SINGAPORE - The state of finanical reporting by Singapore-incorporated listed companies is generally healthy, the Accounting and Corporate Regulatory Authority (ACRA) found in its first-ever such study.
After spending a year reviewing the 2013 financial statements of 49 listed companies out of more than 600, the regulator found that only four fell severely short of standards, and had their directors slapped with warning letters.
These companies are found to have significantly misstated their revenue, profits and/or operating cash flows.
But ACRA noted that there is still room for improvement as it also issued advisory letters to directors of 29 companies for "some non-compliance" with Singapore accounting standards such as lack of disclosure.
According to Singapore's Companies Act, company directors are responsible for making sure that the financial statements are compliant with the accounting standards.
Hence ACRA's regulatory sanctions ranging from warning letters to financial penalties and prosecution are directed at the directors, not the companies when non-compliances are found.
In this review cycle, ACRA did not impose any fines nor prosecute any directors as a result of severe lapses.
The review is conducted under ACRA's Financial Reporting Surveillance Programme (FRSP), which aims to guide companies to meet the requirements in the accounting standards.
This will provide investors with reliable and meaningful financial statements for decision-making.
The reviews focused on areas that would significantly impact revenue, profit and operating cash flow, often key measures used by investors to evaluate companies.
Key findings in the report released by ACRA on Thursday (Oct 1) include the misclassification of operating cash flow, wrong accounting for mixed-use property, inappropriate consolidation and wrong revenue recognition.
ACRA will announce the FRSP areas of review focus for the FY2015 financial statements in December.
The inaugural report on the FRSP is available at www.acra.gov.sg.