By expanding the scope of Financial Reporting Surveillance Programme, Singapore improves level of corporate governance and stakeholder confidence, thereby protecting investors, says SingaporeCompanyIncorporation.sg.
In a bid to strengthen the quality of financial reporting by companies, Singapore’s Accounting and Corporate Regulatory Authority (ACRA) has last week expanded the scope of the Financial Reporting Surveillance Programme (FRSP). In light of the growing complexity in financial reporting requirements and emergence of tighter compliance norms such as FATCA and Basel III capital requirements, Singapore’s greater emphasis on accurate financial reporting and investor protection is expected, says SingaporeCompanyIncorporation.sg.
“With the expansion in Financial Reporting Surveillance Programme, Singapore not only ensures financial reporting that is in accordance with the global standards, but instills greater confidence in investors. Tighter compliance will attract genuine companies, and deter those involved in financial crimes,” explained Ms. Cheryl Lee, Operations Manager at SingaporeCompanyIncorporation.sg.
FRSP expansion to protect investors
For capital markets to grow and attract genuine investors, it is vital for an economy to maintain accurate and consistent financial reporting framework. Investors ask for reliable and timely information in order to obtain a true picture of the business, whether in terms of generating value or understanding the risks involved. With the rise in complexity of the financial domain worldwide, regulators in Singapore have expanded the scope of the Financial Reporting Surveillance Programme. To this effect, a Memorandum of Understanding (MoU) was signed in January this year between ACRA and the Institute of Singapore Chartered Accountants (ISCA).
Under the MoU, ISCA will audit financial statements and look for inconsistencies. The inconsistencies will then be shared with ACRA, which will deliberate and take enforcement action against directors under the Companies Act, if necessary. The changes came into effect on April 1, 2014.
“Singapore bagged the top position in the ‘Change Readiness Index’ last year. The tighter financial reporting requirements proposed by ACRA only provide a rationale for the top position. Investors will now have a sense of being safe and protected from financial frauds,” affirmed Ms Lee.
Surveillance expanded to ‘clean’ audit reports
When established in 2011, the FRSP only covered financial statements of listed companies with modified audit reports. However, with the FRSP expansion, the ‘clean’ audit reports of listed as well as non-listed companies will come under the ACRA scanner. The rationale behind the expansion to ‘clean’ reports was to detect material uncertainties in all the financial statements. Similarly, modified audit reports of non-listed companies that are of public interest will be subject to the surveillance program.
Reflecting on the expanded scope of FRSP, Ms Lee noted, “Audit reports may sometimes be modified to hide material inconsistencies in the financial statements. However, there is a significant probability of financial reporting deficiencies occurring within the ‘clean’ reports as well. Expanding the scope of surveillance to ‘clean’ reports is definitely a step ahead in the level of transparency, integrity and quality of financial reporting. This will only build investor confidence and Singapore will see a higher flow of funds as well as company incorporation in Singapore in the days to come.”
About SingaporeCompanyIncorporation.sg
SingaporeCompanyIncorporation.sg is a portal for entrepreneurs and professionals who want to have a presence in Singapore. It is also a provider of company incorporation as well as the related taxation and relocation services in Singapore.
20 Cecil Street
Singapore 049705
(+65) 6850 5280
http://www.singaporecompanyincorporation.sg/ 
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