. Those that choose to become public accountants (auditors) are required to hold membership with ISCA and register as a public accountant with ACRA. ACRA requires 2,500 hours of experience within a five-year period prior to applying for a license to practice as an auditor.

Both ACRA and ISCA have established CPD requirements. ACRA requires all public accountants to complete 120 hours of CPD every three years to maintain a license to practice in Singapore. ISCA members who are public accountants registered with ACRA are to comply with ACRA’s requirements. Other non-public accountant members of ISCA are also subject to the same requirements as public accountants.

Current Status: Adopted

Under the Accountants Act, the Accounting and Corporate Regulatory Authority (ACRA) is responsible for approving auditing standards to be applied in Singapore. ACRA oversees the entire standard-setting process for auditing standards in Singapore through its Public Accountants Oversight Committee (PAOC).

Under the Companies Act, all companies in Singapore are to be audited unless they meet exemption criteria.

The International Standards on Auditing (ISA), as issued by the International Auditing and Assurance Standards Board (IAASB) are adopted as Singapore Standards on Auditing (SSA), with modifications to reflect national requirements where appropriate, by the Institute of Singapore Chartered Accountants (ISCA) Auditing and Assurance Standards Committee. SSA are issued following the review of the ISCA Council and the approval of the PAOC. As reported by ISCA, the SSA are aligned with the requirements in the 2021 Handbook.

Current Status: Adopted

In Singapore, both the Accounting and Corporate Regulatory Authority (ACRA) and the Institute of Singapore Chartered Accountants (ISCA) are responsible for establishing ethical requirements for professional accountants.

Under the Accounting and Corporate Regulatory Authority Act, ACRA is responsible for approving ethical requirements for public accountants and public accountants are required to comply with ACRA’s Code of Professional Conduct and Ethics for Public Accountants and Accounting Entities.

ISCA issues the ISCA Ethics Pronouncement (EP) 100 Code of Professional Conduct and Ethics (the ISCA Code), and members of the institute (both public accountants and non-public accountants) are required to adhere to the ISCA Code. This Code is developed in line with the 2022 International Code of Ethics for Professional Accountants, issued by IESBA and encompasses any Singapore provisions to reflect the local legal and regulatory environment. ISCA plans to issue a revision to EP 100 based on the IESBA’s final pronouncements with an effective date of December 15, 2023. The revisions include the Revisions to the Code Relating to the Definition of Engagement Team and Group Audits.

Current Status: Adopted

Public sector in Singapore comprises:

• Government of Singapore
• Statutory Boards

Government of Singapore

The Government of Singapore is an accounting entity comprising all organs of states and ministries. The accounting policies of the Government of Singapore are based on the laws governing the financial affairs of the Government. The Government keeps its accounts on the cash basis of accounting in accordance with Regulation 19 of the Financial Regulations.

Statutory Boards

Under the Accounting Standards Act 2007, the Accountant-General of Singapore is the legal authority to prescribe accounting standards for Statutory Boards. Every Statutory Board specified in the Schedule of the Act is required to prepare its financial statements in compliance with the accounting standards established by the Accountant-General i.e., Statutory Board Financial Reporting Standard (SB-FRS).

SB-FRS is on accrual basis of accounting and Singapore Financial Reporting Standards (SFRS) is the key guiding framework for accounting standards for Statutory Boards. However, each SFRS will be individually considered, and where necessary, modifications will be made, or additional guidelines will be issued to address the unique needs of Statutory Boards.

Besides SFRS, pronouncements from International Public Sector Accounting Standards Boards which are relevant to Statutory Boards would be considered as well. Presently, SB-FRS has applied IPSASB pronouncements in the following areas:

• To reproduce certain concepts in IPSAS (i.e. IPSAS Conceptual Framework); and
• To adopt certain IPSAS standards, with certain modifications to cater to Statutory Boards’ unique needs (i.e. IPSAS 21 Impairment of Non-Cash-Generating Assets, IPSAS 23 Revenue from Non-Exchange Transactions (Taxes and Transfers)).

Current Status: Partially Adopted

The responsibility for the investigation and discipline (I&D) of professional accountants in Singapore rests with the Public Accountants Oversight Committee (PAOC), operating under the authority of the Accounting and Corporate Regulatory Authority (ACRA), and the Institute of Singapore Chartered Accountants (ISCA).

Under the Accountants Act, the PAOC is responsible for I&D procedures for public accountants who audit public interest entities (PIEs). PAOC’s I&D mechanism is linked to the Practice Monitoring Programme (PMP) which is the quality assurance function of ACRA. Public accountants who failed to comply with PAOC orders arising from the PMP would be liable for disciplinary actions by both the PAOC and ACRA.

