Key differences between SFRS and IFRS

IFRS for SMEs

Small and Medium-sized Entities (SMEs)

In December 2010, the Accounting Standards Council issued the Singapore Financial Reporting Standard for Small Entities, which is based on the IFRS for SMEs and includes the description of the scope and applicability of the SFRS for Small Entities.

An entity is eligible to apply the SFRS for Small Entities if it is not publicly accountable, publishes general purpose financial statements for external users, and meets the definition of a ‘small entity’ (for each o fthe previous two consecutive financial reporting periods, with amended application to newly incorporated entities).

An entity qualifies as a small entity if it meets at least two of the three following criteria:

•      Total annual revenue of not more than S$10 million

•      Total gross assets of not more than S$10 million

•      Total number of employees of not more than 50

SFRS for Small Entities applies as an option as an alternative framework to the SFRS for the preparation and presentation of general purpose financial statements of eligible entities to apply for financial periods beginning on or after 1 January 2011.

IAS 16

Property, Plant and Equipment

“For an enterprise which had: revalued its PPE before 1 January 1984 (in accordance with the prevailing accounting standard at the time); or performed any one-off revaluation on its PPE between 1 January 1984 and 31 December 1996 (both dates inclusive), there will be no need for the enterprise to revalue its assets in accordance with paragraph 29 of FRS 16.”

“One-off revaluation” means any instance where an item of PPE was revalued only once between 1 January 1984 and 31 December 1996 (both dates inclusive).

Where an item of PPE has been revalued more than once during this period, the company should: (a) explain why the particular item of PPE should be exempted; and (b) obtain the auditor’s concurrence of the explanation.

Whereas IAS 16 does not include the above exemption.

IAS 27, 28 and IFRS 10

Consolidated Financial Statements and Accounting for Investments in Subsidiaries, Associates and Joint Ventures

The revised FRS 27 and FRS 110 requires the ultimate holding company or any intermediate parent of a company that seeks exemption from consolidation to produce consolidated financial statements that are available for public use. These consolidated financial statements need not comply with any specific accounting framework.

The revised IAS 27 and IFRS 10 requires the ultimate holding company or any intermediate parent of a company that seeks exemption from consolidation to produce consolidated financial statements available for public use that comply with the International Financial Reporting Standards (IFRS).

FRS 28 (2012) is consistent with IAS 28 (2011) in all material aspects, except in one of the conditions for exemption from equity accounting. The dissimilarity is as identified in the revised FRS 27 and FRS 110.

IFRS 7

Financial Instruments: Disclosures

For non-listed companies, FRS 107 is effective for annual periods beginning on or after 1 January 2008, whilst IFRS 7 is effective for annual periods beginning on or after 1 January 2007.

IFRS 9

Financial Instruments

Effective 1 January 2018, it has adopted the final version of IFRS 9 and this will be effective for annual periods beginning on or after 2018.

Members’ Shares in Cooperative Entities and Similar Instruments

IFRS 2

Share-based Payment

Additionally, IFRS 2 will apply to:

1. share-based payment transactions that were granted on or after 7 November 2002 and had not yet vested by 1 January 2005; and
2. share-based payment transactions made before 7 November 2002, which were subsequently modified.

FRS 102 replaces the cut-off grant date for retrospective treatment of equity-settled share-based payment of “7 November 2002” with “22 November 2002”.

IFRIC 15

Agreements for the Construction of Real Estate

INT FRS 115 is consistent with IFRIC 15 in all material aspects, except that INT FRS 115 contains an Accompanying Note that takes into account the legal framework in Singapore that is directly relevant to the application of INT FRS 115 in Singapore and summarises the ASC’s considerations in reaching its consensus on the accounting treatment for a specific type of sale of uncompleted residential properties.

Based on IFRIC 15, an agreement for the construction of real estate

meets the definition of a construction contract, and percentage-of- completion accounting can be used, only when the buyer is able to:

• specify the major structural elements of the design of the real estate before construction begins; and/or
• specify major structural changes once construction is in progress (whether or not it exercises that ability).

If the agreement is not a construction contract, it may be an agreement for the rendering of services if the entity is not required to acquire and supply the construction materials required for the construction. In this situation, the entity may still be able to use percentage-of-completion accounting.

If the agreement is neither a construction contract nor a service contract, it is a contract to supply goods for which IAS 18 should be applied. In this case, the percentage-of-completion accounting can only be applied if the entity transfers to the buyer control and the significant risks and rewards of ownership of the work-in-progress in its current state as construction progresses.

The Accompanying Note to INT FRS 115 states that the standard residential property sales in Singapore that meet the criteria set out in FRS 18.14 would require such sales to be accounted for on a percentage-of-completion method.

However, in some situations specific to the circumstances of a development project as described in paragraph 32, there might be uncertainties that would require the completion of construction method to be applied, consistently with the principles set out in FRS 18 for the treatment of revenue when such uncertainties exist.