Tech Talk Q1 2012
ACRA issues Public Consultation Paper on Accountants Act
The Accounting and Corporate Regulatory Authority (ACRA) is seeking public feedback on proposed amendments to the Accountants Act. A public consultation paper, summarising the proposed changes, was issued on 24 May. The consultation exercise ended on 4 July 2012.
ACRA developed the proposed amendments in consultation with key stakeholders, namely public accountants, audit firms, professional accountancy bodies, aspiring public accountants, universities and audit committee members.
The key proposals in the consultation paper aim to:
• Ensure good quality control frameworks for the audit and review of entities that have a significant public interest.
• Enhance ACRA’s ability to inspect audit quality controls and policies of audit firms and require audit firms to improve, where necessary.
• Make practical experience in key audit functions a core requirement for registration as a public accountant.
• Clarify the scope of ACRA’s regulation.
• Enhance ACRA’s ability to respond swiftly to protect public interest and uphold public confidence, through the establishment of a Special Investigation process.
More details can be found at ACRA’s website http://www.acra.gov.sg
Pro-Tem SAC issues Public Consultation Paper on the SQP
The Pro-Tem Singapore Accountancy Council (the ‘Pro-Tem SAC’) issued the Singapore Qualification Programme (the ‘SQP’) Discussion Paper on 18 May 2012. This Discussion Paper sets out the pathway to becoming a Singapore professional accountant. The Pro-Tem SAC invited all stakeholders and interested parties to contribute feedback towards the shaping and design of the SQP. The public consultation exercise ended on 15 June 2012.
The purpose of issuing this Discussion Paper is two-fold:
• to assist stakeholders and the general public to understand the development process of the SQP.
• to invite feedback and submissions about the specific components underpinning the SQP.
This Discussion Paper outlines each specific component underpinning the SQP Framework and highlights particular areas (including Academic Base, Professional Programme and Practical Experience) that stakeholders and interested parties may wish to comment on. The Discussion Paper also touches on important issues currently bring deliberated by the Pro-Tem SAC, including global recognition, international portability and the SQP administrator.
More details can be found at http://www.singaporeqp.com/
ACRA issues Public Consultation Paper on XBRL Filing Requirements
The Accounting and Corporate Regulatory Authority (ACRA) invited the public on 11 May to provide feedback and suggestions on proposed revisions to XBRL filing requirements and Exposure Draft (ED) ACRA Taxonomy 2012. The consultation exercise ended on 11 June 2012.
ACRA implemented the filing of financial statements in XBRL in 2007 as part of the move towards enhancing business reporting and information flow. Today, close to 60,000 corporate financial statements are filed in XBRL format annually. The financial information that is filed in XBRL with ACRA is also an important source of information from which companies can utilise to make informed decisions. The proposed revisions are therefore part of ACRA's continual efforts to promote an environment of high quality financial reporting and thus further strengthen Singapore's position as a vibrant and trusted business hub.
Earlier this year, ACRA sought feedback from 80 organisations involved in the financial reporting supply chain to develop the proposed revisions. These include preparers of financial statements, data consumers, government agencies, and accounting software companies. Through this revamp exercise, ACRA seeks to facilitate the preparation and filing of XBRL financial statements, and add further value to the flow of financial information by increasing the breadth and depth of XBRL data gathered. The varying needs of stakeholders were carefully considered and a balanced approach was taken in the proposals.
The public consultation paper covered two key areas:
• Proposed revisions to XBRL filing requirements to better meet the needs of preparers and consumers of financial statements.
• ED ACRA Taxanomy 2012 in meeting the various disclosure requirements in Singapore Financial Reporting Standards (SFRS).
The proposed revisions are targeted for implementation in the second quarter of 2013.