ISCA’s I&D function covers all its members which includes both public and non-public accountants. The Singapore Accountancy Commission Act stipulates that ISCA is to inform SAC of any complaint received against any of its members who are Chartered Accountants in Singapore, and ISCA’s website outlines its I&D process. Additionally, ACRA requires ISCA to submit all reports for non-PIE reviews under the PMP program carried out by ISCA to ACRA’s Practice Monitoring Sub-Committee (PMSC). As of June 2023, ISCA reports that its I&D system is aligned with the requirements of SMO 6.

Current Status: Adopted

Under the Accountancy Functions (Consolidation) Act 2022, the AS Committee is responsible for formulating accounting standards to be applied for use by companies, charities, co-operative societies, and societies in Singapore. The AS Committee’s overall policy intention is to adopt the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB). However, while the AS Committee will track closely the introduction of new IFRS for possible adoption in Singapore, it will also consider the local economic and business circumstances and context, as well as the entity to which the IFRS would apply to.

Accounting standards issued by the AS Committee are:

Singapore Financial Reporting Standards (International) (SFRS(I))

SFRS(I) are equivalent to the International Financial Reporting Standards (IFRS) issued by the IASB. The following entities are required to apply SFRS(I) for annual periods beginning on or after 1 January 2018: Singapore and foreign companies listed on the Singapore Exchange (SGX) currently reporting under Singapore Financial Reporting Standards (SFRS); Registered Business Trusts currently reporting under SFRS; and Entities that would lodge prospectus with the Monetary Authority of Singapore (MAS) on or after 1 January 2018 for the purposes of issuing equity or debt instruments for trading on the SGX.

Other entities in Singapore, such as Singapore-incorporated companies that are non-listed, may elect to voluntarily apply SFRS(I).

Singapore Financial Reporting Standards (SFRS)

The SFRS are substantially aligned with IFRS except for IFRIC 2 Members’ Shares in Co-operative Entities and Similar Instruments; and other modifications primarily relating to transition provisions and effective dates of the IFRS that were adopted. The non-adoption of IFRIC 2 does not affect Singapore-incorporated companies (both listed and non-listed).

Charities Accounting Standard (CAS)

A charity or an Institution of a Public Character (IPC) that is registered or approved under the Charities Act is required to comply with either SFRS or CAS. However, those charities that hold significant investments in any subsidiary, associate, or joint venture that is not a charity are required to comply with the SFRS.

Singapore Financial Reporting Standard for Small Entities (SFRS for Small Entities).

Like SFRS, SFRS for Small Entities are substantially aligned with IFRS for Small and Medium Entities. SFRS for Small Entities can only be used by entities that publish general purpose financial statements for external users and are not publicly accountable. In addition, they must meet the definition of a small entity for each of the previous two consecutive financial reporting periods by satisfying certain thresholds.

Current Status: Adopted

Relevant Organizations

• Accounting and Corporate Regulatory Authority (ACRA)
• Accounting Standards Committee (AS Committee) in Singapore
• Institute of Singapore Chartered Accountants (ISCA)
• ISCA’s Auditing and Assurance Standards Committee (AASC)
• Singapore Accountancy Commission (SAC).
• Singapore Stock Exchange (SGX)

Relevant Legislation

• Accountants Act
• Accounting and Corporate Regulatory Authority Act
• Accountants (Public Accountants) Rule.
• Accounting Standards Act
• Audit Act
• Companies Act
• Singapore Accountancy Commission Act

Relevant Publications

• Accounting Standards for Statutory Boards.
• ASC, Accounting Standards Council Issues New Singapore Financial Reporting Standards (International), December 2017.
• ASC, Singapore Financial Reporting Standards (International), December 2017.
• Audit Exemption for Small Companies in Singapore, August 2017.
• IFIAR, IFIAR Member Profile – ACRA.
• IFRS Foundation, Singapore, June 2016.
• ISCA, Code of Professional Conduct and Ethics, November 2015.
• ISCA, Complaints and Disciplinary Process.
• ISCA, Ethics Pronouncements and Implementation Guidance.
• ISCA, Pathways to ISCA Membership.
• ISCA, Resignation, Removal or Suspension of Membership.
• ISCA, SMO Action Plan, 2023.
• ISCA, Full Convergence with International Financial Reporting Standards (IFRS) in Singapore, December 2017.
• ISCA, Singapore Standards on Auditing (SSA).
• ISCA, Quality Assurance Review Programme.
• ISCA, Qualification Programmes.
• SAC, Singapore Chartered Accountant Qualification.
• World Bank, Current Status of the Accounting and Auditing Profession in ASEAN Countries, September 2014.