The preparation of financial statements in Singapore serves several important purposes, which are generally consistent with the global objectives of financial reporting. The primary purposes of the preparation of financial statements in Singapore are as follows:
- Transparency and Accountability: Financial statements offer a clear view of a company’s financial health and ensure accountability in financial management.
- Decision-Making: Investors, creditors, and management rely on these statements for informed decision-making.
- Regulatory Compliance: Companies must follow Singapore’s accounting standards (SFRS or IFRS) when preparing financial statements to meet legal requirements.
- Taxation: Accurate financial statements determine a company’s tax liability.
- Attracting Investment: Well-prepared financial statements make a company more appealing to potential investors and lenders.
- Performance Evaluation: Comparing current and past statements helps evaluate a company’s financial progress and trends.
- Disclosure and Transparency: Statements include crucial disclosures about accounting policies, risks, and uncertainties.
- Stakeholder Communication: Financial statements serve as a common language for sharing financial information with various stakeholders.
- Legal and Regulatory Compliance: Companies must prepare statements to comply with Singapore’s legal and regulatory requirements, including those set by ACRA.