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The basics of financial statements for companies

Financial statements (FS) give an account of the business activities and a company’s financial performance. In Singapore, unless exempted, all companies are required to file their financial statement with ACRA within 7 months after the end of their financial year.

Under ACRA’s guidelines, some may need to file Full XBRL while others only need partial XBRL. The latter needs to include their financial statements in PDF format when filing their annual returns with ACRA. Click here to find out more about filing FS in XBRL format.

What is required in Financial Statements?

Under guidelines of the Financial Reporting Standards in Singapore (FRS), a complete FS should include the following:

  • A statement of financial position (balance sheet) detailing the company’s assets, liabilities and equity.
  • A statement of comprehensive income detailing revenue and expenses, capital gains and losses, and other sources of income.
  • A statement of changes in equity detailing any changes in the share structure of the company.
  • A statement of cash flows detailing the inflow and outflow of cash and cash equivalents of the company.
  • Notes to the accounts detailing accounting policies and explanations.
  • Comparative information for the preceding financial year.

Who is responsible for preparing and filing Financial Statements?

Businesses may hire companies providing accounting services in Singapore to help them prepare and file their FS. However, all company directors have a duty to file their company’s annual returns and FS or face possible penalties.

All FS must also comply with accounting standards made or formulated by the Accounting Standards Council under the Accounting Standards Act, or company directors may be found guilty of an offence and be subject to penalty. The accounting standards that are commonly adopted for this purpose, would be the Singapore Financial Reporting Standards (International) and the Financial Reporting Standards in Singapore.

Who is exempted from filing Financial Statements?

The following types of business entities are not required to file financial statements:

  • Sole proprietorships
  • Partnerships (and limited partnerships)
  • Solvent Exempt Private Companies (EPCs)
  • Dormant unlisted companies which are dormant from the time of their formation or since the end of the previous financial year

EPCs are private companies that 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.

A dormant company, generally defined as a company that has no accounting transactions throughout the financial period, except for the transactions which are to be disregarded when determining dormancy provided for in the Companies Act Section 205B(3). A non-listed dormant Company would be exempted from preparing its financial statements, in compliance with the accounting standards and tax filing, and if it fulfils the following criteria at any time within the financial year:-

  • Expenses such as payment or receipt by the company of a nominal sum not exceeding S$5,000; and
  • Total asset of the Company must not exceed S$500,000.
  • If the Company is a parent company, the consolidated total assets of the group must not exceed S$500,000.

For avoidance of doubt, it is mandatory for every company to file its Annual Return, including dormant companies. Through filing of the Annual Return, a company updates ACRA through an electronic form, disclose information including whether the company is dormant, and the date to which the financial statements of the company are made up to. Learn more about Compliance Timeline for Singapore Companies.

Companies exempted from filing audited Financial Statements

Some companies may be exempted from filing audited financial statements if they fall within the definition of a “small company” during the financial year if it meets any 2 of the 3 criteria below:

  • Total Annual Revenue not more than S$10 million
  • Total Assets not more than S$10 million
  • Number of employees not more than 50

For a company that is a part of a group:
(a) the company must qualify as a small company; and
(b) the entire group must be a “small group” to qualify for the audit exemption.

For a group to be a small group, it must meet at least 2 of the 3 quantitative criteria above for its consolidated financial statements for the immediate past two consecutive financial years.

With the changing accounting landscape and new rules being implemented, companies should find a reliable company providing accounting services in Singapore to ensure their financial statements are prepared correctly.