Knowledge Highlights 27 November 2025
ACRA issues Financial Reporting Practice Guidance No. 1 of 2025 on areas of review focus for FY2025 financial statements
On 12 November 2025, the Accounting and Corporate Regulatory Authority (“ACRA”) issued Financial Reporting Practice Guidance No. 1 on Areas of Review Focus for FY2025 Financial Statements (“Practice Guidance”). This Practice Guidance serves as a guide for directors, particularly those who serve on audit committees (“ACs”), in fulfilling their duties as directors. In reviewing the financial statements (“FS”), ACRA advises ACs to exercise heightened vigilance given the prevailing uncertainties in the business environment, particularly those arising from evolving global trade, tariff policies, and climate-related risks, and assess their potential impacts on the FS.
ACRA states that since high quality audits are essential for fostering confidence and trust in financial markets, ACs should engage external auditors early in the audit process to ensure accounting issues are addressed appropriately to comply with the accounting standards.
ACRA’s areas of review focus for FY2025 FS include:
- Navigating through uncertainties: As the global economy continues to face uncertainties from evolving tariff policies and trade disruptions, ACRA advises directors to apply increased scrutiny and professional judgement when reviewing the FS. Further, directors are advised to focus on the following accounting considerations in their review of the FS: (i) going concern assessment; (ii) impairment of assets; (iii) expected credit loss; (iv) provisions and onerous contracts; (v) revenue recognition and contract modification accounting; (vi) fair value measurement; (vii) general disclosure considerations and subsequent events; and (viii) climate change and financial reporting connectivity. Further details on each of these accounting considerations, as well as other specific guidance for directors and ACs, are set out in the Practice Guidance.
- Accounting standards: The Practice Guidance highlights recent and upcoming amendments to the Singapore Financial Reporting Standards (International) (“SFRS(I)”) and focuses on SFRS(I) 18 Presentation and Disclosure in Financial Statements, and SFRS(I) 19 Subsidiaries without Public Accountability: Disclosures, both of which are effective for annual periods beginning on or after 1 January 2027.
- Climate reporting requirements: ACRA and Singapore Exchange Regulation (“SGX RegCo”) have extended the timelines for most climate reporting requirements to give listed companies and large non-listed companies (i.e. non-listed companies with annual revenue of at least S$1 billion and total assets of at least S$500 million) more time to develop their reporting capabilities. The extension takes into consideration varying levels of resources and readiness across companies of different sizes, while maintaining the momentum for climate action and ensuring larger companies continue to lead the implementation efforts. ACRA advises that while the timelines have been extended, companies should put the extension to good use and push forward with assembling the building blocks required to align with the standards of the International Sustainability Standards Board and to produce quality, decision-useful climate reports when the time comes.
- Audit quality: The Practice Guidance highlights quality control (“QC”) inspection outcomes and audit quality indicators (“AQI”):
- With amendments to the Accountants Act 2004 effective from 1 July 2023, ACRA conducts statutory QC inspections of accounting entities (“AEs”). In a QC inspection, ACRA assesses the quality controls of AEs against the requirements of the Singapore Standards on Quality Management. Underlining the importance of the quality controls of AEs in upholding audit quality, SGX RegCo has issued a Guidance Note on Change of Auditors on 19 June 2024 which specifies that ACs should consider the QC inspection outcome of the incoming auditors (among other factors) when assessing the appointment of the incoming auditors.
- To help ACs in ensuring high quality and reliable financial reports, ACRA introduced the AQI Disclosure Framework in 2015 to enhance discussions between ACs and AEs on audit quality matters. In view of the evolving landscape, ACRA will be updating this framework to ensure relevancy, with the refreshed framework expected to be launched in November 2025.
Reference materials
The following materials are available on the ACRA website www.acra.gov.sg:
