There are many reasons why companies need to prepare financial accounts. These accounts can come in various forms, but are generally used for the following purposes:
1) Regulatory Filing
Every year, all Singapore incorporated companies are required under the Companies Act to file annual returns with Accounting and Corporate Regulatory Authority (ACRA) to ensure that the company’s information on ACRA’s register is up to date. Companies must also submit amongst other things, the company’s financial statements. Failing which would result in enforcement action being taken on company officers.
2) Requirements on reporting Financial Statements
Under the Companies Act, directors are responsible to present at its annual general meeting, financial statements that it complies with Accounting Standards issued by the Accounting Standards Council, and give a true and fair view of the financial position and performance of the company.
3) Responsibility of maintaining accounting records
Directors of companies incorporated in Singapore are responsible for maintaining a system of controls and keeping proper accounting and other records.
4) Internal reference
Directors and management of companies will need to have oversight on their earnings and expenses. To do so, they will require access to some form of financial information. Unless these are properly recorded, the data captured and presented might result in inaccurate communication of financial position.
How Can Directors carry out financial reporting duties?
Directors can carry out financial reporting duties if they have a certain degree of financial literacy. With sufficient and updated knowledge of accounting principles, they should be equipped to prepare and review quality financial statements and accounts.
However, Directors are not always trained to be equipped with such knowledge. In such cases, Directors can appoint senior personnel to oversee the accounting aspect of the business.
Doing so might be prohibitively expensive for some entities. Directors could as an alternative, seek professional accounting advice and outsource their accounting function to qualified accounting service providers that can assist to prepare and maintain accounting and other records, as well as aid with the preparation of financial statements that are compliant with the standards.
Should you require any assistance in bookkeeping and accounting support, do contact us at firstname.lastname@example.org or +65 8010 1470