Quality financial information is essential in establishing a solid and thriving market. Therefore, reliable and timely financial statements are necessary to ensure the relevant stakeholders have an accurate picture of the company’s trajectory.
The responsibility of ensuring that financial statements are delivered in a timely and reliable manner lies with the company’s directors, who are tasked with maintaining the business’s financial reporting in accordance with the law set by the Singapore government.
However, ensuring the financial reports are up to standard is but one aspect of a director’s job. Let us share some of the essential financial reporting duties that company directors need to fulfil to ensure everything complies with regulatory standards.
1. Review of the financial statements
It is the responsibility of the directors to review the financial statement thoroughly before they are presented to the stakeholders and filed annually with the Accounting and Corporate Regulatory Authority (ACRA).
If any discrepancy is discovered, they should challenge the accounting decisions made in the report. There should always be a degree of scepticism applied to the management’s judgment and estimates until they can provide a satisfactory answer to the questions.
2. Understand basic financial concepts
Company directors do not need to be experts in finance and accounting. However, it is crucial for them to understand basic accounting principles to complete a thorough financial statement review. Without the fundamental concepts, a director may be misled by the behind-the-scenes manipulation of the financial figures, which can have severe repercussion for the business.
3. Maintaining the company’s yearly accounts
Directors have to submit the company’s financial statements annually at an Annual General Meeting (AGM) for stakeholders to understand the business’s performance. Additionally, they have to ensure that the financial statements submitted are up-to-date and should not be older than four months (for public listed companies) or six months (non-public listed companies) prior to the date of the AGM.
4. Working with external auditors
A company may decide to outsource their accounting and bookkeeping needs to a specialised audit firm. In this situation, the company directors will have to work closely with the external auditors during the auditing of the financial statements.
If there are significant audit findings brought to the attention of the directors, they have to resolve these issues amicably. However, the directors should seek professional assistance if required and not rely solely on the auditor’s opinion, as this will affect the objective nature of an external audit.
It is advisable to engage the accounting services of a reputable firm to ensure your financial statements are accurate. Allow our team at Ackenting Group to offer our tax and accounting services to deliver precise and timely financial reports so you can stay on top of your company’s taxes and allow your stakeholders to better understand the business’s financial position.
5. Build an internal accounting and control system
Directors are also responsible for overseeing the company’s accounting and control system. They have to ensure the management adopts appropriate accounting policies, follows the proper internal processes and control, and maintains comprehensive and accurate accounting records. This system also serves as a guide to aid the directors in complying with their financial reporting duties for both in-house and external accounting services.
Conclusion
Quality financial reporting is a fundamental part of a well-maintained business. Therefore, company directors are obligated to uphold their responsibilities and fulfil their financial reporting duties to ensure that the financial statements are consistently prepared according to standards.
If you require any assistance on accounting services, feel free to drop us an email at johnwoo@ag-singapore.com or contact us at +65-66358767. At Ackenting Group, we offer a complimentary 30 minutes online consultation for us to better understand your business requirements.
