impact of new/ revised ifrs / frs on singapore listed companies

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impact of new/ revised ifrs / frs on singapore listed companies

ACCOUNTANTS FOR BUSINESS

IMPACT OF NEW/ REVISED IFRS / FRS

ON SINGAPORE LISTED COMPANIES

A JOINT REPORT BY ACCA AND DELOITTE SINGAPORE


ACKNOWLEDGEMENTS

ACCA and Deloitte Singapore thank the respondents ong>ofong>

this online survey for providing their responses.

CONFIDENTIALITY

This survey was conducted on a confidential basis.

Accordingly, we do not provide information on individual

survey responses.

CONTACT

For any queries regarding the content ong>ofong> this report,

please contact:

ACCA Singapore

Michelle Seth-Langbein

Head, Marketing

Contact number: +65 6637 8178

Email address: michelle.seth-langbein@accaglobal.com

The information contained in this publication is provided

for general purposes only. While every effort has been

made to ensure that the information is accurate and up

to date at the time ong>ofong> going to press, ACCA and Deloitte

Singapore accept no responsibility for any loss which

may arise from information contained in this publication.

No part ong>ofong> this publication may be reproduced, in any

format, without prior written permission ong>ofong> ACCA and/or

Deloitte. © ACCA, Deloitte February 2012

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Content

Purpose ong>ofong> Survey ...................................................................................................................... 2

Key Findings ............................................................................................................................. 3

Terms ong>ofong> Reference .................................................................................................................... 4

Findings:

Overall Readiness ............................................................................................................... 5

Impact - IFRS/FRS ......................................................................................................... 6-10

Impact - Sustainability Reporting ................................................................................... 11-13

Prong>ofong>ile ong>ofong> Respondents ........................................................................................................ 14-16

Summary & Conclusion ........................................................................................................... 17


Purpose ong>ofong> Survey

ACCA and Deloitte Singapore strongly support the establishment

and operation ong>ofong> a global set ong>ofong> reporting standards. To be realistic,

however, we are aware that we can approach our destination

only with incremental advances. Furthermore, we realize that the

continued growth and acceptance ong>ofong> the International Financial

Reporting Standards (IFRS) across the world will depend on how

well companies are able to understand and implement the IFRS

in a way that is ultimately beneficial to businesses as a whole.

This survey explores issues, which when addressed, is expected

to ensure that the corporate reporting environment, while being

robust, remains business friendly.

In 2011, the International Accounting Standards Board (IASB)

issued a number ong>ofong> ong>newong>/ong>revisedong> financial reporting standards and

exposure drafts which are effective as early as January 2013. With

the exception ong>ofong> IFRS 9, the Accounting Standards Council (ASC)

in Singapore has adopted the ong>newong>/ong>revisedong> Standards issued by

IASB in their entirety. In the same year, the Singapore Exchange

(SGX) issued guidance on sustainability reporting encouraging all

listed companies in Singapore to include environmental, social and

governance issues in their annual reports.

The implementation ong>ofong> these pronouncements could have a

significant ong>impactong> on reporting entities, not only with respect to

the numbers appearing in their annual reports but also on various

processes, systems and resources; and perhaps even changes to

their business model. These may require the re-training ong>ofong> staff

and revamping reporting systems to capture different data; to

potentially changing remuneration and other policies to avoid

adverse reactions from stakeholders and unintended ong>impactong>s on

the results reported. Changes may also require modifications to the

company’s internal reporting framework and information generated

for tax purposes.

CEOs, CFOs and other executives will need to inform the market

and media as to what the different numbers in the annual report

mean and prepare investors and analysts for any significant

changes ahead. Differences between old and ong>newong> accounting

policies and treatments will need to be explained with care. This is

especially true in the current economic climate which anticipates

slow growth and is rife with uncertainties.

The objective ong>ofong> this survey is to gather information on the ong>impactong>

ong>ofong> the various ong>newong>/ong>revisedong> pronouncements on listed corporations

and explore the implications ong>ofong> the findings. In particular, we

were interested in the state ong>ofong> readiness ong>ofong> listed companies to

implement these changes and their overall assessment ong>ofong> the

ong>impactong> ong>ofong> the required changes. Which standards are most likely

to result in the greatest ong>impactong>s on the annual report? What

challenges do companies face in implementing these changes

within their companies? What degree or types ong>ofong> assistance should

be given to companies by regulators, standard-setters, prong>ofong>essional

accounting bodies and accounting firms to ensure smooth transition

and a high degree ong>ofong> compliance with international standards?

