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Many Singapore firms still have not started looking at adopting new revenue standard: EY
WITH less than a year to the January 1, 2018 implementation deadline, many Singapore firms have not started adopting the new revenue standard, EY said on Thursday.
According to its poll of 53 finance executives in Singapore late November, many face challenges in implementing the Financial Reporting Standard 115 (FRS 115) - which aims to improve the quality and consistency of revenue reporting practices across transactions and industries.
Sixty-two per cent of those polled indicated that they have not started identifying and evaluating the key impact of FRS 115 - the first stage of the adoption process - and only 6 per cent have completed this process. Further, 60 per cent of the respondents share that their organisations have yet to decide which approach - full retrospective or modified retrospective - to adopt. Only 2 per cent said their company was ready for FRS 115 adoption.
Under FRS 115, revenue is recognised either over time or at a point in time, depending on the pattern of transfer of the goods or services to the customer. This is different from the current risks-and-rewards model that requires different treatments depending on the type and form of the transactions.
When it kicks in next year, firms will need to restate the affected comparative financial information as though they have always applied FRS 115 unless they elect not to. However, the latter approach cannot be applied by Singapore companies listed on the Singapore Exchange due to the additional requirement to adopt, for the first time in 2018, Singapore's new financial reporting framework that is identical to International Financial Reporting Standards.
Therefore, listed companies must undertake the procedure of restating comparative financial information that are affected by the application of the new revenue standard.
Non-listed Singapore companies, on the other hand, can choose between full retrospective or modified retrospective approach when adopting FRS 115.
Respondents believe that the areas that will require most time and efforts in the FRS 115 implementation process are management and financial reporting (33 per cent), business processes and practices (18 per cent), information technology (IT) and accounting systems (17 per cent), and internal controls and policies (11 per cent).