Illustrative Financial Statements 2016 - Deloitte

[Pages:242]Illustrative Financial Statements 2016

GAAP Singapore Ltd and its subsidiaries

(Registration No. 200001999A)

Directors' statement and financial statements

Year ended December 31, 2016

Preface

Scope

This publication provides a set of sample financial statements of a fictitious group of companies. GAAP Singapore Ltd is a company incorporated in Singapore and its shares are listed on the Main Board of the Singapore Exchange Securities Trading Limited ("SGX-ST"). The names of people and entities included in this publication are fictitious. Any resemblance to a person or entity is purely coincidental.

GAAP Singapore Ltd is assumed to have presented its financial statements in accordance with Financial Reporting Standards in Singapore ("FRS") for a number of years.

Effective date

The illustrative financial statements include the disclosures required by the Singapore Companies Act, SGX-ST Listing Manual, and FRSs and INT FRSs that are issued at the date of publication (August 31, 2016).

Illustrative in nature

The sample disclosures in this set of illustrative financial statements should not be considered to be the only acceptable form of presentation. The form and content of each reporting entity's financial statements are the responsibility of the entity's directors and management, and other forms of presentation which are equally acceptable may be preferred and adopted, provided they include the specific disclosures prescribed in the Singapore Companies Act, SGX-ST Listing Manual, and FRSs and INT FRSs.

For the purposes of presenting the statement of profit or loss and other comprehensive income, and statement of cash flows, the various alternatives allowed under FRSs for those statements have been illustrated. Preparers of financial statements should select the alternatives most appropriate to their circumstances.

The illustrative financial statements contain general information and are not intended to be a substitute for reading the legislation or accounting standards themselves, or for professional judgement as to adequacy of disclosures and fairness of presentation. They do not encompass all possible disclosures required by the Singapore Companies Act, SGX-ST Listing Manual, and FRSs and INT FRSs. Depending on the circumstances, further specific information may be required in order to ensure fair presentation and compliance with laws and accounting standards and securities exchange regulations in Singapore.

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Guidance notes

Direct references to the source of disclosure requirements are included in the reference column on each page of the illustrative financial statements. Guidance notes are provided where additional matters may need to be considered in relation to a particular disclosure. These notes are inserted within the relevant section or note.

The illustrative financial statements are prepared by the Professional Practice Department of Deloitte & Touche LLP in Singapore ("Deloitte Singapore") for the use of clients and staff and are written in general terms. Accordingly, we recommend that readers seek appropriate professional advice regarding the application of its contents to their specific situations and circumstances. The illustrative financial statements should not be relied on as a substitute for such professional advice. Partners and professional staff of Deloitte Singapore would be pleased to advise you. While all reasonable care has been taken in the preparation of these illustrative financial statements, Deloitte Singapore accepts no responsibility for any errors it might contain, whether caused by negligence or otherwise, or for any loss, howsoever caused, incurred by any person as a result of relying on it.

Abbreviations used

References are made in this publication to the Singapore Companies Act, Singapore accounting pronouncements, guidelines and SGX-ST listing rules that require a particular disclosure or accounting treatment. The abbreviations used to identify the source of authority are as follows:

Alt App CA CCG FRS

INT FRS

LM

RAP Sch SSA

Alternative Appendix Singapore Companies Act Code of Corporate Governance Financial Reporting Standards in Singapore Interpretation of Singapore Financial Reporting Standards Singapore Exchange Securities Trading (SGX-ST) Listing Manual Recommended Accounting Practice Schedule Singapore Standards on Auditing

Summary of key changes from the 2015 version of the Illustrative Financial Statements

This section covers: ?

? an overview of new and revised FRSs that are mandatorily effective for the year ending December 31, 2016;

? ? an overview of new and revised FRSs that are not

yet mandatorily effective but allow early application for the year ending December 31, 2016; ? and

? revisions to independent auditor's report in

accordance with requirements of SSA 700

(Revised) Forming an Opinion and Reporting on

?