2

Overall, the survey shows that companies are generally lukewarm

about the upcoming changes as they face various challenges

within their organisations. This includes a lack ong>ofong> organisational

motivation and budgets to implement the various changes. While

this is true for the implementation ong>ofong> ong>newong> or ong>revisedong> IFRS/FRS,

the case is more acute for sustainability reporting. The survey

feedback shows that this may partly be due to the non-mandatory

framework for sustainability reporting. The main challenge pointed

to concerns relating to the retraining and development ong>ofong> staff to

fully appreciate and implement these changes.

As the economy is entering into a phase ong>ofong> slower growth in

2012/13 and volume ong>ofong> transactions decrease, downtime is likely

to increase. Businesses may take this as an opportunity to engage

their accounting and finance staff in both internal and external

courses to develop their understanding and appropriate skills in

implementing the relevant IFRS/FRS and sustainability reporting.

Training providers must also endeavor to ong>ofong>fer training which are

more specifically oriented towards these ong>newong> standards and place

a special emphasis on ensuring that trainees are genuinely able to

understand and apply these increasingly sophisticated ong>newong>/ong>revisedong>

pronouncements.

Based on feedback in this survey, it appears that accounting firms

and prong>ofong>essional accounting bodies play critical roles in updating

and assisting companies to implement these changes. With the

growing interest in Integrated Reporting, the apathy towards

sustainability reporting will also need to be addressed.

The survey findings suggest that businesses are likely to need

assistance from accounting firms, prong>ofong>essional accounting bodies

and other experts in the following areas:

� Providing or facilitating comprehensive training and development

for finance and accounting staff in businesses on the IFRS/FRS

and sustainability reporting

� Providing updates on these pronouncements, assessing their

implications and highlighting the probable ong>impactong>s ong>ofong> these

pronouncements on businesses

� Engaging CEOs and key decision makers in business on issues

relating to these pronouncements so as to inculcate an

appreciation ong>ofong> the relevant reporting issues at a strategic level.

A review ong>ofong> the key findings follows.


Key Findings

1. Overall, there appears to be a relatively lower level ong>ofong>

readiness with respect to changes that may be required to IT

systems, human resources, the business model or strategy

as a result ong>ofong> the ong>impactong> ong>ofong> changes in the pronouncements.

However, companies appear better prepared in terms ong>ofong>

changes to business and accounting processes.

None ong>ofong> the respondents have yet to assess IFRS 12 / FRS

112: Disclosure ong>ofong> Interests in Other Entities although the

standard was considered to have a significant ong>impactong> to

the Group.

2. Less than half (41%) ong>ofong> the respondents agreed with all the

changes or expected changes required by the IFRS/FRS.

The majority were neutral i.e. they neither agreed nor

disagreed with the changes. It is possible that this is because

they still have not reviewed completely or digested the

implications ong>ofong> the various requirements.

3. Out ong>ofong> the ong>newong>/ong>revisedong> standards, the majority ong>ofong> respondents

expected significant ong>impactong> from IFRS 9: Financial

Instruments, IFRS 10 / FRS 110: Consolidated Financial

Statements and IFRS 13 / FRS 113: Fair Value Measurements.

IFRS 9 was considered to have the most ong>impactong> on the

financial statements/annual report, followed by IFRS 10 / FRS

110 and IFRS 13 / FRS 113.

4. More specifically, the main ong>impactong> on financial instruments

was seen to arise from issues relating to impairment

assessments, followed by the classification ong>ofong> assets and

liabilities. Interestingly, the majority were neutral regarding

hedge accounting. With regards to the preparation ong>ofong>

consolidated financial statements, respondents generally

agreed that the ong>revisedong> definition ong>ofong> control as set out in

IFRS 10 / FRS 110 would not change their Group structures.

The majority ong>ofong> respondents also generally do not expect the

accounting treatment for investments in joint ventures to

change in their Group’s financial statements with the

adoption ong>ofong> IFRS 11 / FRS 111. (However, it has been

noted above that IFRS 11 / FRS 111 has not yet been

assessed by the majority ong>ofong> respondents in its entirety. Hence,

a more complete assessment may be required.)

5. The majority ong>ofong> respondents relied to a significant extent

on their external auditors and prong>ofong>essional accounting

bodies to provide them with updates on the IFRS/FRS.

When it came to the actual implementation ong>ofong> the changes

ACCOUNTANTS FOR BUSINESS:

IMPACT OF NEW/REVISED IFRS/FRS ON SINGAPORE LISTED COMPANIES

or assessing the ong>impactong>, one third ong>ofong> respondents, perhaps not

unexpectedly, relied on the Big Four accounting firms and

other external specialists. A significant proportion (28%) also

relied on internal technical experts. A similar proportion

(28%), however, said that they had no concrete plans and

preferred to defer their assessments until the situation became

clearer. Considering that the majority ong>ofong> companies responding

were from the SGX Mainboard, this gives us some cause for

reflection.

6. Practically all changes arising from ong>newong> IFRS/FRS were

expected to incur less than S$1 million in terms ong>ofong> their costs

associated with changes in each ong>ofong> the following areas:

processes, IT systems, human resources, the business model

or strategy. For sustainability reporting, none ong>ofong> the

respondents allocated any budget or expect to incur any

incremental costs for its implementation.

7. Respondents identified training and development ong>ofong> staff as

the main challenge to implementing the various changes

arising from ong>newong>/ong>revisedong> IFRS/FRS and sustainability

reporting. A lack ong>ofong> an adequate budget (allocated time,

costs and manpower resources) was also cited. This

was probably related to a lack ong>ofong> ‘management buy-in’ and

organisational motivation as perceived by some respondents.

For sustainability reporting, the fact that it was not mandatory

was cited as one ong>ofong> the reasons for the lack ong>ofong> motivation.

8. Generally, respondents assessed the ong>impactong> ong>ofong> the Guide

to Sustainability Reporting for Listed Companies on the

annual report as low. The majority ong>ofong> respondents (63%)

do not expect to include the consideration and performance

ong>ofong> environmental, social and governance issues in their

2011/12 annual reports. The main reason for the less than

enthusiastic take-up appears to be a lack ong>ofong> understanding

or familiarity with sustainability reporting. A significant

percentage felt that it was not relevant to their Group.

KEY FINDINGS 3


Terms ong>ofong> Reference

This report presents the findings ong>ofong> a survey conducted jointly by ACCA and Deloitte Singapore.

OBJECTIVE & SCOPE OF SURVEY

The objective ong>ofong> the survey was to gather information on the ong>impactong>

ong>ofong> the following pronouncements on listed corporations.

1. IFRS 9: Financial Instruments

2. IFRS 10 / FRS 110: Consolidated Financial Statements

3. IFRS 11 / FRS 111: Joint Arrangements

4. IFRS 12 / FRS 112: Disclosure ong>ofong> Interests in Other Entities

5. IFRS 13 / FRS 113: Fair Value Measurements

6. ED on Revenue from Contracts with Customers

7. ED on Leases

8. Guide to Sustainability Reporting for Listed Companies

(2010/11) issued by SGX.

(The Accounting Standards Council (ASC) had deliberated the

adoption ong>ofong> IFRS 9 at its meeting in November 2009 and decided

to defer its adoption in Singapore in view ong>ofong> further changes

expected to the Standard. In December 2011, IASB deferred the

mandatory effective date ong>ofong> IFRS 9 to annual periods beginning on

or after 1 January 2015.)

TERMINOLOGY

IFRS: International Financial Reporting Standard issued by the

International Accounting Standards Board (IASB)

FRS: Financial Reporting Standards issued by the Accounting

Standards Council (ASC).

ED: Exposure Draft on financial reporting issued by ASC/IASB.

For the purposes ong>ofong> this report, the term IFRS/FRS will include

all IFRS, FRS and EDs included in the scope above. The

term pronouncements will include, additionally, the Guide to

Sustainability Reporting for Listed Companies.

Integrated Reporting: Integrated Reporting refers to reporting

which brings together material information about an organisation’s

strategy, governance, performance and prospects in a way that

reflects the commercial, social and environmental context within

which it operates. It provides a clear and concise representation ong>ofong>

how an organization demonstrates stewardship and how it creates

and sustains value.

4

For more details on the pronouncements included in the Scope

above and terminology, please visit these websites:

www.iasplus.com

www.iasb.org

www.asc.gov.sg

www.sgx.com

www.theiirc.org.

METHODOLOGY

Survey

The survey was conducted in November-December 2011 using an

online questionnaire which was sent out to 570 companies listed

on the Singapore Exchange (SGX).

As the respondents to the survey are allowed to pass over

particular questions, the number ong>ofong> responses varies from question

to question. The maximum number ong>ofong> responses received for a

single question in this survey was 25. The relatively small number

ong>ofong> respondents in this survey will have to be taken into account

when interpreting the findings and extrapolating it to the whole

population ong>ofong> listed companies.

Report

The responses were consolidated to highlight the main themes

in this report and the actual survey question, where appropriate,

are captioned in the relevant table/figure. As such, the referenced

question numbers in this report do not necessarily run in sequence

and not all questions are captioned. The report cites unattributed

direct and paraphrased quotations, which respondents ong>ofong>fered on

a confidential basis, selectively, to illustrate various themes and

opinions.

PROFILE OF RESPONDENTS

The majority ong>ofong> respondents were CFOs from companies that were

listed on the SGX Mainboard with annual group turnovers ong>ofong> less

than S$500 million. A detailed analysis is given towards the end ong>ofong>

this report.


Overall Readiness

The majority ong>ofong> respondents (13 out ong>ofong>

22) agreed (or strongly agreed) that they

were ready for changes brought about

by ong>newong> or ong>revisedong> pronouncements with

regards to changes in processes. These

include all changes to information flows

and work processes, both manual and

automated, in anticipation ong>ofong> changes

required at the effective dates ong>ofong> the

relevant pronouncements, excluding

significant overall changes to IT systems.

In contrast, respondents were neutral about

readiness with respect to changes in human

resources.

Overall, except for changes to processes,

there appears to be a lower level ong>ofong>

readiness with respect to modifications

required to IT systems, human resources,

the business model or strategy as a

result ong>ofong> the ong>impactong> ong>ofong> changes in the

pronouncements.

The relatively small number ong>ofong> respondents

may also indicate an overall lower level ong>ofong>

readiness. Companies who are on top ong>ofong>

the changes are more likely to respond and

report than those companies who may have

to admit they are running behind.

The majority ong>ofong> respondents (77%) have

allocated less than 12 months to prepare

for changes in the pronouncements.

ACCOUNTANTS FOR BUSINESS:

IMPACT OF NEW/REVISED IFRS/FRS ON SINGAPORE LISTED COMPANIES

25

20

15

10

5

0

Figure 1

Your Group is ready for the changes brought about by the ong>newong> or ong>revisedong> Financial Reporting

Standards and Sustainability Reporting, in terms ong>ofong>:

IT System change

Human resource

change

Process change Business model or

strategy change

Figure 2

Strongly disagree

Disagree

Neither agree nor disagree

Agree

Strongly agree

On average, how long did your Group spend or will spend in getting ready

for the requirements set out in the relevant Financial Reporting Standards

and Sustainability Reporting?

More than 2 years

14%

1 to 2 years

9%

6 to 12 months

50%

Less than 6 months

27%

OVERALL READINESS 5


Impact - IFRS/FRS

Less than half (41%) ong>ofong> the respondents

agreed with all the changes or expected

changes required by the IFRS/FRS. The

majority were neutral i.e. they neither

agreed nor disagreed with the changes. It is

possible that this is because they still have

not reviewed completely or digested the

implications ong>ofong> the various requirements.

IMPACT AS PERCEIVED BY

RESPONDENTS

With regards to the expected ong>impactong> on

the Group’s financial statements/annual

reports, the majority ong>ofong> respondents

expected significant ong>impactong> from IFRS 9:

Financial Instruments, IFRS 10 / FRS 110:

Consolidated Financial Statements and IFRS

13 / FRS 113: Fair Value Measurements.

This is evidenced by the observation that

these standards received the highest

cumulative responses in the ‘Strongly agree’

or ‘Agree’ columns (see Table 1).

6

Figure 3

Overall, your Group welcomes the changes as proposed or stated in the

ong>newong> or ong>revisedong> Financial Reporting Standards.

Agree

41%

Table 1

Disagree

14%

Neither agree nor

disagree

45%

The following Financial Reporting Standards / Exposure Drafts are expected to have significant

ong>impactong> to your Group financial statements / annual reports.

Strongly Disagree Neither Agree Strongly Response

disagree

agree

nor

disagree

agree Count

ED on Revenue from

Contracts with Customers

3 2 6 7 0 18

ED on Leases 2 5 5 6 0 18

IFRS 9: Financial

Instruments

0 1 5 9 3 18

IFRS 10 / FRS 110:

Consolidated Financial

Statements

0 0 6 12 0 18

IFRS 11 / FRS 111: Joint

Arrangements

3 5 6 4 0 18

IFRS 12 / FRS 112:

Disclosure ong>ofong> Interests in

Other Entities

1 1 5 11 0 18

IFRS 13 / FRS 113: Fair

Value Measurements

0 1 3 11 3 18


Impact - IFRS/FRS

IFRS 9: Financial Instruments was

considered to have the most ong>impactong> on

the financial statements/annual report (see

Table 2), followed by IFRS 10 / FRS 110:

Consolidated Financial Statements and IFRS

13 / FRS 113: Fair Value Measurements,

based on the cumulative responses in the

top four ranks (i.e. from ‘1’ to ‘4’).

The Accounting Standards Council (ASC)

has decided to defer the adoption ong>ofong> IFRS 9

while IFRS 10 / FRS 110 will be effective

for annual periods beginning on or after 1

January 2013.

Respondents have therefore IFRS 10 / FRS

110 in their immediate view while taking

cognisance ong>ofong> the probable changes relating

to IFRS 9. This explains the higher number

ong>ofong> responses for IFRS 10 / FRS 110 in the

top rank (designated ‘1’) as compared to

IFRS 9, which received the highest number

ong>ofong> responses in the next highest rank

(designated ‘2’).

Interestingly, the ED on Revenue from

Contracts with Customers and ED on Leases

were expected to have only a moderate

ong>impactong> on the financial statements/annual

report. This may be partly due to the fact

that the final form ong>ofong> the corresponding

standards have not been finalised and the

full ong>impactong> may therefore be difficult to

ascertain at the date ong>ofong> this survey.

ACCOUNTANTS FOR BUSINESS:

IMPACT OF NEW/REVISED IFRS/FRS ON SINGAPORE LISTED COMPANIES

Table 2

Rank the following Financial Reporting Standards / Exposure Draft (from 1 to 8; 1 - Most

ong>impactong>; 8 - Least ong>impactong>) that have the most to least ong>impactong> on your financial statements /

annual reports.

1 2 3 4 5 6 7 8 Response

Count

ED on Revenue

Contracts with

Customers

2 1 3 2 3 1 1 4 17

ED on Leases 2 1 1 4 2 3 1 2 16

IFRS 9: Financial

Instruments

1 9 4 1 0 0 0 1 16

IFRS 10 / FRS 110:

Consolidated Financial

Statements

6 0 2 3 1 3 2 0 17

IFRS 11 / FRS 111:

Joint Arrangements

1 1 1 1 3 4 3 3 17

IFRS 12 / FRS 112:

Disclosure ong>ofong> Interests

in Other Entities

0 0 2 5 4 3 1 1 16

IFRS 13 / FRS 113:

Fair Value

Measurements

3 3 3 0 1 2 5 0 17

IMPACT - IFRS/FRS 7


Impact - IFRS/FRS

FINANCIAL INSTRUMENTS

The main ong>impactong> on financial instruments

was seen to relate to impairment assessment,

followed by the classification ong>ofong> assets and

liabilities. Interestingly, the majority were neutral

regarding hedge accounting. (see Table 3)

CONSOLIDATED FINANCIAL STATEMENTS

Except for one respondent (out ong>ofong> 16),

all other respondents assessed that with

the ong>revisedong> definition ong>ofong> control set out in

IFRS 10 / FRS 110 Consolidated Financial

Statements, they do NOT expect the Group

structure to change as a result (for example,

a situation where entities may need to be

recognised/derecognised as subsidiaries/

associates/joint arrangements.)

The majority ong>ofong> respondents (75%) assessed

that with the adoption ong>ofong> IFRS 11 / FRS 111

Joint Arrangements, they do NOT expect the

accounting treatment for investments in joint

ventures to change in their Group’s financial

statements (for example, a situation where

the accounting treatment may be changed

from proportionate shares ong>ofong> assets,

liabilities, expenses and income to equity

accounting; or vice versa).

IMPLEMENTATION GUIDANCE AND

SUPPORT

The majority ong>ofong> respondents relied

considerably more on their external auditors

and prong>ofong>essional accounting bodies to

provide them with updates on the IFRS/FRS,

than getting direct updates from standard

setters or internal technical experts. This

observation is based on the cumulative

responses in the top three ratings (i.e. from

‘1’ to ‘3’ in Table 4).

8

Table 3

The following sections ong>ofong> IFRS 9: Financial Instruments are assessed to have significant ong>impactong>

on your Group financial statements:

Strongly Disagree Neither Agree Strongly Impact Response

disagree

agree or

agree yet to be Count

disagree

assessed

Measurement

and

classification ong>ofong>

financial assets

2 0 5 5 3 1 16

Measurement

and

classification ong>ofong>

financial

liabilities

0 0 6 6 2 2 16

ED on

impairment

0 1 3 7 2 3 16

ED on hedging 0 2 7 2 2 3 16

ED on ong>ofong>fsetting

financial assets

and financial

liabilities

0 0 6 6 1 3 16

Table 4

To what extent do you depend on the following sources to provide you with updates on

IFRS/FRS? (Please rate from 1 to 5; 1 - Significant extent; 5 - No relevance.)

1 2 3 4 5 Response

Count

Updates from standard

setters (IASB/ASC)

4 3 5 4 2 18

Updates from external

auditors

9 5 1 1 2 18

Updates from prong>ofong>essional

accounting bodies

(ACCA,CPA Australia,

ICAEW, ICPAS or others)

7 4 5 1 1 18

Internal technical expert 5 4 2 2 5 18


Impact - IFRS/FRS

In terms ong>ofong> assessing the ong>impactong> ong>ofong> the

changes and actual implementation, one

third ong>ofong> respondents relied on the Big

Four accounting firms and other external

specialists. A slightly lower but still

significant proportion (28%) relied on

internal technical experts.

