Across the globe, all companies are using financial reporting systems to show the financial performance of any organization. The format being used, although varying from country to country and company to company, is based upon the legal, cultural, political and economic situation of any specific company. Today having transparent, reliable as well as comparable financial information is considered crucial for working of capital market at global level. With an increase in the number, sizes, growth pattern and scope of corporations, importance of financial reporting has increased many folds.
There are many financial transactions involved in any standard accounting which consists of different governing practices and principles. Statements are the key to any cash flows and financial information which are needed by the company for making financial decisions.
Accounting Standards in Singapore
The accounting standards known in Singapore are Singapore Financial Reporting Standards (SFRS). The ultimate principal of accounting in Singapore is secured by an Accrual Based Accounting System. Under the system, impacts of events as well as transactions are considered. Transactions are also recorded in accounting processes and finally reported in the form of financial statements. The financial statement covers the period for which they are recorded. With the help of financial transactions, users are aware of total cash receipts, payments as well as other payable amounts (obligations) which are to be made in future or to be received in future. There are in total 41 standards of accounting system in Singapore.
Bookkeeping for Small Businesses in Singapore
For small businesses working in Singapore, dealing with full time accounting standards is not easy. It was also considered a burden on the financial and human resources of small enterprises. Thus, in order to address the issue raised by small companies, Singapore accounting services came up with special IFRS standards especially for SME in the year 2009. They can also outsource bookkeeping providers for accounting services for small businesses in Singapore. This helps small businesses remain focused on their business and not miss out on legal and accounting compliance with the government.
Singapore Financial Reporting Standards for Big and Small Enterprises
There was a time when all companies in Singapore whether small or big were following the same SFRS system for registration of tax and accounting practices, however with the advent of new and wholehearted system for small entities, now companies based upon their accounting needs are moving towards new SFRS system. It is pertinent to mention that companies have to look for their nature of business as well as growth plans when plan to adopt new methods.
There are certain variables which small enterprises need to evaluate before moving towards final decisions, these are:
- Consideration for Groups, i.e. effect on the holdings of the companies
- Statement about financing, i.e. all statements related to SFRS and other financial institutions
- Plans for Future, i.e., any plans for IPO, any business probability in case they exceed the threshold sizes
- Costs of transaction, i.e., it includes software, training costs as well as accounting system costs.
It is ideal for companies, all small and large to adhere to the standards of SFRS in case they have accustomed to their rules and regulations. However, for start-ups and small enterprises who are struggling between adopting old and new SFRS system are advised to go for the system especially designed for small enterprises. It is also good for companies whose financial statements are not being used publically or by some other external parties.