Financial statements hold immense importance for any business, especially for Singapore-incorporated ones. They reflect financial performance and position, which helps in understanding a company’s viability. The balance sheet displays assets and liabilities, the income statement reveals profitability over a period, and the cash flow statement tracks liquidity.
Compliance with the Singapore Companies Act and the Singapore Financial Reporting Standards (SFRS) isn’t just necessary; it’s foundational. When I assess a business, these documents provide the clarity needed to gauge financial health. If you’re navigating this landscape, keep reading to dig deeper into each of these essential statements.
I see a lot of folks open a business in Singapore thinking it's just money in, money out. But numbers don’t lie. And over here, if your company’s incorporated, those numbers better talk straight.
Every year, businesses have to prepare annual financial statements. It’s not optional—it’s written right into the Singapore Companies Act, and those statements need to follow the Singapore Financial Reporting Standards (SFRS). Those standards mostly mirror international rules, so if you’re doing business across borders, it won’t feel too unfamiliar.
The annual financial statements aren’t just about keeping regulators like ACRA and IRAS happy (though you should, they don’t mess around). They also show your creditors whether you can pay your bills, and they help investors decide if you’re worth betting on. Basically, it's your business report card.
I think if there's one thing I’ve learned studying this stuff, it’s that financial statements aren't just paperwork—they’re a conversation with everyone who touches your business.
They do three big things:
And these statements? They must reflect your financial year-end results, which is the anchor for everything from ECI filing to income tax return deadlines. Businesses can use AI financial analysis to catch red flags early or spot trends that may go unnoticed, making it a valuable tool when leveraged with the right insights.
When I first looked at a balance sheet, it reminded me of a still photo—a freeze-frame of what a company owns and owes at one point in time. Nothing fancy, just assets on one side, liabilities and owners’ equity on the other. They always match. Always.
These three parts must balance. That’s the whole point. Total assets = total liabilities + owners’ equity.
The analysis part’s where it gets interesting. You start seeing patterns—sometimes problems. One way I spot red flags is by using ratios:
These numbers don’t tell the whole story, but they hint at whether the company can meet obligations or if it's gasping for air. Utilizing tools like cc:Monet can enhance this analysis by providing real-time financial dashboards and AI-driven insights into key ratios, offering a clearer picture of financial health.
The income statement, or profit and loss account, is more like a diary. It tracks what happened over time—usually 12 months. You start with what came in, subtract what went out, and what’s left is either net income or a loss. Simple, right? Not always.
Under Singapore rules, you must file an estimated chargeable income (ECI) within three months of your financial year-end. If your profit’s under S$200,000 and you meet other criteria, you might get a waiver of tax return filing—but don’t count on it.
This statement tells your story—how well your business model works. Investors and analysts use it to calculate:
They might also look at:
As someone studying financial reporting closely, I’ve seen how easily one wrong entry can twist the whole picture. So it's worth keeping your books clean. Reconcile often. Watch for private expenses, and don’t mislabel capital expenses as business costs.
I’ve always thought the balance sheet told me what a business owned, and the income statement told me how it performed—but the cash flow statement? That one tells me how it breathes. Every inflow, every outflow—it’s the rhythm. And in Singapore, where compliance with the Companies Act means every statement must be certified, this one’s no exception.
The cash flow statement measures liquidity in a way no other report can. It’s broken into three big sections: cash flows from operating activities, investing activities, and financing activities. Each one tells a different story. But together, they answer the same question: does this business have enough cash to survive?
This is the one most folks focus on. It shows how the business is doing at its core. Not just profits on paper—real cash. Coming in, going out. I usually see these lines pop up:
You won’t find capital expenditure or debt repayment here. This part isolates operations, plain and simple. That said, it reflects taxable income indirectly—since IRAS uses adjusted profit/loss from this section in ECI filing. And if your net income is high, but your operating cash flow is weak? That’s a red flag. Usually means earnings aren’t backed by real cash.
This part covers what the business does with its cash—long-term. It’s where I spot capital expenditure (buying or selling fixed assets like machinery or land). I also see purchases or sales of:
When a company spends too much here without enough from operations, it’s probably bleeding. It might be expanding—or it might be in trouble. Depends if the cash burn matches the revenue growth.
Now here’s the part where things get personal—equity and debt. This section tracks changes in how the business funds itself. Things like:
I usually compare this with the balance sheet, specifically owners’ equity and debt-to-equity ratio. High financing inflows can indicate that the business is bringing in external funding for growth, but excessive debt can skew the net D/E ratio, increasing financial risk.