A similar proportion (28%), however,

said that they have no concrete plans and

prefer to defer their assessments until the

situation becomes clearer. Considering

that the majority ong>ofong> companies responding

were from the SGX Mainboard, this gives

us some cause for reflection. There could

possibly be a combination ong>ofong> factors

resulting in this attitude, some ong>ofong> which are

reflected in the Challenges section below.

The two main standards that respondents

have started to assess the ong>impactong> on are

IFRS 10 / FRS 110: Consolidated Financial

Statements and IFRS 13 / FRS 113: Fair

Value Measurements.

It is interesting to note that none ong>ofong> the

respondents have started to assess IFRS 12

/ FRS 112: Disclosure ong>ofong> Interests in Other

Entities, although it was considered to

have a significant ong>impactong> to the Group (see

Table 1, above). The majority have not yet

begun assessing IFRS 11 / FRS 111: Joint

Arrangements.

IMPLEMENTATION COSTS

The expected cost ong>ofong> implementing the

changes brought about by the IFRS/FRS

were expected to be less than S$1 million

for each identified area ong>ofong> ong>impactong> (see Table 5).

None ong>ofong> the respondents expected to incur

more than S$1million for each identified area.

ACCOUNTANTS FOR BUSINESS:

80%

70%

60%

50%

IMPACT OF NEW/REVISED IFRS/FRS ON SINGAPORE LISTED COMPANIES

Percent Response

40%

30%

20%

10%

0%

IFRS 9: Financial

Instruments

Figure 4

How does your Group intend to implement the changes or assess the

ong>impactong> as set out in the ong>newong> or ong>revisedong> Financial Reporting Standards?

Others

11%

Use ong>ofong> internal

technical experts

28%

To engage external

specialists (e.g.

Big-4. consulting

firm) 33%

Figure 5

Table 5

Wait and see, no

concrete plans as yet

28%

Please indicate which ong>ofong> the following Financial Reporting Standards has

your Group started to assess the ong>impactong> on the financial statements:

(please select all that apply):

IFRS 10 / FRS 110:

Consolidated

Financial Statements

IFRS 11 / FRS 111:

Joint Arrangements

IFRS 12 / FRS

112: Disclosure ong>ofong>

Interests in Other

Entities

Less than S$

1million

(Number ong>ofong>

responses)

IT System change 6

Human resource change 7

Process change 7

Business model or strategy change 6

IFRS 13 / FRS 113:

Fair Value

Measurements

IMPACT - IFRS/FRS 9


Impact - IFRS/FRS

CHALLENGES – IFRS/FRS

The main challenge to implementing

the various changes arising from ong>newong>/

ong>revisedong> IFRS/FRS related to the training

and development ong>ofong> staff. A lack ong>ofong> an

adequate budget (allocated time, costs

and manpower resources) was also cited.

This was probably related to a lack ong>ofong>

‘management buy-in’ perceived by some

respondents.

Several respondents, included in ‘Others’,

expressed concerns over processes

relating to the fair valuation ong>ofong> unquoted

investments. Some were concerned about

the standards not being sufficiently specific

or localised.

The image to the right shows the

magnitude ong>ofong> the responses relative to the

various concerns (as included in Figure

6, above); with the size ong>ofong> the font being

proportionate to the degree ong>ofong> concern.

10

Others, 20%

Management Buyin,

10%

Figure 6

System &

Processes,

10% Manpower

Resources,

10%

Figure 7

Staff knowledge &

Training 32%

Time & Costs, 18%


Impact - Sustainability Reporting

IMPACT ON FINANCIAL STATEMENTS/

ANNUAL REPORT

No costs are expected to be incurred

(or have been allocated) for any

implementation ong>ofong> sustainability reporting.

When respondents were asked to rank the

pronouncements in terms ong>ofong> their perceived

ong>impactong> on the financial statements/annual

report, the Guide to Sustainability Reporting

for Listed Companies and IFRS 11 / FRS

111: Joint Arrangements were identified to

have the least ong>impactong>. In both cases, the

highest number ong>ofong> responses was received

in the lower half ong>ofong> the ranking i.e. from

ranks ‘5’ to ‘8’. The table on the right

shows the responses to the implementation

ong>ofong> sustainability reporting.

Furthermore, the majority ong>ofong> respondents

(63%) do NOT expect to include the

consideration and evaluation ong>ofong> relevant

environmental, social and governance

issues in their 2011/2012 annual reports.

Nevertheless, a significant 37% responded

that they will be including the consideration

and performance ong>ofong> environmental, social

and governance issues in the 2011/2012

annual reports.