More details can be found at ACRA’s website http://www.acra.gov.sg
Waiver of ECI Filing for Companies with Turnover Not Exceeding $1 Million
The Inland Revenue Authority of Singapore (IRAS) has simplified the reporting requirements for Estimated Chargeable Income (ECI) and the filing of Income Tax Return, Form C, for small companies so as to reduce their compliance burden. Currently, all companies have to report their ECI within 3 months of the end of their financial year end. Companies without any taxable profit and have no ECI are also required to do so.
To reduce compliance requirements for small companies with turnover not exceeding $1 million and with no ECI, they will no longer need to file the ECI. The waiver will take effect from Year of Assessment 2013 for companies with accounting year ending October 2012 or after. With this change, 67,000 companies, or about 42% of all companies would not need to file their ECI, saving them one step in the overall corporate tax filing requirements.
More details are available at IRAS’s website http://www.iras.gov.sg .
Introduction of Form C-S, a Simplified Income Tax Return for Companies
Compared to larger companies, small companies have less complex transactions, fewer tax claims and fewer tax adjustments. From this year, the Year of Assessment 2012, small companies with an annual turnover not exceeding S$ 1million dollars will find tax filing much faster and easier with the Form C-S, a new simplified income tax return for small companies. About 110,000 small companies, which constitute 70% of all companies, will benefit from the Form C-S as only essential tax and financial information that are most relevant to them are required in Form C-S. It is estimated that they will spend only 10 minutes to complete Form C-S, or half the average time taken to complete (the current) Form C. Companies that electronically file the Form C-S will also enjoy a later e-Filing due date of 15th December, instead of 30th November for paper filing.
More details are available at IRAS’s website http://www.iras.gov.sg .
MAS Issues Revised Code of Corporate Governance
The Monetary Authority of Singapore (MAS) has accepted the recommendations made by the Corporate Governance Council (Council) on the Code of Corporate Governance (Code), and issued the revised Code of Corporate Governance.
MAS has carefully considered the recommendations of the Council, and has announced that it has accepted all of the Council’s recommendations. The key changes to the Code are focused on the areas of director independence, board composition, director training, multiple directorships, alternate directors, remuneration practices and disclosures, risk management, as well as shareholder rights and roles. MAS will however make two modifications to the recommendation relating to independence from substantial shareholders.
The revised Code will take effect in respect of Annual Reports relating to financial years commencing from 1 November 2012. MAS recognises that sufficient time should be given for companies to make board composition changes. Accordingly, the changes (with the exception of changes required as a result of the Chairman of the Board falling within the four circumstances specified in Guideline 2.2 of the Code) should be made at the Annual General Meetings following the end of the relevant financial year. A longer transition period will be provided for board composition changes needed to comply with the requirement for independent directors to make up at least half of the Boards in specified circumstances (Guideline 2.2). These changes should be made at the Annual General Meetings following the end of financial years commencing on or after 1 May 2016.
The Council has informed MAS that it will shortly be issuing a Guidance for Boards on Risk Governance. This is intended to provide practical guidance on risk governance for Board members. MAS welcomes this initiative as enhancing risk governance among listed companies is one of the key thrusts to strengthening overall corporate governance.
More details can be found at MAS’s website http://www.mas.gov.sg
New Chairman for the Accounting and Corporate Regulatory Authority
The Ministry of Finance has announced the appointment of Ms Lim Soo Hoon, incoming Permanent Secretary (Finance)(Performance), as Chairman of the Board of the Accounting and Corporate Regulatory Authority (ACRA). Ms Lim takes over the Board Chairman appointment from Ms Chan Lai Fung, Permanent Secretary (Finance)(Performance), who will be Permanent Secretary (Education Policy) with effect from 1 April 2012.
Six new Board Members have also been appointed and four re-appointed. More details can be found at ACRA’s website http://www.acra.gov.sg
Accounting Standards Council (ASC) completes review for Full Convergence
In March the Accounting Standards Council (ASC) completed its review of the plans for full convergence of the Singapore Financial Reporting Standards (SFRSs) with the International Financial Reporting Standards (IFRSs) for Singapore incorporated companies listed on the Singapore Exchange (Singapore listed companies) and has concluded that full convergence will not be implemented in 2012.
