EY responds to ASC’s announcement that Singapore-listed companies to embrace full convergence with IFRS in 2018
- Convergence eases preparation costs and improves comparability of financial reports across jurisdictions
- IFRS conversion requires change management beyond an accounting exercise
Singapore, 29 May 2014 – The Singapore Accounting Standards Council (ASC) today announced that Singapore-incorporated companies listed on Singapore Exchange (SGX) will apply a new financial reporting framework identical to the International Financial Reporting Standards (IFRS) in 2018. This move is timely, and will enhance ease of comparability with similar companies in other jurisdictions by global investors, thereby helping to promote better investment decision-making, says EY in response to the announcement today.
“IFRS has essentially become the de facto language for financial reporting around the world and this convergence augurs well for Singapore given its position as a business and financial hub in the region,” says Mak Keat Meng, Head of Assurance, EY in Singapore. “Using a single set of accounting standards will allow Singapore companies to reduce the costs of preparing financial statements, particularly for companies that are listed or have operations in more than one jurisdiction.”
The IFRS conversion exercise also offers an excellent opportunity for companies to relook at the integration of their various business processes with financial reporting, and assess the need to fine-tune or improve existing infrastructure to achieve greater synergies.
“Conversion to IFRS is not merely an accounting exercise; it is an exercise in change management. Management should carry out an impact assessment as early as possible and put in place the IFRS conversion roadmap for their entities,” adds Mak.
The magnitude of IFRS conversion – and challenges -- will vary among companies. While it is envisaged that the IFRS conversion process will be a relatively straightforward exercise given that the SFRS is closely aligned to IFRS, there are however differences between SFRS and IFRS, and proper care must be taken to analyze these differences and their impact on the financial statements. The application of SG-IFRS 1 First Time Adoption of SG-IFRS must also be brought to bear.
Mak concludes: “In essence, detailed analysis and meticulous planning of the IFRS conversion roadmap in consultation with auditors and professionals that are specialized in IFRS conversion will be key to a seamless and successful transition.”
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