ACCOUNTANTS FOR BUSINESS:

IMPACT OF NEW/REVISED IFRS/FRS ON SINGAPORE LISTED COMPANIES

Rank the following (from 1 to 8; 1 - Most ong>impactong>; 8 - Least ong>impactong>) that have the most to least

ong>impactong> on your financial statements / annual reports.

Answer Options 1 2 3 4 5 6 7 8 Response

Count

Guide to Sustainability

Reporting for Listed

Companies

Table 6

1 0 1 1 3 1 3 6 16

Figure 8

Will your Group include the consideration and performance ong>ofong>

environmental, social and governance issues in the 2011/2012 annual

report?

No

63%

Yes

37%

IMPACT - SUSTAINABILITY REPORTING 11


Impact - Sustainability Reporting

The main reason for the less than

enthusiastic take-up appears to be a

lack ong>ofong> understanding and availability

ong>ofong> in-house expertise in the area ong>ofong>

sustainability reporting. Other reasons cited

by respondents include the perception that

certain aspects ong>ofong> sustainability reporting

are not relevant to their reporting entities,

the fact that sustainability reporting is

not compulsory, and the belief that costs

in reporting outweigh any benefits such

reporting will bring.

CHALLENGES – SUSTAINABILITY

REPORTING

The main challenge to implementing

sustainability reporting, according to the

respondents to the survey, is the lack ong>ofong>

staff knowledge and training to develop

the necessary expertise. Staff resources,

time and costs allocated to sustainability

reporting were also considered lacking.

Respondents acknowledged that there was

no push within the organisation to embark

on sustainability reporting as it is not

mandatory.

12

Response Percent

Hard to quantify the

ong>impactong>, 5%

Figure 9

Your Group is not planning to include sustainability reporting in the 2011/2012 annual

report because

90%

80%

70 %

60%

50%

40%

30%

20%

10%

0%

sustainability reporting

is voluntary

certain areas,

such as social and

environmental issues

are not relevant to our

Group

the costs required

to report on

sustainability

issues outweigh the

benefits

Others, 17%

Lack ong>ofong> motivation

(Not compulsory),

17%

Figure 10

Time & Costs, 17%

our Group currently our Group is in the others (please specify)

has limited expertise process ong>ofong> developing

in this area ong>ofong> a system to track and

reporting collate information for

sustainability reporting

and implementation is

not expected to be ready

by 2012

Staff Knowledge &

Training, 24%

Manpower

Resources, 20%


Impact - Sustainability Reporting

The image to the right shows the

magnitude ong>ofong> the responses relative to the

various concerns (as included in Figure

10, above); with the size ong>ofong> the font being

proportionate to the degree ong>ofong> concern.

ACCOUNTANTS FOR BUSINESS:

IMPACT OF NEW/REVISED IFRS/FRS ON SINGAPORE LISTED COMPANIES

Figure 11

IMPACT - SUSTAINABILITY REPORTING 13


Prong>ofong>ile ong>ofong> Respondents

The majority ong>ofong> respondents were CFOs

from mainboard listed corporations with

group annual turnover ong>ofong> less than S$500

million.

(a) Job role

The respondents included 16 CFOs (or

Financial Controllers) and 9 Finance

Mangers (and Accountants) ong>ofong> listed

corporations.

(b) Market

Most ong>ofong> the respondents (88%) were from

the SGX Mainboard. Specifically 20 were

from SGX Mainboard (primary listing) and 2

from SGX Mainboard (secondary listing). 3

respondents were from the Catalist.

14

Figure 12

What is your role in your listed Company?

Finance Manager /

Accountant 36%

Figure 13

CFO / Financial

Controller

64%

Select the market which your company is listed on:

SGX Mainboard

(secondary listing)

8%

Catalist

12%

SGX Mainboard

(primary listing)

80%


Prong>ofong>ile ong>ofong> Respondents

(c) Sector

Most ong>ofong> the respondents were from the

Finance and Services Sectors.

ACCOUNTANTS FOR BUSINESS:

IMPACT OF NEW/REVISED IFRS/FRS ON SINGAPORE LISTED COMPANIES

Figure 14

Select the sector in which your listed company is operating in:

Transport/Storage/

Communications

8%

Properties

4%

Multi-Industry

4%

Services

20%

Manufacturing

16%

Table 7

Agriculture

4%

Construction

16%

Finance

28%

Included below is the breakdown ong>ofong> the number ong>ofong> respondents from the various sectors:

Finance 7

Services 5

Manufacturing 4

Construction 4

Others 5

PROFILE OF RESPONDENTS 15


Prong>ofong>ile ong>ofong> Respondents

(d) Annual Turnover

The majority ong>ofong> the respondents were

from listed corporations with group annual

turnover ong>ofong> less than S$500 million.