In 2009, the ASC had set, as its strategic direction, the aim of working towards full convergence of the SFRSs with the IFRSs for Singapore listed companies by 2012. In completing its review of the status of full convergence, the ASC has identified a few key outstanding issues that need to be resolved before full convergence can be implemented.
The ASC had met with the IFRS Foundation Trustees and the International Accounting Standards Board (IASB) in January 2012, and shared these outstanding issues and the resultant impact on Singapore’s full convergence timeline. In the joint communiqué issued after the meeting, the Trustees and the leadership of the IASB had expressed a commitment to support the work of the ASC towards full convergence.
The timeline for full convergence will be adjusted in tandem with international developments, and will depend on the progress of several key projects undertaken by the IASB. These key IASB projects are still in progress and are not expected to take effect before 1 January 2015. The ASC had also noted during its review that major capital markets such as the US are still in the process of working out their IFRS convergence plans. The revised timeline will be announced at an appropriate juncture.
The ASC will continue to engage proactively and work closely with the IASB and other regional standard setters to ensure that the IFRSs continue to reflect the economic substance of underlying transactions in Singapore and the Asian region. The ASC will also continue to consult local stakeholders on the convergence implementation plans.
More details can be found at ASC’s website http://www.asc.gov.sg
MAS and SGX join Malaysia and Thailand to expedite review process for Secondary Listings within ASEAN
In March the Monetary Authority of Singapore (MAS) and the Singapore Exchange (SGX) jointly signed a Memorandum of Understanding (MOU) on the Expedited Review Framework for Secondary Listings. The objective of the Framework is to speed up the processing of secondary listing applications together with the relevant disclosure documents.
This Framework is available to entities which are incorporated and whose shares are primarily listed on the main market of an exchange in jurisdictions which are signatories to the MOU. Where corporations satisfy the requirements set out in the Framework, signatories to the MOU will review these applications within a shortened time period of 35 business days compared to the normal review time of up to 16 weeks.
Malaysia, Singapore and Thailand are the first three jurisdictions to sign the MOU. Other securities regulators and stock exchanges of ASEAN jurisdictions may join the Framework by signing the Memorandum of Understanding on Expedited Review Framework for Secondary Listings as and when they are able to satisfy the requirements of the Framework.
More information on the ACMF Implementation Plan and the ASEAN Economic Community Blueprint 2015 can be found at http://www.theacmf.org/ACMF/webcontent.php?content_id=00014 and http://www.asean.org/5187-10.pdf.
MAS signs MOU with the European Securities and Markets Authority (ESMA)
In March the Monetary Authority of Singapore (MAS) and the European Securities and Markets Authority (ESMA) signed a Memorandum of Understanding (MOU) on the supervision of credit rating agencies (CRAs).
CRAs play an important role in the global financial markets and their rating activities have a significant impact on the operations of the markets and on investor confidence. The MOU provides a formal basis for supervisory cooperation between MAS and ESMA. It paves the way for the enhanced sharing of supervisory information between the two authorities for more effective supervision of cross-border CRAs operating in Singapore and within the European Union (EU).
In addition to the signing of the MOU, ESMA also announced that it considers Singapore’s regulatory framework for CRAs to be in line with EU’s CRA regulations, thereby facilitating EU registered CRAs to endorse credit ratings issued in Singapore. More details can be found at http://www.esma.europa.eu/node/57482.
Singapore and Turkey Enhance Tax Cooperation
In March, Singapore and Turkey signed a protocol to incorporate the internationally agreed Standard for the exchange of information for tax purposes, upon request, in their standing Agreement for the Avoidance of Double Taxation (DTA). The full text of the protocol is available at IRAS’s website http://www.iras.gov.sg . The protocol will enter into force after its ratification by both countries.
