New Financial Reporting Stds

Hi,

Read in papers today that there would be new Financial Reporting Stds in spore, wonder if anyone could highlight/summarize the really important changes & how that would impact B/s, Inc Statement, CF statement, etc. and in turn how that would affect value investors? Appreciate if somebody could share their expertise & views.

(04-05-2013, 04:10 PM)tanlui Wrote: Hi,

Read in papers today that there would be new Financial Reporting Stds in spore, wonder if anyone could highlight/summarize the really important changes & how that would impact B/s, Inc Statement, CF statement, etc. and in turn how that would affect value investors? Appreciate if somebody could share their expertise & views.

Yes, there are several new amendments with effective for annual periods beginning on or after 1 January 2013. It was a revised/new standards implementation since year 2011, and will continue for next several years.

I am not an accountant. I knew it when i researched on service concession accounting months ago.

I will highlight one that i interested.

FRS 113 Fair Value Measurement:
The fair value measurement requirements and the disclosures about fair value in previous standards do not always articulate a clear measurement or disclosure objective. Hence the revision is to deal with this issue.

IMO, this is an important one especially for those companies have significant fair value gain in income statement.

CityFarmer is right on the FRS113 bit. U can assess more details in the following link: http://www.kpmg.com/SG/en/IssuesAndInsig...ar2013.pdf

Disclaimer: not advertising for KPMG.

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I was also interested in the following change:

"Under FRS 113, the fair value of investment property may change as a result of the consequential amendment to FRS 40 Investment Property.
Under the current FRS 40, expected cash flows from planned improvements of the investment property were generally not taken into account in measuring fair value, unless it was clear that a buyer (market participant) would refurbish or redevelop the property.
Under the revised FRS 40, the effect of future capital expenditure is considered in measuring fair value, if market participants would consider the future improvement in determining the fair value of the property." - page 6

For ur property counters.

Does this mean that companies that are not REITS, but hold some properties bought from long ago, are required to revalue these properties on a consistent basis? Rather than just leave it at the value bought from 20years ago?

If so, wouldn't value traps be eliminated?

(05-05-2013, 12:23 PM)TheMillennium Wrote: Does this mean that companies that are not REITS, but hold some properties bought from long ago, are required to revalue these properties on a consistent basis? Rather than just leave it at the value bought from 20years ago?

If so, wouldn't value traps be eliminated?

Hi TheMillenium, the accounting policy is not changed from a recognition perspective. Meaning if I am a company that records my IP at cost, I will continue to do so. My additional disclosure of fair value will continue too. But the way to measure fair value will need to take into account my intended use for it, especially if I have near term redevelopment plans.

The revised FRS40 does not prescribe on frequency of valuation nor insist a change that companies must record all IP at fair value rather than cost.

Every accounting revision means a compliance cost?

(05-05-2013, 06:51 PM)pianist Wrote: Every accounting revision means a compliance cost?

Hi pianist, as long as the accounting revision gives the Big Four accounting firms a platform to engage their clients for an extra 15 min or more, yes, there is a compliance cost (from client perspective). Business as usual.

(06-05-2013, 06:45 AM)FatBoi Wrote:

(05-05-2013, 06:51 PM)pianist Wrote: Every accounting revision means a compliance cost?

Hi pianist, as long as the accounting revision gives the Big Four accounting firms a platform to engage their clients for an extra 15 min or more, yes, there is a compliance cost (from client perspective). Business as usual.

I agree, the compliance cost is one-time and minimum, and most of it is "re-training" expenses. It can be part of the existing "re-training" budget of companies.