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PROCESS OF PRESCRIBING ACCOUNTING STANDARDS

 

The Accounting Standards Council (ASC) is empowered under the Accounting Standards Act to prescribe accounting standards for use by companies, charities, co-operative societies and societies.

The broad policy intention is to adopt the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB). Convergence with international accounting standards would achieve greater transparency and comparability of financial information among companies and help lower compliance costs for companies investing in Singapore as well as local companies going overseas. However, while the ASC will track closely the introduction of new IFRS for possible adoption in Singapore, it will also take into account the local economic and business circumstances and context, as well as the entity to which the IFRS would apply to.

The ASC adopts a formal and rigorous process in prescribing Financial Reporting Standards (FRS) so as to ensure that the accounting standards prescribed are of a consistent high quality. The various sectors and stakeholder groups are all given adequate opportunities to express their views. The ASC also works closely with the Accounting Standards Committee of the Institute of Certified Public Accountants of Singapore (ICPAS’ ASC) in reviewing new accounting proposals and prescribing accounting standards.

The ASC believes it is useful to maintain good communication with the IASB, through proactively surfacing views relating to local specific issues on the IASB’s projects for the IASB’s attention and consideration. These include representation on the IASB Standards Advisory Council, participation at standard setters meetings, reviewing and commenting on relevant IASB’s research and improvement projects, and working with IASB liaison representatives. The ASC also sees the benefit of collaborating with national standard setters in the region in reviewing convergence issues, especially where there are similar concerns.

PROCESS FOR PRESCRIBING FRS (INCLUDING INTERPRETATIONS OF FRS ALSO KNOWN AS INT FRS)

Exposure stage

1. When the IASB issues an Exposure Draft (ED) on new IFRS/amendments to existing IFRS/International Accounting Standard (IAS) or a draft Interpretation of the International Financial Reporting Interpretations Committee (IFRIC)/amendment to an existing Interpretation, the ASC also issues an equivalent ED on the proposed equivalent FRS (ED FRS) or draft Interpretation (ED INT FRS) in the name of the ASC on the ASC website, inviting public comments. ICPAS also issues the ASC ED or draft Interpretation concurrently at its website to seek its members’ comments.

2. The comments deadline for the ASC EDs usually expires one month before the comments deadline imposed by the IASB, to allow sufficient time for the collation of comments, drafting of the comment letters to the IASB, reviewing of the comment letters before submission to the IASB.

3. The ASC proactively seeks feedback from interested email alert subscribers. To develop a list of interested parties, the ASC taps on ICPAS’ list of about 50 interested parties, comprising industry associations, Governmental bodies, listed companies, banks, securities firms and academic institutions for comments.

4. To gather more feedback from constituents, the ASC may conduct separate public consultations to solicit comments on specific areas covered in the ED FRS or ED INT FRS.

5. Respondents can forward their comments on EDs to the ASC email account or by fax or post (as indicated in every ED). The comments received will be channelled to the ASC secretariat and representatives from ICPAS.

Reviewing of comments received

6. To facilitate an efficient and effective review, the ICPAS’ ASC sets up standing subcommittees, comprising both ICPAS members as well as representatives from certain key affected or interested industries (e.g. banking, property, manufacturing, insurance etc). These subcommittees form the core expert groups to review and deliberate on accounting issues pertaining to their industries.

7. After reviewing the comments received and accounting issues in the ED, the ICPAS’ ASC subcommittees will present their recommendations and propose draft comments on the ED FRS or ED INT FRS to the ICPAS’ ASC for consideration.

Post exposure stage - submission of comments to the IASB

8. Upon deliberation, the ICPAS’ ASC will forward the summary feedback and proposed comment letters to the ICPAS Council and thereafter to the ASC for consideration.

9. Upon receiving ICPAS’ proposed comments to the IASB documents, the ASC would then seek further feedback from its four Committees (namely the Committee for “For-Profit” Entities, the Committee for Charities, the Committee for Co-operative societies and the Committee for Societies) before deciding whether to approve the draft comment letter.

10. Once ASC approves the final draft comment letter, the ASC secretariat will send the letter (via email) to the IASB email account. The comment letter will also be posted on the ASC website for public view. The ASC secretariat will send email alerts to subscribers on the comment letters sent to the IASB.

Issuance of final standards or interpretations by IASB

11. After the exposure period, ASC and ICPAS will continue to monitor the IASB’s developments to see if there are any further changes to the proposed standard.

12. When the IASB issues the final Standard or Interpretation, ICPAS’ ASC and its relevant subcommittees will review the final Standard or Interpretation and consider any changes from the earlier proposed Standard or Interpretation during the ED stage, taking into account the impact on relevant stakeholders and will advise the ICPAS Council and ASC on whether the new Standard should be adopted in full or in part in Singapore.

13. The four ASC Committees will also consider whether to adopt the standard or interpretation, in full, or with modifications, and recommend accordingly to the ASC.

14 Upon due consideration and after seeking independent counsel from a technical consultant, the ASC will decide whether to prescribe the new standard or interpretation as accounting standards in Singapore, in full or with modifications.

15. Following the ASC’s decision to adopt an IFRS/IAS or Interpretation of IFRIC, the ASC secretariat will also work with ICPAS in preparing the actual FRS or INT FRS to be issued. The final approved FRS or INT FRS will be published on the ASC website. The ASC secretariat will also send email alerts to subscribers on the issuance of the new FRS or INT FRS.

Flowchart on prescribing accounting standards

 
 
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Last reviewed on 11 December 2007
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