Financial Statements, SSA 701 Communicating

Key Audit Matters in the Independent Auditor's

Report and SSA 720 The Auditor's Responsibilities

?

Relating to Other Information.

Amendments to FRS 16 Property, Plant and Equipment and FRS 38 Intangible Assets: Clarification of Acceptable Methods of Depreciation and Amortisation Amendments to FRS 16 Property, Plant and Equipment and FRS 41 Agriculture: Agriculture: Bearer Plants Amendments to FRS 110 Consolidated Financial Statements, FRS 112 Disclosure of Interests in Other Entities, FRS 28 Investments in Associates and Joint Ventures - Investment Entities: Applying the Consolidation Exception Amendments to FRS 111 Joint Arrangements: Accounting for Acquisitions of Interests in Joint Operations Improvements to Financial Reporting Standards (November 2014)

For this purpose, the discussion below reflects a cut-off date of August 31, 2016. The potential impact of the application of any new and revised FRSs and INT FRSs issued after August 31, 2016 but before the financial statements are issued should also be considered and disclosed.

Note: Appendix A contains sample disclosures required by FRS 8.30 on new/revised FRSs, INT FRSs and amendments to FRSs that may be relevant to an entity that were issued but are not effective at the date of authorisation of the financial statements. The disclosures are purely for illustrative purposes and may not be relevant to GAAP Singapore Ltd for the year ended December 31, 2016.

Amendments mandatorily effective for the year ending December 31, 2016

The following is a summary of the new and revised FRSs that are mandatorily effective for the annual periods beginning on or after January 1, 2016.

? Amendments to FRS 1 Presentation of Financial Statements: Disclosure Initiative

? Amendments to FRS 27 Separate Financial Statements: Equity Method in Separate Financial Statements

Amendments to FRS 1 Presentation of Financial Statements: Disclosure Initiative

The amendments have been made to the following: ? Materiality and aggregation - An entity shall not obscure useful information by aggregating or disaggregating information and materiality considerations apply to the primary statements, notes and any specific disclosure requirements in FRSs. ? Statement of financial position and statement of profit or loss and other comprehensive income The list of line items to be presented in these statements can be aggregated or disaggregated as relevant. Guidance on subtotals in these statements has also been included. ? Presentation of items of other comprehensive income ("OCI") arising from equity-accounted investments - An entity's share of OCI of equity-accounted associates and joint ventures should be presented in aggregate as single items based on whether or not it will subsequently be reclassified to profit or loss. ? Notes - Entities have flexibility when designing the structure of the notes and guidance is introduced on how to determine a systematic order of the notes.

Illustrative Financial Statements 2016

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Summary of key changes from the 2015 version of the Illustrative Financial Statements

Amendments to FRS 27 Separate Financial Statements: Equity Method in Separate Financial Statements

FRS 27 requires an entity to account for its investments in subsidiaries, joint ventures and associates either at cost or in accordance with FRS 39 (or FRS 109 when effective). The amendments allow an additional option for an entity to account for these investees in its separate financial statements using the equity method as described in FRS 28. The accounting option must be applied by category of investments.

Amendments to FRS 16 Property, Plant and Equipment and FRS 38 Intangible Assets: Clarification of Acceptable Methods of Depreciation and Amortisation

The amendments to FRS 16 prohibit entities from using a revenue-based depreciation method for items of property, plant and equipment. The amendments to FRS 38 introduce a rebuttable presumption that revenue is not an appropriate basis for amortisation of an intangible asset. This presumption can only be rebutted in the following two limited circumstances:

a) when the intangible asset is expressed as a measure of revenue; or

b) when it can be demonstrated that revenue and consumption of the economic benefits of the intangible asset are highly correlated.

