The Accounting Standards Committee (ASC), under the Accounting and Corporate Regulatory Authority (ACRA), has finalised significant amendments to FRS 119 Subsidiaries and Small Entities without Public Accountability: Disclosures. The revised Standard, issued in August 2025, broadens the scope of reduced disclosure requirements to include eligible small entities that prepare financial statements in accordance with Singapore Financial Reporting Standards (FRSs).
The amended FRS 119 becomes effective for annual periods beginning on or after 1 January 2027, with early application permitted.
1. Background to the Amendments
Originally issued in 2024, FRS 119 provided a voluntary reduced disclosure framework for subsidiaries without public accountability that applied full FRS recognition, measurement and presentation requirements. Following extensive stakeholder consultation, the ASC identified an opportunity to extend similar benefits to a wider group of entities.
The primary change is a retitling and expansion of the Standard:
- From: Subsidiaries without Public Accountability: Disclosures
- To: Subsidiaries and Small Entities without Public Accountability: Disclosures
This revision now permits application by Singapore entities that:
- Prepare financial statements under full FRSs; and
- Meet the “small entities” criteria under the Singapore Financial Reporting Standard for Small Entities (SFRS for Small Entities).
2. Rationale and Expected Benefits
The amendments are intended to enhance financial reporting efficiency while retaining the robustness of full FRS recognition and measurement principles.
2.1 Benefits for Eligible Entities Currently Applying FRSs
- Reduced disclosure burden will streamline preparation, reduce administrative costs, and shorten financial reporting cycles.
- Review and audit processes may become more efficient due to fewer ancillary disclosures.
2.2 Benefits for Entities Currently Applying the SFRS for Small Entities
- The SFRS for Small Entities has recently undergone major updates, with more revisions expected in future years.
- Transitioning to full FRSs with reduced FRS 119 disclosures may offer a more stable and cost-effective long-term reporting framework.
- Financial statements prepared under full FRSs are generally more familiar to investors and financial institutions, enhancing comparability and credibility.
2.3 Benefits for Users of Financial Statements
- Financial statements will be more concise and focus on decision-relevant, material information.
- Improved comparability across entities preparing FRS-based financial statements, even when applying reduced disclosures.
3. Practical Implications for Preparers
3.1 Eligibility Assessment
Entities must evaluate whether they meet:
- The definition of having no public accountability; and
- The quantitative thresholds for classification as a “small entity”.
Judgment may be required for groups with mixed subsidiary characteristics or borderline financial metrics.
3.2 Transition Considerations
For first-time adopters:
- Transitioning from SFRS for Small Entities to full FRSs may involve adjustments to accounting policies and potential restatements.
- System updates and chart-of-account modifications may be necessary to accommodate FRS recognition and measurement differences.
- Entities should assess whether applying FRS 119 early (before 2027) could reduce transitional effort.
3.3 Audit and Documentation Requirements
- Although disclosures are reduced, recognition and measurement remain identical to full FRSs, so technical rigour in accounting treatments must be maintained.
- Preparers should ensure documentation supports judgments, estimates, and policy applications.
- Auditors may require updated engagement planning to reflect changes in presentation and disclosure scope.
3.4 Stakeholder Communication
Management should consider briefing:
- Shareholders
- Boards and audit committees
- Lenders and financial institutions
on expected differences in financial statement format and granularity.
4. Cost–Benefit Assessment
As FRS 119 remains voluntary, entities should weigh:
- Cost savings (staff time, audit effort, disclosure preparation)
vs. - Transition costs (policy change, training, system adjustments)
Industries with complex accounting models—such as construction, real estate, and investment holdings—should consider whether reduced disclosure meaningfully reduces reporting effort.
5. Recommendations for Firms and Practitioners
Firms are encouraged to:
- Inform clients who may qualify for the amended FRS 119.
- Provide targeted training on:
- Reduced disclosure requirements
- Transition from SFRS for Small Entities
- First-time adoption of full FRSs
- Support eligibility assessments with technical analysis and scenario planning.
Source: ACRA, 8 September 2025