What Constitutes Proper Financial Statements:
Why is This Important?

Financial statements are documents which outline the financial performance, financial position, and cash flow of a company, and are useful for investors, lenders, customers, suppliers, and not least of all, government authorities. In Singapore, all business owners or entities are required to file their financial statements yearly. Depending on the size of your enterprise, you may have a more hands-on role in the filing of financial statements. This is often the case for small businesses as there are fewer employees and resources. 

This blog will give you a brief outline of the necessary information to prepare you for the end of your financial year.

Who Needs to File Financial Statements

All businesses in Singapore are required by law to file their financial statements with the Accounting and Corporate Regulatory Authority (ACRA), but there are some exemptions: 

  1. Sole proprietorships 
  2. Partnerships and limited partnerships
  3. Solvent Exempt Private Companies (EPCs)
  4. Dormant unlisted companies


If you are not any one of the above, you will be required to submit your financial statements in XBRL format, but the requirements do differ depending on your company’s nature and size. If you are considered a smaller and non-publicly accountable company, you only need to file the financial statements in the Simplified XBRL template along with a PDF copy of financial statements authorised by the directors of your company. 

A smaller company is a company whose revenue and total assets for the current financial period are not more than $500,000 and $500,000, respectively.

You are considered a non-publicly accountable company if you are not:

  • A company that has been listed or is in the course of issuing debt or equity instruments for trade on a securities exchange in Singapore
  • A company that has securities listed on an exchange overseas
  • A financial institution such as a licensed bank, capital market infrastructure provider and operator of the Central Depository System under the Securities and Futures Act, for example.


For companies that do not fall under any of the 4 exemptions above and do not qualify as a smaller and non-publicly accountable company, you would be required to file your financial statements in Full XBRL template.

Who Needs to Audit Financial Statements

Your company can be exempted from audit as long as it meets the requirements of a small company.

A company qualifies as small if:

  1. it is a private company during the financial year in question; and
  2. it fulfils at least 2 of 3 following criteria for the immediate past two consecutive financial years:
  • total annual revenue of not more than $10 million
  • total assets of not more than $10 million
  • have no more than 50 employees

If your company is part of a group, the company must  meet the above criteria as a small company and the entire group must be a “small group” to be eligible for audit exemption. A group cannot qualify as a small group if it meets less than 2 of the 3 quantitative criteria on a consolidated basis for the immediate past two successive financial years.

Similarly, a company will remain a small company for subsequent financial years until it is disqualified when:

  • It is no longer a private company at any time during a financial year; or
  • It does not fulfil at least 2 of the 3 quantitative criteria for the immediate past two consecutive financial years

What Are Financial Statements Comprised Of

The purpose of these financial statements is to give a true and fair view of a business’s financial position and performance. At a minimum, the financial statements should include the following: 

  1. A statement of comprehensive income. This document outlines the revenue, expense, gains and losses from derecognition of financial assets measured at amortised cost or revaluation of financial assets measured at fair value, financing costs and other comprehensive income of the company. There are two presentation methods: i) function of expense method and ii) nature of expense method. For entities that classify expenses by function in the statement of comprehensive income i.e. marketing & distribution, administrative and finance, you will have to separately disclose the additional information on the nature of expense i.e. employee compensation, depreciation, professional fees etc in the notes to the financial statements.
  2. A statement of financial position lists the business’s assets,  liabilities and equity. It provides a snapshot of the company’s financial health at a point in time.
  3. A statement of changes in equity, which reports the different classes of shares issued by a company as well as transactions between it and its shareholders.
  4. A statement of cash flows, including cash or cash equivalents that are generated by or used in its operating, financing and investing activities.
  5. Notes to the financial statements. This includes the entity’s information, significant accounting policies, estimates and assumptions, detailed breakdown of key balances for the financial year, related party transactions, financial risk management disclosure, and many more.

What Happens if You Don’t File with ACRA

The ACRA is a governmental body which oversees enterprises and businesses in Singapore. The filing of financial statements to ACRA is required by law, and failing to do so is considered an offence. It is important to keep your financial statements in compliance with the Singapore Financial Reporting Standards as well, at risk of being fined up to $50,000. 

It is thus of utmost importance that these statements are prepared in accordance with Singapore Financial Reporting Standards (SFRS) and by qualified personnel. Only those with the necessary skills and knowledge can ensure that the statements are up-to-date, accurate and complete. Otherwise, inexperience and errors can easily be spotted by those in the know when your company submits the financial statements. 

Start Keeping a Record of Your Financial Statements

Starting a business in something you are passionate about can take your company off the ground in Singapore, but the financial and accounting aspects of it can use up a lot of time to learn and get used to. At Chartsworth, we can work with you to build up your financial statements as part of our accounting services. Our Chartered Accountants can handle all aspects of your financial management, offering advisory, tax and corporate secretarial services to help empower you and your organisation.

Get in touch with us here to learn more about our packages.