16

Between S$500million

and less than

S$1billion

8%

Figure 15

On average, what has been your Group’s annual turnover for the past 3 years?

Between S$100million

and less then

S$500million

24%

Less than S$50million

28%

Between S$50million

and less than

S$100million

40%


Summary & Conclusion

Overall Readiness

Overall, except for changes to processes, there appears to be a

relatively lower level ong>ofong> readiness with respect to modifications

that may be required to IT systems, human resources, the

business model or strategy as a result ong>ofong> the ong>impactong> ong>ofong> changes

in the pronouncements. It would appear that accounting and

other processes would be the immediate concern for most finance

departments as they can be more easily and quickly modified.

More strategic modifications relating to strategic management

information systems and sensitive human resource decisions have

been postponed or have been perceived to be not immediately

required.

Less than half ong>ofong> the respondents agreed with all the changes or

expected changes required by the IFRS/FRS. The majority were

neutral i.e. they neither agreed nor disagreed with the changes.

It is possible that this is because they still have not reviewed

completely or digested the implications ong>ofong> the various requirements.

Impact on Financial Statements

The majority ong>ofong> respondents expected significant ong>impactong> from

IFRS 9: Financial Instruments, IFRS 10 / FRS 110: Consolidated

Financial Statements and IFRS 13 / FRS 113: Fair Value

Measurements. IFRS 9 was considered to have the most ong>impactong>

on the financial statements /annual report (see below), followed

by IFRS 10 / FRS 110 and IFRS 13/ FRS 113. The main ong>impactong>

on financial instruments was seen to arise from issues relating to

impairment assessments, followed by the classification ong>ofong> assets

and liabilities. Interestingly, the majority were neutral regarding

hedge accounting.

Impact on Costs

Practically all changes arising from ong>newong> IFRS/FRS were expected

to incur less than S$1 million in terms ong>ofong> their costs associated

with changes in each ong>ofong> the following areas: processes, IT

systems, human resources, the business model or strategy. No

costs are expected to be incurred (or have been allocated) for any

implementation ong>ofong> sustainability reporting.

Sustainability Reporting

Generally, respondents assessed the ong>impactong> ong>ofong> the Guide to

Sustainability Reporting for Listed Companies on the annual report

as low. The majority ong>ofong> respondents do not expect to include the

consideration and evaluation ong>ofong> relevant environmental, social and

governance issues in their 2011/2012 annual reports. The main

reason for the less than enthusiastic take-up appears to be a lack

ong>ofong> understanding or familiarity with sustainability reporting. A

significant percentage felt that it was not relevant to their Group.

Nevertheless, it is heartening to note that a significant 37% ong>ofong>

respondents said that they will be including the consideration and

performance ong>ofong> environmental, social and governance issues in

their 2011/2012 annual reports.

ACCOUNTANTS FOR BUSINESS:

IMPACT OF NEW/REVISED IFRS/FRS ON SINGAPORE LISTED COMPANIES

Challenges

The main challenge to implementing the various changes arising

from ong>newong>/ong>revisedong> IFRS/FRS and sustainability reporting related to

the training and development ong>ofong> staff. A lack ong>ofong> an adequate budget

(allocated time, costs and manpower resources) was also cited.

This was probably related to a lack ong>ofong> ‘management buy-in’ and

organisational motivation perceived by some respondents.

Several respondents expressed concerns over processes relating to

the fair valuation ong>ofong> unquoted investments. Some were concerned

about the standards not being sufficiently specific or localised.

For sustainability reporting, the fact that it was not mandatory

was cited as one ong>ofong> the reasons for the lack ong>ofong> motivation in its

implementation.

Assistance and Support

The majority ong>ofong> respondents relied to a significant extent on their

external auditors and prong>ofong>essional accounting bodies to provide

them with updates on the IFRS/FRS. When it came to the actual

implementation ong>ofong> the changes or assessing the ong>impactong>, one third

ong>ofong> respondents relied on the Big Four accounting firms and other

external specialists. Nevertheless, a significant proportion also

relied on internal technical experts. A significant proportion, just

less than a third, however, said that they had no concrete plans

and preferred to defer their assessments until the situation became

clearer.

Conclusion

The above findings indicate that there could be significant areas

where businesses may require direction and assistance from

accounting firms, prong>ofong>essional accounting bodies and other experts

to implement ong>newong>/ong>revisedong> IFRS/FRS and sustainability reporting.

They would also need adequate time to understand and interpret

the pronouncements in a meaningful and comprehensive manner.

SUMMARY & CONCLUSION 17


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