ACRA Advises Directors to Spare Time to Ensure Accuracy of Financial Statements
ACRA (Accounting and Corporate Regulatory Authority of Singapore) is concerned about the thoroughness of the financial statements filed by the Singapore-listed companies. The Financial Reporting Surveillance Program (FRSP) run by it has revealed that there is still scope for the companies to show improvements in this direction.
ACRA has once again, emphasized that the responsibility of the statutory filing remains with the directors of the company and they need to get a firm grip on the numbers. They need to investigate into the claims made by the management and ascertain their veracity.
Who Needs Accuracy of Financial Statements?
ACRA’s concerns are legitimate as the financial statements reveal the revenue, profits, and operating cash flow and in turn, the financial well-being of a company. The investors depend on this valuable resource to make important investment decisions.
The latest findings of the FRSP reveals that the managements of companies are indulging in the recognition of revenues and profits for the unfinished work or holding back on the billings to customers. ACRA insisted that these incidences are examples of non-compliance and to some extent are more prevalent in smaller companies.
The agency has advised the directors to look into the matter deeply and root out the causes. It could be the complexity of accounting rules. It is for the directors to ensure the application of right accounting standards and the 100% accuracy of the financial statements.
The directors need to dig deeper if the management’s judgments and estimates are not consistent with what they know about the financial health of the company. The companies can also appoint a competent corporate services provider like SBS Consulting for a cleaner statutory compliance.
The FRSP revealed 4 cases of severe non-compliance which could have hurt the investors and has issued 4 warning letters. It also found 54 other lesser non-compliance cases.