2012 Budget Statement
The FY2012 Budget Statement was delivered by Deputy Prime Minister and Minister for Finance, Mr Tharman Shanmugaratnam, in Parliament on 17 February 2012.
Budget 2012 sets out the directions that the Government has embarked on to build an inclusive society and a stronger Singapore. The two strategies are:
• Sustaining economic growth by continuing to upgrade and restructure the economy, to increase productivity.
• Building a fair and inclusive society. This will include doing more to invest in opportunities for lower and middle income Singaporeans and to enhance social mobility through education and jobs. Sufficient attention will also need to be focused on the ageing population. Budget 2012 marks a significant step up in supporting three groups of Singaporeans:
(i) Older Singaporeans – a comprehensive set of measures has been set up to help Singaporeans work, build up savings, stay healthy and have a greater sense of security in retirement.
(ii) Singaporeans with disabilities – various measures have been put in place to help maximise their potential at each stage of their lives – in early childhood, school, and as adults.
(iii) Lower income Singaporeans – More has been done to support their children’s education, measures to help adults acquire skills, hold good jobs and improve incomes over time. A new and permanent feature in the tax system has been introduced, namely, GST Vouchers. This will provide continuing assurance of a fair and progressive system of taxes and benefits.
More details, including the Budget in Brief and Key Budget Initiatives, can be found at the Ministry of Finance (MOF) website http://www.mof.gov.sg and the Budget 2012 website http://www.singaporebudget.gov.sg
MAS Proposes Extending the Corporate Governance Framework to all locally incorporated direct insurers and reinsurers
The Monetary Authority of Singapore (MAS) issued a consultation paper in February 2012 proposing an extension of the MAS Corporate Governance (CG) Framework to all direct insurers and reinsurers incorporated in Singapore. This is in line with MAS’ emphasis on the importance of effective corporate governance, given insurers’ responsibilities to safeguard policyholders’ interests and the important role they play in the financial system and economy.
Key recommendations in the proposal are:
• To categorise locally-incorporated direct insurers and reinsurers into two tiers based on the size of total assets or annual gross premiums;
• To subject Tier 1 insurers to higher CG standards. The Regulations that are currently applicable to significant insurers will be applied to Tier 1 insurers;
• To require Tier 2 insurers to have a board comprising at least one third of directors who are independent directors;
• To extend the CG Guidelines to all locally-incorporated reinsurers; and
• To introduce a disqualification rule for the directors, executive officers and employees of an insurer. The insurer will be required to obtain MAS’ written consent to employ persons disqualified under the rule.
The proposed recommendations requiring insurers to appoint new independent directors to the board are targeted to take effect no later than from the first Annual General Meeting (AGM) of each insurer held on or after 1 January 2015. This is to take into consideration that affected insurers may need more time to find suitable independent directors. The other recommendations are targeted to take effect no later than from the first AGM of each insurer held on or after 1 January 2013. The proposed disqualification rule is targeted to take effect in mid-2013.
Further details regarding the detailed proposals relating to the CG Framework are contained in the consultation paper which is available on MAS website http://www.mas.gov.sg. The consultation comment period ended on 23 Mar 2012.
Singapore and the United Kingdom Sign a Second Protocol to the Agreement for the Avoidance of Double Taxation
The Government of the Republic of Singapore and the Government of the United Kingdom of Great Britain and Northern Ireland signed a Second Protocol amending the Agreement for the avoidance of double taxation (DTA) on 15 February 2012.
The Second Protocol revises certain terms in the current DTA between the two countries, such as updating Article 5 (Permanent Establishment) and lowering the withholding tax rates in Article 10 (Dividends), Article 11 (Interest) and Article 12 (Royalties). These changes will serve to enhance trade and investment flows between the two countries. The Second Protocol will enter into force after ratification by both countries.
The full text of the Second Protocol is available at IRAS’s website http://www.iras.gov.sg