Directors' Duties in relation to Financial ReportingIntroductionQuality financial information is crucial for strong and vibrant markets. More than ever, investors, suppliers, financial institutions, customers, company directors, corporate executives and many more are asking for reliable and timely financial statements in order to obtain a more accurate picture of the business, whether in terms of generating value or understanding the risks involved. Show
Over the past decade, businesses have also become more challenging and business models more complex. To cope with them, financial reporting standards have become increasingly complex and require more professional judgement on the part of the preparers of financial statements. Examples include the accounting for business acquisitions, the fair value measurement of assets and revenue recognition of multi-element transactions. It is essential that the market remains confident in the level of transparency, integrity and quality of financial reporting. In response to this, ACRA has commenced a Financial Reporting Surveillance Programme to enforce against poor financial reporting that leads to unreliable information and/or non-compliance with the prescribed accounting standards. Companies Act requirementsUnder sections 201(2) and 201(5) of the Companies Act (the Act), directors are responsible to present and lay before the company, at its annual general meeting, financial statements that:
In addition, directors of a company incorporated in Singapore are responsible to maintain a system of internal accounting controls and keep proper accounting and other records that will enable the preparation of true and fair financial statements under sections 199(2A) and 199(1) of the Act, respectively. Guidance to directors in carrying out these financial reporting duties
The above is meant to guide directors in complying with certain significant duties in relation to financial reporting. They do not exhaustively define the duties applicable to directors under the Act and/or related legislation. When in doubt, legal advice should be sought by directors to clarify the scope of their duties. Financial Reporting Resources for Companies and DirectorsACRA provides companies and directors with help resources such as:
1 Accounting Standards refer to Singapore Financial Reporting Standards (International) (SFRS(I)s), Singapore Financial Reporting Standards (SFRS), Singapore Financial Reporting Standards for Small Entities (SFRS for SE) and Charities Accounting Standards. Did you find this page useful? Who are responsible for the financial statements?03. The financial statements are management's responsibility. The auditor's responsibility is to express an opinion on the financial statements.
Who can prepare financial statements?The income statement or profit and loss statement, the statement of retained earnings, and the balance sheet comprise the "big three" financial statements. A company's accounting professional typically prepares financial statements to give a clear picture of the company's financial position at a specific time.
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