The requirements for balance sheet disclosure are multifaceted and primarily governed by the Companies Act 1967 and Accounting Standards. Here’s a comprehensive overview:

Core Requirements:

  • True and Fair View: The balance sheet must comply with the requirements of the Accounting Standards and give a true and fair view of the state of affairs of the company at the end of its financial year. This is a fundamental principle underpinning balance sheet disclosure. The term ‘true and fair view’ means that the accounts must not be misleading.
  • Compliance with Accounting Standards: The balance sheet must be prepared in accordance with the Accounting Standards prescribed by the Accounting Standards Council.
  • Presentation at Annual General Meeting (AGM): The directors of every company must lay before the company at its AGM the financial statements for the financial year, which includes the balance sheet. For holding companies, this includes a balance sheet dealing with the state of affairs of the parent company. Unitholders of registered business trusts are also entitled to have a balance sheet laid before them at their annual general meeting.
  • Audit: Generally, the financial statements, including the balance sheet, must be duly audited before they are laid before the company at the AGM, and the auditor’s report must be attached to or endorsed upon them.
  • Directors’ Responsibilities: Directors must take reasonable steps to ensure the balance sheet complies with the provisions of the Companies Act regarding accounts and to ensure the accounts are audited. They are also required to take reasonable steps to ascertain the treatment of bad debts, doubtful debts, current assets, and non-current assets to ensure the balance sheet is not misleading.
  • Directors’ Statement: The directors must attach a statement to the balance sheet (and consolidated balance sheet for a holding company), signed by two directors, stating whether in their opinion the balance sheet gives a true and fair view of the company’s state of affairs.
  • Information and Explanations: The balance sheet must include such information and explanations as are necessary to ensure that it gives a “true and fair view”.

Specific Requirements and Considerations:

  • Contents: A balance sheet is a statement of a company’s affairs as at the date it is prepared (the end of a financial period), showing the share capital, reserves, and liabilities of the company and how these funds are represented by the various assets of the company.
  • Consolidated Financial Statements: For a parent company, consolidated financial statements are required, which include a balance sheet dealing with the state of affairs of the parent company at the end of its financial year. These must also comply with Accounting Standards and give a true and fair view.
  • Exemptions and Relief:
    • With the Registrar’s approval, a company’s financial statements or consolidated financial statements may not need to comply with certain requirements of the Accounting Standards if they would otherwise not give a true and fair view.
    • Directors can apply to the Registrar for an order relieving them from certain requirements of the Act relating to the form and content of financial statements or consolidated financial statements (other than Accounting Standards).
    • Exempt private companies may have different reporting requirements, potentially not needing to report financial statements if solvent. However, if insolvent, they are required to report.
  • Disclosure to Members: A copy of the audited financial statements or consolidated financial statements and balance sheet (including required attachments like the auditor’s report) must be sent to all persons entitled to receive notice of general meetings at least 14 days before the meeting. Listed companies may be permitted to send summary financial statements instead of full accounts under certain conditions. These summary statements must state they are a summary and contain an auditor’s opinion on their consistency with the full financial statements.
  • Lodgment with Registrar: Revised financial statements, consolidated financial statements, and balance sheets may need to be lodged with the Registrar. Foreign companies with a place of business or carrying on business in Singapore are also obligated to lodge a balance sheet and profit and loss account with the Registrar, prepared in accordance with applicable financial standards that are similar to or acceptable to the Registrar, giving a sufficient disclosure of the company’s financial position.
  • Solvency Statements: In specific situations like proposed redemption of preference shares out of capital, giving financial assistance, or reducing share capital, a solvency statement by the directors is required, attesting to the company’s ability to pay debts and the value of its assets versus liabilities, which directly relates to the information presented in the balance sheet.
  • Foreign Companies: Foreign companies operating in Singapore must lodge a duly audited statement showing their assets used in and liabilities arising out of their Singapore operations as at the date their balance sheet was made up. The Registrar may also require additional particulars or documents if the financial statements do not sufficiently disclose the company’s financial position, but cannot demand more than what a Singapore public company would supply.
  • Business Trusts: The trustee-manager of a registered business trust must prepare a balance sheet giving a true and fair view of the state of affairs of the trust at the end of the relevant period and lay it before the unitholders at the AGM. A report containing prescribed information must be attached.

It’s important to note that the specifics of balance sheet disclosure can be detailed and may be subject to further regulations and pronouncements within the Accounting Standards. Directors face significant responsibilities regarding the accuracy and compliance of these financial statements, and failure to ensure a true and fair view can lead to severe consequences.