Financial reporting in Singapore

World over financial reporting procedures are used to understand the financial activities and position of a business, an entity, or a person. This is done under the stringent regulations of the country (in Singapore, Singapore Financial Reporting Standards (SFRS) by the Accounting Standards Council is the governing law), which dictates how business information such as tax or financial reports are maintained and presented.

Accounting reports of a company comprise its financial reports. These can be either templated regulatory reports required under the law or custom-made documents created to present information for a specific purpose, such as the profitability of a particular product item.

Most businesses in Singapore would be required to prepare accounting reports such as cash flow statements, profit and loss statements, balance sheets, etc.

In accounting, financial reporting usually refers to documents that are used or are required to show the financial health of a company to outsiders such as investors, creditors, or banks. These usually comprise materials such as income statements, balance sheets, quarterly earnings, and annual reports to stockholders or documents about stocks and other securities.

Financial reporting facilitates decisions like credit or lending to the company, investments, or for determining taxation.

Financial reporting is a powerful tool for imparting key financial information about the company to both in-house management and external stakeholders. To keep a tight grasp on the functioning of the business, daily, weekly, or monthly financial reports can be added to the usual quarterly or annual documents. The most common of these are the balance sheet, income statement, and cash flow statement.

Financial reports include four main types of documents –

• Balance sheet - provides information about a company’s assets and liabilities.
• Income statement –shows how much revenue a company earned over a time period.
• Cash flow statements – show inflows and outflows of cash.
• Statement of shareholders’ equity – reports the interests of the company’s shareholders.

The core function of financial reporting is to give a comparable overview and an in-depth understanding of a business’s financial health. These reports are used to make key financial decisions by senior management and are also used by external investors, banks, and creditors for determining a company’s financial position.