Objective of Harmonisation in Accounting Standards
The concept of Harmonisation has been seen to collaborate with the various types of the systems in one particular method. The process of accounting policy is further seen to be maintained to increase the compatibility of the setting constraints and accounting practices and how can they change. The primary objective of the assignment is to provide information for the reader to assess the financial position.
Harmonisation in the accounting standard has been seen to be considered as per the level of similarity of the financial reporting and accounting standards. Hence, it has been observed that the main intention of harmonisation not only emphasizes on the elimination of the differences but also the differences as per the reduction in the contradiction rules. The main form of the harmonization process in the accounting standard has been further seen to be overcome the reduction in the global differences to achieve a better aspect of the international comparability of the financial statements. The present reporting standard has aimed at differing nature of “Singapore Statements of Accounting Standards” (SAS) in terms of local accounting standard and subsequent transition to “Financial Reporting Standards” (FRS) and INT FRS. Following changes has brought significant difference in the balance sheet and the income statement of “Singapore Press Holdings”. As opined by SmithKline Beecham and Daimler-Benz the main difference and segregation has led to several changes associated to changes in terms of the purpose and effect rising as a result of accounting requirement implementation process. The main aim of the harmonisation has been observed to make the financial statements comparable with the various types of the other companies or same company in other countries. The conceptualisation of harmonisation is seen to act as a vital process for the companies operating within different business situations (Sebastiao, 2017).
The international level of IASC has been seen to develop and maintain the accounting standard with the important published financial statements. The main compliance with the standards has been further seen to be based be helpful in harmonisation of the standards which are used by national accounting requirements.
During the Asia Financial crisis which took place in 1997-1998, the market participants were seen to raise serious concern about the dependability on the financial data and using lenient or creative accounting practice in Asia. In several occasions it has been considered to be short of of transparency, reliability and the scale of the crisis could have been reduced in case there had been a more consistent standard of accounting. Cognizant of the concerns rose in the various international communities, and in the effort to comply with the standards which are internationally accepted and best practices several Asian have recognized the execution of IFRS issued by the “International Accounting Standards Board (IASB)” (Iasplus.com, 2017).
Process of Harmonisation in Accounting Standards
In Singapore “The Accounting Standards Council” was founded in 2007 with the main motive of adopting IFRS. The financial analysts were assigned to analyze the consolidated financial condition of the FBOs with relevance to the principle accounting difference and the administrative implications to perform a meaningful “Strength of Support Assessment (SOSA)”. The implementation of IFRS has been identified as a “a single set of high quality, uniform, globally-applied, and enforced accounting standards which is conducive for both domestic and cross-border investment and financing decisions.”. The IFRS adoption has been identified with greater reliance on the reported financial statements presented by FBOs and other genres of enterprises (Iasplus.com, 2017).
The various types accounting standards which are followed in Asia ranges from following of both IAS and GAAP. The increasing consideration of the compliance with the accounting standards has been seen to be important standard based on the accounting principles to adhere with the globalization criteria. The effect of globalization has been seen in numerous enterprises franchised or setup other than Asian countries. Henceforth, the harmonization of the accounting standard has been seen to be conducive in overall presentation and understanding of the financial presentation of the report in various countries where it is seen to be operational. The adoption of the accounting harmonization has been identified to be conducive in tackling of investors in a better way and the various types of the other concerns have been able to assess the financial data presented in the annual reports. This particular aspect has been considered to be the most important factor in the harmonization process (IASB, 2016).
The main problem with the harmonization process has been seen to be based on its compliance needs with more than a single accounting standard. Some of the main issues are listed below:
This obstacle has been identified as the most common types of problem, as it is seen to be associated with the attitudes, religion, value and the language barrier. The research work based on Hofstede and Trompenaar has been able to discern about the various differences due to the culture barrier. The Singapore auditors has been further seen to eclipse the personal and the close reaction and rejection of any form of gifts in the business. The diversified values and the behaviour of the individuals often lay implication on the interpretation of the international standards.
The issue of the new accounting standards in Singapore has been evident with the FRSs which were in use for FYs commencing on or after January 1, 2003, apart from FRS 39.