Amendments to FRS 16 Property, Plant and Equipment and FRS 41 Agriculture: Agriculture: Bearer Plants

The amendments to FRS 16 and FRS 41 define a bearer plant and require a biological asset that meets the definition of a bearer plant to be accounted for as property, plant and equipment in accordance with FRS 16, instead of FRS 41. The produce growing on bearer plants continues to be accounted for in accordance with FRS 41.

Amendments to FRS 110 Consolidated Financial Statements, FRS 112 Disclosure of Interests in Other Entities, FRS 28 Investments in Associates and Joint Ventures - Investment Entities: Applying the Consolidation Exception

The amendments clarify that:

? the exemption from preparing consolidated financial statements is available to a parent entity that is subsidiary of an investment entity, even though the investment entity measures its subsidiaries at fair value in accordance with FRS 110;

? the requirement for an investment entity to consolidate a subsidiary applies only to a subsidiary that is not itself an investment entity and whose main purpose and activities are to provide services related to the investment entity parent's investment activities;

? in applying the equity method to an associate (or joint venture) that is an investment entity, a non-investment entity investor should retain the fair value measurements that the associate (or joint venture) used for its subsidiaries; and

? an investment entity that prepares financial statements in which all of its subsidiaries are measured at fair value through profit or loss shall present the disclosures relating to investment entities required by FRS 112.

Amendments to FRS 111 Joint Arrangements: Accounting for Acquisitions of Interests in Joint Operations

The amendments to FRS 111 provide guidance on how to account for the acquisition of both the initial and additional interests in a joint operation that constitutes a business as defined in FRS 103 Business Combinations. Specifically, the amendments state that the relevant principles on accounting for business combinations in FRS 103 and other standards should be applied, to the extent that they do not conflict with the requirements of FRS 111. The same requirements should be applied to the formation of a joint operation if and only if an existing business is contributed to the joint operation by one of the parties that participate in the joint operation.

A joint operator is also required to disclose the relevant information required by FRS 103 and other standards for business combinations.

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Summary of key changes from the 2015 version of the Illustrative Financial Statements

Improvements to Financial Reporting Standards (November 2014)

Standards included in this cycle of improvements project comprised the following. Amendments apply for annual periods beginning on or after January 1, 2016, unless otherwise stated.

Standard

Topic

Key amendment

FRS 105 Non-current Assets Held for Sale and Discontinued Operations

Changes in methods of disposal

Provides additional guidance on when an entity reclassifies an asset (disposal group) from held-for-sale to held-fordistribution to owners (or vice versa), or when held-fordistribution accounting is discontinued:

? Reclassifications from held-for-sale to held-fordistribution to owners (or vice versa) should not be considered changes to a plan of sale or a plan of distribution to owners, and the classification, presentation and measurement requirements applicable to the new method of disposal should be applied.

FRS 107 Financial Instruments: Disclosures

Servicing contracts

? Assets that no longer meet the criteria for held-fordistribution to owners (and do not meet the criteria for held-for-sale) should be treated in the same way as assets that cease to be classified as held-for-sale.

Provides additional guidance to clarify whether a servicing contract results in continuing involvement in a transferred asset for the purpose of determining the disclosures required.

FRS 19 Employee Benefits

FRS 34 Interim Financial Reporting

Applicability of the amendments to FRS 107 to condensed interim financial statements Discount rate: regional market issue

Disclosure of information 'elsewhere in the interim financial report'

Clarifies that the offsetting disclosures are not explicitly required for all interim periods. However, the disclosures may need to be included in condensed interim financial statements to comply with FRS 34 Interim Financial Reporting.

Clarifies that the depth of the market for high quality corporate bonds used in estimating the discount rate for post-employment benefits should be assessed at the currency level instead of at country level.

Clarifies that the meaning of 'elsewhere in the interim report' encompasses other statements besides the interim financial statements (e.g. management commentary or risk reports) that is available to users on the same terms and at the same time as the interim financial statements. Crossreferences between the interim financial statements and those other statements are required where disclosures are made in the latter.

