Technical Update – July 2021
SINGAPORE
1. Financial Reporting
1.1 ISCA issues FRG 3 with illustrative condensed interim financial statements for the preparation of interim financial statements
On 3 May 2021, the the Institute of Singapore Chartered Accountants (ISCA) issued Financial Reporting Guidance (FRG) 3 Preparation of Interim Financial Statements under SFRS(I) 1-34 Interim Financial Reporting (in compliance with the SGX Listing Rule 705(3A))
FRG 3 has been issued to assist issuers in understanding the implications of SGX Listing Rule 705(3A) and applying SFRS(I) 1-34’s requirements in their preparation of interim financial statements. Accompanying FRG 3, two sets of Illustrative Condensed Interim Financial Statements have been issued as an illustration of how certain key requirements of SFRS(I) 1-34 and SGX Listing Rule Appendix 7.2 could be met concurrently in the interim financial statements.
To access FRG 3, click here.
To access the illustrative condensed interim financial statements, click here.
INTERNATIONAL
1. Ethics
1.1 IESBA revises non-assurance services and fee-related provisions of the Code
On 28 April 2021, the International Ethics Standards Board for Accountants (IESBA) issued revisions to the Non-Assurance Services (NAS) and fee-related provisions of the International Code of Ethics for Professional Accountants (including International Independence Standards) (the Code). The revised NAS and fee-related provisions significantly strengthen the guardrails around auditor independence in two important areas that have the potential to create incentives influencing auditor behavior—non-assurance services provided to audit clients and fees.
The revised NAS and fee-related provisions become effective for audits of financial statements for periods beginning on or after 15 December 2022. Early adoption is permitted and encouraged.
For more information, click here.
2. Financial Reporting
2.1 IASB consults on a new framework for management commentary reflecting changes in corporate reporting landscape
On 27 May 2021, the International Accounting Standards Board (IASB) published an exposure draft (ED) on a proposed comprehensive framework for companies preparing management commentaries aligned with investors’ information needs. Management commentary—in some countries referred to as management discussion and analysis—is a report that complements a company’s financial statements.
The proposed framework represents a major overhaul of IFRS Practice Statement 1 Management Commentary. It builds on innovations in narrative reporting and would enable companies to bring together in one place the information investors need to assess a company’s long-term prospects—such as information about the company’s intangible resources and relationships and about sustainability matters that affect the company.
To access the ED, click here.
The Snapshot that gives an overview of the consultation’s proposals is available here.
The deadline for comments on the ED is 23 November 2021.
2.2 IASB clarifies the accounting for deferred tax on leases and decommissioning obligations
On 7 May 2021, the IASB issued targeted amendments to IAS 12, the IFRS Standard on income taxes, to specify how companies should account for deferred tax on transactions such as leases and decommissioning obligations.
IAS 12 Income Taxes specifies how a company accounts for income tax, including deferred tax, which represents tax payable or recoverable in the future.
The amendments are effective for annual reporting periods beginning on or after 1 January 2023, with early application permitted.
For more information, click here.
2.3 IASB proposes amendments setting out accounting for when no foreign exchange rate exists
On 20 April 2021, the IASB published an exposure draft (ED) on proposed amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates. The proposed amendments aim to help companies determine whether a currency can be exchanged into another currency, and what accounting to apply if the currency cannot be exchanged.
The proposed amendments would improve the usefulness of the information provided to investors by requiring a consistent approach to determining whether a currency is exchangeable into another currency and, when it is not, determining the exchange rate to use and the disclosures to provide.
The deadline for comments is 1 September 2021.
To access the ED, click here.
