EFFORTS by regulators to improve the quality of financial reporting by Singapore-listed companies are yielding positive results, with directors of companies taking quick action to rectify any issues.
This was announced by the Accounting and Corporate Regulatory Authority (Acra) on Tuesday morning, in its second annual report on its Financial Reporting Surveillance Programme (FRSP).
The FRSP aims to guide companies to meet the requirements in the accounting standards so that investors and other stakeholders can be provided with reliable and meaningful financial statements.
Acra said that a good level of quality in financial reporting was observed, overall, among the listed companies reviewed. In most cases, companies' boards took ownership of financial reporting, with many taking steps to document their deliberations on complex accounting matters.
But, Acra added, there remains room for improvement as a number of non-compliances with the accounting standards were also identified.
A total of 50 sets of financial statements, for the year ended Dec 31, 2014, of listed companies incorporated in Singapore were reviewed. There were 21 instances in which the statements did not comply with accounting standards, and 19 instances in which the reporting could be improved. Acra said that 95 per cent and 63 per cent of these instances, respectively, were rectified - some even before their reviews were concluded.
Kenneth Yap, chief executive of Acra, said: "It is encouraging to note that many directors of listed companies are making the effort to promptly rectify financial reporting gaps identified by Acra."
Companies, however, struggled with the following areas: new consolidation standards; accounting for business acquisitions; impairment of long-lived assets; and fair value of properties.
This was sometimes the result of a company's finance team not understanding or not being alerted to the business rationale of unique arrangements or non-standard contract terms negotiated by the operations team; or directors not being given enough time and opportunity to check if the accounting concurs with their understanding of the business.
Of the 50 companies reviewed this time, Acra issued warning letters to two. Warning letters are issued when there are one or more instances of serious non-compliance. Directors of companies who receive warning letters have to announce it at their next appointment as a director of any Singapore-listed company.