Not yet mandatorily effective but early application allowed for the year ending December 31, 2016

The following is a summary of the new and revised FRSs that are not yet mandatorily effective for the year ending December 31, 2016 but early application is allowed.

? FRS 109 Financial Instruments ? FRS 115 Revenue from Contracts with

Customers (with clarifications issued) ? FRS 116 Leases

Disclosure Initiative ? Amendments to FRS 12 Income Taxes:

Recognition of Deferred Tax Assets for Unrealised Losses ? Amendments to FRS 110 Consolidated Financial Statements and FRS 28 Investments in Associates and Joint Ventures: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture

? Amendments to FRS 7 Statement of Cash Flows:

Illustrative Financial Statements 2016

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Summary of key changes from the 2015 version of the Illustrative Financial Statements

Guidance notes

See Appendix A for the illustrative disclosures on the effects of the above new FRSs, INT FRSs and amendments to FRS that are issued but not effective at the date of authorisation of financial statements. The list is updated up to August 31, 2016.

Revisions to independent auditor's report

Users of audited financial statements are calling for more pertinent information and to gain further insights into the audited entity and its financial statements. New and revised auditor reporting standards have been issued in Singapore in July 2015 and are effective for annual period ending on or after December 15, 2016. A summary of the revisions and requirements are as follows:

SSA 700 (Revised) Forming an Opinion and Reporting on Financial Statements

Illustrative independent auditor's reports have been updated to align with the new requirements of SSA 700 such as (i) revised layout (for example, opinion section is now positioned first) and (ii) expansion of content to include a separate paragraph when there is a material uncertainty related to going concern, requirement to communicate key audit matters ("KAMs") for listed entities, enhanced description of the responsibilities of the auditor, separate section on other information and disclosure of name of engagement partner in the auditor's reports of listed entities.

SSA 701 Communicating Key Audit Matters in the Independent Auditor's Report

There is now a new requirement to communicate KAMs in the independent auditor's reports of listed entities. These KAMs may include (a) areas of higher assessed risk of material misstatement, or significant risks identified, (b) significant auditor judgements relating to areas in the financial statements that involved significant management judgement, including accounting estimates that have been identified as having high estimation uncertainty; and (c) the effect on the audit of significant events or transactions that occurred during the period.

The description of each key audit matter in the Key Audit Matters section of the auditor's report shall include a reference to the related disclosure(s), if any, in the financial statements and shall address:

(a) Why the matter was considered to be one of most significance in the audit and therefore determined to be a key audit matter; and

(b) How the matter was addressed in the audit.

SSA 720 The Auditor's Responsibilities Relating to Other Information

The independent auditor's report shall include a separate section with a heading "Other Information" or other appropriate heading.

The auditor is required to report in the independent auditor's report if

1)

all of the other information has been

obtained prior to the date of our auditor's

report and has not identified or has

identified a material misstatement of the

other information;

2)

partial information has been obtained prior

to the date of our auditor's report and has

not identified a material misstatement of the

other information, and expects to obtain

other information after the date of the

auditor's report; or

3)

no other information were obtained prior to

the date of the auditor's report but expects

to obtain other information after the date of

the auditor's report.

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Content

Directors' statement Independent auditor's report Statements of financial position Consolidated statement of profit or loss and other comprehensive income

Alt 1 ? Consolidated statement of profit or loss and other comprehensive income Alt 2 ? Consolidated statement of profit or loss Alt 2 ? Consolidated statement of profit or loss and other comprehensive income Statements of changes in equity Consolidated statement of cash flows Alt 1 ? Direct method of reporting cash flows from operating activities Alt 2 ? Indirect method of reporting cash flows from operating activities Notes to financial statements Appendices to illustrative financial statements Appendix A ? Guidance on financial statements disclosures: Sample disclosures on FRSs in issue at date of authorisation of the financial statements but not yet effective

1 9 16

22 26 28 34

38 40 44

227

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