SHOWING THE WAY
A recent ISCA Poll on listed companies showed that, with fewer than six months to go before March 2018, many of the listed companies surveyed were far from being prepared for IFRS Convergence. ISCA has, in collaboration with the Singapore Institute of Directors (SID), developed the “IFRS Convergence 2018 Implementation Roadmap” (Publication) to help listed companies get back on track with IFRS Convergence.
This Publication provides a roadmap to help listed companies transit from Singapore Financial Reporting Standards (SFRS) to the new financial reporting framework that is identical to International Financial Reporting Standards (IFRS) (hereinafter referred to as SG-IFRS).
The following areas are covered in this Publication.
A. DIRECTOR OVERSIGHT OF IFRS CONVERGENCE
It is imperative for directors to put in place due processes to enable them to assert that their 2018 financial statements are in compliance with SG-IFRS. They should ensure that management goes through the process of impact assessment, if they have not already done so, and report back regularly to the Audit Committee and the Board, on the challenges and status of the implementation exercise. Consideration must be given as to the adequacy of resources within their organisations to implement this. Directors should also have continuous engagements with management and both the internal and external auditors to understand the progress of their SG-IFRS implementation.
To assist the directors to do the above, this Publication provides a bird’s eye view of what IFRS Convergence entails, and areas that would commonly impact entities the most when adopting SG-IFRS. It also contains a non-exhaustive list of possible questions for directors to ask management and auditors on how IFRS Convergence will impact the entity.
B. MANAGEMENT ACTIONS TO IMPLEMENT SG-IFRS
This section includes an overview of the various steps that could be taken by management, especially the Chief Financial Officers and their finance teams, in order to implement SG-IFRS. These steps include:
- Fully comprehend what IFRS Convergence entails;
- Formulate a strategy and an SG-IFRS implementation roadmap;
- Execute the SG-IFRS implementation roadmap with the required resources and people in place, and
- Assess and quantify the impact of transitional provisions provided in SG-IFRS 1.
C. BIRD’S EYE VIEW OF IFRS CONVERGENCE
This section provides an overview of IFRS Convergence which discusses:
- The types of entities required to adopt SG-IFRS;
- Whether an entity is SG-IFRS-compliant if it has always been SFRS compliant;
- How to transit to the SG-IFRS framework and the general principles of SG-IFRS 1;
- Considerations for group reporting;
- Implementation timeline.
D. STEP-BY-STEP APPLICATION GUIDE OF SG-IFRS 11
This section illustrates the impact of SG-IFRS 1, and where applicable, the application of the transitional exemptions on the following areas that would commonly impact entities the most when adopting SG-IFRS:
- Business combinations;
- Attribution of total comprehensive income, including deficit balances, to non-controlling interests;
- Goodwill and fair value adjustments arising from acquisition of foreign operations;
- Cumulative translation differences;
- Deemed cost exemption for property, plant and equipment and investment property;
- Capitalisation of borrowing costs on qualifying assets.
E. TRANSITIONAL PROVISIONS IN SG-IFRS 1
First-time adopters applying SG-IFRS 1 are required to apply all effective standards under SG-IFRS retrospectively from date of incorporation, unless exempted under the transitional provisions of SG-IFRS 1. This section lists the transitional provisions: (a) mandatory exceptions, and (b) optional exemptions in SG-IFRS 1. First-time adopters are required to apply all mandatory exceptions. First-time adopters are generally allowed (but not mandated) to apply the optional exemptions.
F. STANDARDS/TRANSITIONAL PROVISIONS APPLIED PROSPECTIVELY AND SFRS/SG-IFRS DIFFERENCES WITH NO TRANSITIONAL RELIEFS AVAILABLE IN SG-IFRS 1
This section lists the areas of impact to first-time adopters of the standards under SFRS or transitional provisions of SFRS that were applied prospectively, and standards under SFRS that had different requirements from SG-IFRS, for which there are no mandatory exceptions or optional exemptions available to provide relief from full retrospective application.
G. STANDARDS AND AMENDMENTS ISSUED AND EFFECTIVE ON 1 JANUARY 2018
This section lists the new standards and amendments which are effective for annual periods beginning on 1 January 2018. A first-time adopter disregards the transitional provisions within each standard/amendment. These standards/amendments are to be applied retrospectively if there are no transitional provisions available in SG-IFRS 1 that provide relief from full retrospective application of these standards/amendments.
A copy of this Publication is available here.
1 Entities would be required to apply the Singapore-equivalent of IFRS 1: First-time Adoption of IFRS (referred to as SG-IFRS 1) to transition to SG-IFRS 1. Although the existing SFRSs are modelled closely after IFRS, there may be a need to adjust prior years’ financial numbers when companies make the switch from SFRS to IFRS. This is because first-time adopters applying SG-IFRS 1 are generally required to apply all effective standards under IFRS retrospectively from date of incorporation, unless exempted under the transition provisions of SG-IFRS 1. As such, entities which had in the past applied certain accounting standards prospectively would now have to adjust their financial statements as if those accounting standards had been effective since the date of incorporation.