27 April 2018
Sections 202A and 202B of the Companies Act, which introduce a new framework whereby directors are able to revise defective financial statements (“Framework”), took effect on 20 April 2018 with the implementation of section 121 of the Companies (Amendment) Act 2014:
- Voluntary revision by directors: The directors of a company may voluntarily revise defective financial statements of the company that do not comply with the Companies Act or Accounting Standards without the need to obtain a court order. This allows directors to correct errors at an earlier opportunity than in the following year’s financial statements. Directors may revise the company’s financial statements in respect of any financial year of the company. Any revision carried out must be confined to those aspects in which the financial statements did not comply with the Companies Act (including compliance with Accounting Standards) and any necessary consequential revisions.
- Alternative enforcement action by ACRA: The Accounting and Corporate Regulatory Authority (“ACRA”) may apply to court for a declaration that the financial statements of a company do not comply with the Companies Act or Accounting Standards and to compel the directors of the company to revise the accounts by court order.
The Framework applies, in the case of a parent company, to the consolidated financial statements and balance-sheet.
The Companies (Revision of Defective Financial Statements, or Consolidated Financial Statements or Balance-sheet) Regulations 2018 (“Regulations”) have been issued on 19 April 2018 to operationalise sections 202A and 202B.
ACRA has also issued a Guidance for Companies (“Guidance”).
These changes provide more impact to the Financial Reporting Surveillance Programme administered by ACRA where selected financial statements of Singapore incorporated companies are reviewed for compliance with the Accounting Standards and Companies Act requirements. When non-compliance is found, directors are requested to remedy it on a timely basis. This facilitates giving investors and other stakeholders a timely and accurate picture of the financial standing of the company.
- Companies (Amendment) Act 2014
- Companies (Amendment) Act 2014 (Commencement) Notification 2018
- Companies (Revision of Defective Financial Statements, or Consolidated Financial Statements or Balance-sheet) Regulations 2018
- ACRA Guidance for Companies - Revision of Defective Financial Statements, or Consolidated Financial Statements or Balance-sheet under sections 202A and 202B of the Companies Act