I start with cash flows from operating activities. That’s the heartbeat. Then I look at free cash flow—what’s left after capital expenditure. That’s a decent indicator of sustainability. If a business can cover dividends and debt repayments from free cash flow, it’s usually in decent shape.
Some of the ratios I consider:
Lately, I’ve seen folks use AI financial analysis to spot irregularities faster—stuff that might take days to notice otherwise. Algorithms don’t get tired, and that helps when you're digging through patterns. Still, I don’t rely on it alone. That’s why I read the notes to financial statements—they break down the real cause behind the numbers.
Most folks skip this one. I don’t. Equity changes tell me who’s really getting the benefit of the income—owners or lenders. The statement of changes in equity reconciles all movements from the start of the financial year-end to the close.
You’ll usually see:
When companies issue new shares or buy them back, it shows up here. Also, when net income gets plowed back into retained earnings, I can see how management thinks—spend it or save it.
This statement matters during ACRA filing and IRAS tax filing too. Because declared dividends and changes in shareholding can affect tax obligations. And for consolidated financial statements, you also get breakdowns for minority interests. Which can show if the real control is with the parent company or not.
I’ve worked with enough Singapore companies to know—if it’s not filed right, it’s a problem. Every company, unless exempt (like some dormant company setups), has to prepare annual financial statements that comply with the Singapore Companies Act and Singapore Financial Reporting Standards (SFRS).
Here’s what I check:
Some small companies don’t need an audit. However, they must still prepare their finances. Solutions like cc:Monet can simplify this process by automating invoice processing, expense categorization, and generating necessary financial reports, ensuring compliance with Singapore's reporting standards.
And if they’re filing with ACRA or IRAS, they’ll need to report their estimated chargeable income within 3 months of financial year-end. That ECI filing depends on adjusted profit/loss, so clean books are everything.
In the IRAS context, disallowable expenses (like private expenses or capital expenses) have to be filtered out. Business expenses must be wholly and exclusively incurred. Even general expenses and miscellaneous expenses should be tagged properly—because IRAS checks for business purposes.
Filing also needs to include:
And the annual return with ACRA? That must include signed directors’ statements, the auditor’s report (if any), and a summary financial statement if allowed.
I think folks sometimes forget—the cash flow statement, like every part of the financial report, isn’t just a formality. It’s a story. If it’s clear and honest, the business stands stronger. If it’s muddy, well, everything else probably is too.
A balance sheet shows what your business owns (total assets) and owes (current liabilities and non-current liabilities). It also shows share capital and retained earnings. An income statement (or profit and loss account) shows money earned (gross profit, operating income) and what’s left after costs (net income).
A cash flow statement tracks cash coming in and going out through cash flows from operating activities, investing activities, and financing activities, helping you see your free cash flow.
Yes, most companies must prepare a certified statement of accounts under the Singapore Companies Act. This includes a balance sheet, income statement, and cash flow statement. You’ll need these for your annual financial statements. Unless you run a dormant company with a waiver of tax return, you’ll also need them for ACRA filing and IRAS tax filing.
Businesses are required to file annual financial statements, certified statements of accounts, and notes to the financial statements for ACRA filing each year. For IRAS tax filing, you’ll need to send in an income tax return, your estimated chargeable income (ECI filing), and show your taxable income using the preceding year basis.
Start with your adjusted profit/loss from the profit and loss account. Add disallowable expenses like private expenses and remove capital allowances. Then subtract business expenses such as general expenses, operating expenses, and miscellaneous expenses. What’s left is your taxable income for ECI filing with IRAS.
A fixed assets schedule lists what you’ve spent on things like equipment (capital expenditure), research (R&D expenses), and how much they’ve lost value over time (depreciation and amortization). It supports your balance sheet and profit and loss account, and helps you claim capital allowances when doing your tax obligations.
Financial statements are a must for Singapore-incorporated businesses. They include the balance sheet, income statement, cash flow statement, and statement of changes in equity. These documents give crucial insights into a company’s financial health. By sticking to the Singapore Companies Act and SFRS, companies achieve transparency and build trust with investors.
Understanding this is vital for anyone involved in financial reporting. Leveraging tools like cc:Monet can streamline financial management, reduce manual errors, and provide actionable insights, empowering businesses to focus on growth while maintaining compliance.