Adoption of International Accounting Standards in Asia
In addition to this FRS removed the exemptions from cash flow statements. During the PPE assessment, FRS does not consider the disclosure based on the assessment of property not made by qualified or independent values and annual valuation. There have been several types of the other disparity in the integration of leases, business combinations, borrowing costs, associated party transactions, accounting and reported by the retirement benefits plans, accounting for goods and services tax and several other areas of concern (Ahmed et al., 2013).
Some of the main integration problems have been further identified with the recognition of the various types of the assets which has been seen to be ranging from various combinations of both the standards. These standards has been particularly evident in form of “FRS/SAS 7, FRS 16/SAS 14, FRS 17/SAS 15, FRS 22/SAS 22, FRS 23/SAS 19, FRS 28/SAS 27 and FRS 39/ SAS 33”. In several cases the disparities in the recognition process of the new standard has been seen with certain exemption such as” Accounting for Investments in Associates”. Based on the incorporation of the new method accounting certain exemption needs to be made pertaining to removal of applying equity method of accounting. In the FRS recognition Goodwill taken after the reserves of 1994 FY as per FRS does not need to show the restatement, but in case of SAS the restatement needs to be made.
The main integration problem of FRS from SAS accounting has been an issue of major concern for “Small and medium size entities (SME)”, based in Singapore. Due to the changing global demand the various types of the accounting implication for FRS has been seen to become more complex for the smaller concerns. This has made the SMEs to consider a bulk of the companies operating in Singapore. The Integration of the “Singapore Financial Reporting Standards (SFRS)” for SE is not publicly accountable and the consideration of the gross asset is restricted to not more than S$10 million (Guidemesingapore.com, 2017).
In addition to the aforementioned problems, the smaller multinationals need to spend more on the regulatory compliance of the cost as a percentage of the total revenues in compare to the larger concerns. In some of the other situation it has been seen that the burgeoning costs has been restricted as per the capability to grow and make progress as compared to the larger concerns. The integration of the accounting standards has been has been seen to be deal with the various types of the increasing cost of the small business in Singapore and the increased compliances.
Challenges and Problems in Harmonisation Process
The individual accountants have been seen to adhere to the licenses with the internationally acclaimed law making body. The international council for the accounting has been seen to lack on the various types the aspects which are seen to be related to the make correction on the associated issue and take prosecution actions.
The main form of the problem associated to thee political grouping has been seen evident in the short term. The political grouping is further seen to be applicable to the emerging countries. In several occasions these problems are also evident in the long run.
This particular effect has been seen to be related to the various types to the various associated concerns which are related to the CPA licensing laws. In different situations the various types of the regulation has been seen to be contradicting with the tax laws, securities laws and financial regulations in terms of dictating the accounting principles.
The important driving force for the accounting standard in Singapore has been seen to be based as per the application of the various types the standards which are seen to be associated to the adoption of the standards as prescribed by IASB. IASB has been identified as the independent, standard-setting body of the IFRS. The main objective has been seen to be based on the various types of the objectives of IASB has been identified with the harmonization of the accounting practices as per the formulation of the accounting standards to promote the adoption of worldwide recognition. IFRS has issued several standards which are seen to be set as per the various types the consideration which has been considered as the majority in accounting standard in Singapore. In Singapore the various types of the accounting standards are also referred to as
“Singapore Financial Reporting Standards (SFRS)” which are based on the IFRS. All the companies need to adhere to this standard on or after 1 January 2003.
The main initiative for the harmonisation has been seen with the “Council on Corporate Disclosure and Governance (“CCDG”)” which was seen to be established on 16 August 2002. The main motive of the council has been seen to base on the recommending corporate governance closely modelled with Financial Reporting Standards (“FRSs”). After eventual dissolving of the CCDG, “Accounting Standards Council (ASC)” was seen to be formed, this was responsible for the formulation and promulgation of accounting standards. Since 2003, various initiatives have been further seen to be taken based on the “Singapore Financial Reporting Standards (SFRS)”. The SFRS has been seen to be similar to the adoption to the IFRS. This was seen as main initiative taken by ASC for the convergence of the SAS and eventually SFRS with IFRS for global ensuring comparability and transparency (Requirements, 2017).
