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Adoption of FRS 115 expected to be a challenge for Singapore companies

With less than a year until the 1 January, 2018 implementation deadline, many companies in Singapore will face challenges as they have not started the implementation of FRS 115, according to a survey by EY Singapore.   

The survey revealed that 62% of the 53 surveyed finance executives have not recognised or assessed the key impact of FRS 115 and only 6% have completed the process. A further 60% of the respondents shared that their organisations have yet to decide which approach to take, either full retrospective or modified retrospective - to adopt the standard. Only 2% said that their company is ready for FRS 115 adoption.

Respondents believe that the areas that will require most time and efforts in the IFRS 115 implementation process are management and financial reporting (3%), business processes and practices (18%), information technology (IT) and accounting systems (17%), and internal controls and policies (11%).

When it kicks in next year, companies 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 as for the first time, in 2018, Singapore's financial reporting framework will adhere to International Financial Reporting Standards.

Additionally, listed companies must undertake the procedure of restating comparative financial information that are affected by the application of the new revenue standard and non-listed Singapore companies, on the other hand, can choose between full retrospective or modified retrospective approach when adopting FRS 115.

Ronald Wong, partner financial accounting advisory services at EY Singapore, said: “Many companies that have undergone the implementation process have found the impact to be far-reaching through the organization. Most of the companies need to change the IT system, processes and controls. It is important that companies first understand the potential accounting impact, and go on to determine the wider-organizational impact.”

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