Financial Statements Review Exercise

Under a new agreement announced on 16 January 2014, the Accounting and Corporate Regulatory Authority (ACRA) and the Institute of Singapore Chartered Accountants (ISCA) will review a sample of financial statements from listed companies, non-listed firms as well as charities, which report a large turnover and market capitalisation.

The review will cover financial statements with fiscal years ending after Jan 1, 2013 and will include modified reports as well as those with qualified opinions from auditors. As financial reporting deficiencies may exist even in a clean report, such deficiencies may impair the reliability of the financial statements.

Regulatory actions may be taken as chief executive officers and CFOs may be legally liable for the statements made in their companies' financial reports as true and fair. Lighter repercussions include private warnings, and a restatement of financial statements - amendments which companies need not disclose to be the consequence of an ACRA review. If serious breaches are uncovered, regulatory action could include fines and jail time for directors under Section 201 of the Companies Act.