Integration Problems in Singapore Accounting Standards
Singapore Press Holdings Ltd. is identified as a multichannel facility for advertising system and this has been further seen to be based on media organisation in Singapore. The main business operations of the business have been identified with print, Internet and news media (Sph.com.sg, 2017).
Prior to the implementation of “Financial Reporting Standards (IFRS)”and SFRS in 2003, the main accounting standard was seen in terms of SAS. In August 2002, the council on the corporate disclosure and the governance was setup from ICPAS, as the main initiative for the FRS. The Advisory Committee was set by the “Ministry of Finance (MOF)” with the “Accountant-General’s Department (AGD)”. This has been issued as per the various types of the circulars prescribed by the standards for SBs (Assb.gov.sg, 2017).
The Singapore Reporting Standard (FRS) 102 has shown payment required for the share based payment which has changed the recognition of share-based transactions, such as expenses associated with transactions and the grants to the employees. After the implementation of the new FRS on or after January 1, 2003, the PPE have been stated at cost less accumulated reduction and impairment losses. In the SAS the fixed assets has been stated as per cost less accumulated depreciation. Another change in the PPE has been for furniture and fittings have been seen in terms of considering estimated useful lives for furniture and fittings for 7-10 years in case of SAS. The revised standard of FRS considers the estimated useful lives for furniture and fittings for 5-10 years (Sph.com.sg, 2017).
The subsidiaries in case of SAS were included from the financial statements based on cost and provision for the diminution in the value other than the consideration of temporary, determination of the individual values. The new standard of FRS considers the interest in the subsidiaries from the company’s balance sheet at cost less impairment losses. In this case the indication of the impairment has been seen to be based on the carrying amount of the investment is assessed and written down value of its recoverable amount. In case of a lower amount, the impairment losses have been considered based on income statement.
In case of the FRS integration it has been seen that the Goodwill arising for the acquisition has been recorded in the balance sheet and evaluated for the purpose of impairment in accordance with FRS 103 – Business combinations which is applicable for the Group in financial year 2005. This included the Goodwill considered for reserves after 1994 FY. In case of SAS treatment SHP had the authority to use internal sources of funds, or a amalgamation of internal resources and external borrowings, to finance the buying or acquisition of ordinary shares.
Conclusion
The important consideration for harmonisation in accounting has been considered based on the concept of comparing the financial statements of same company in other countries. The harmonisation is seen to be important for companies willing to operate in different types of the business environment and in multiple regions globally. The main issues of the harmonisation process have been based on the Cultural Obstacles, Integration Problems, Negative impacts on the small business, Licensing and Enforcement.
References
Accounting Standards for Statutory Boards – Introduction. (2017). Assb.gov.sg. Retrieved 17 August 2017, from https://www.assb.gov.sg/agd-assb-intro.html
Ahmed, A. S., Neel, M., & Wang, D. (2013). Does mandatory adoption of IFRS improve accounting quality? Preliminary evidence. Contemporary Accounting Research, 30(4), 1344–1372. https://doi.org/10.1111/j.1911-3846.2012.01193.x
IASB. (2016). IFRS 16 Leases Basis for Conclusions. IFRS Green Book 2016 Part A.
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Requirements, S. (2017). Singapore Financial Reporting Standards | Rikvin. Rikvin. Retrieved 17 August 2017, from https://www.rikvin.com/compliance/singapore-financial-reporting-standards/
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Singapore Accounting Standards. (2017). Guidemesingapore.com. Retrieved 16 August 2017, from https://www.guidemesingapore.com/business-guides/taxation-and-accounting/accounting-standards/singapore-accounting-standards
SPH Corporate Profile – Singapore Press Holdings. (2017). Sph.com.sg. Retrieved 17 August 2017, from https://sph.com.sg/about-sph/sph-corporate-profile/
SPH Corporate Profile – Singapore Press Holdings. (2017). Sph.com.sg. Retrieved 17 August 2017, from https://www.sph.com.sg/about-sph/sph-corporate-profile/
Sph.com.sg. (2017). [online] Available at: https://www.sph.com.sg/system/misc/annualreport/2004/sph_ar2004.pdf [Accessed 17 Aug. 2017].
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