What Is XBRL and Why Is It Required in Singapore?

With Singapore being increasingly recognized as a global financial and business hub, financial reporting transparency and standardization have become a significant issue. In order to facilitate such objectives, Accounting and Corporate Regulatory Authority (ACRA) requires companies to submit financial statements in eXtensible Business Reporting Language (XBRL).

This paper describes the concept of XBRL, its role and reason why it has become an essential need of companies in Singapore. It also provides practical insights into compliance with understanding XBRL filing requirements for Singapore companies and maintaining accurate reporting for corporate governance and audit readiness.

Understanding XBRL

What Is XBRL?

The XBRL or eXtensible Business Reporting Language is a worldwide standard of exchanging financial and business information in a e-format. It enables financial information to be tagged, classified and analyzed effortlessly with standardized elements, that ensure uniformity and clarity through reports made to the regulators, investor and any other stakeholder, similar to how regulatory procedures like how to file a suspicious transaction report in Singapore emphasize the importance of accuracy, compliance, and transparency in reporting.

In contrast to the conventional PDF or Excel submissions, XBRL data can be read by machines and therefore, the authorities such as ACRA can easily process, validate and compare information among thousands of companies.

What is XBRL and Why was it introduced in Singapore?

To make corporate reporting more modern, Singapore came up with XBRL filing to enhance data transparency. Before its implementation, businesses presented financial statements in various forms, which posed a challenge in the collection and analysis of data.

The use of XBRL has made the reporting procedure of ACRA easier and allowed it to run automated checks, quick processing of data, and improved the comparability of financial information.

Who has to file in XBRL form?

Companies Required to File

The majority of firms registered in Singapore would have to submit financial statements in XBRL format. This includes:

• Private limited companies.
• Shareholder-limited public companies.
• Companies limited by guarantee (not where exempted).

Pdf versions of the foreign companies registered as a branch in Singapore normally submit their financial statements where the small companies that are not subject to audit exemption may submit simplified XBRL formats.

Exemptions

Some are not required to report complete XBRL financial statements, and they are:

• Dormant companies.
• Solvents are exempt in the case of private companies.
• Guarantee companies are companies that are limited and satisfy certain criteria.

It is important that individual companies can evaluate their eligibility prior to submission so as to be in agreement with the filing requirements of ACRA.

Benefits of XBRL Reporting

Greater Accuracy and efficiency.

XBRL reduces errors in data entry because each financial data point is tagged. This enhances accuracy and consistency of reporting. XBRL data can also be reused by companies to provide internal reports or analytics or tax filings, save time, and minimize administrative overhead.

Increased Transparency and Comparability.

XBRL data is defined by a standardized taxonomy as defined by ACRA, which makes it easier to compare financial reports of various companies. Investors, analysts and regulators are able to easily determine the financial position of a firm thereby making better decisions.

Lean Regulatory Compliance.

The XBRL solution used by ACRA helps to validate and approve submissions faster. Companies that implement the XBRL filing systems are able to evade penalties on failure or inaccuracy filing and enhance their image as a company with good corporate governance.

The Purpose and Importance of XBRL in Singapore

Supporting Regulatory Oversight

The purpose and importance of XBRL reporting for ACRA compliance lie in its ability to improve regulatory oversight. With XBRL, ACRA can efficiently analyze large volumes of financial data across industries, identify trends, and detect anomalies that may indicate compliance risks or financial distress.

Empowering the Data-Driven Decision Making.

The XBRL data is structured, which allows government agencies and financial institutions to use analytics to make policies and credit evaluations. It facilitates transparency and credibility of the business ecosystem in Singapore, which is in line with the international reporting standards.

Ensuring Corporate Strengthening.

As a company, XBRL leads to increased financial discipline. The use of digital reporting standards enhances business accountability, audit preparedness, and stakeholder confidence in the businesses presented financial statements.

Singaporean XBRL Filings.

Full XBRL

In this format, all financial information such as balance sheets, profit and loss statements and notes should be tagged in detail. It is more so applicable to larger firms and those that are bound with statutory audits.

Simplified XBRL (XBRL Lite)

The Simplified XBRL format is designed to contain only the significant financial elements and is used by smaller companies. It minimizes the compliance load and yet fulfills the reporting compliance requirements of the ACRA which require financial transparency.

Copy of PDF (Specific Entities)

Some exempted entities can proceed with turning in financial statements on PDF format as long as they satisfy exemption provisions. Nevertheless, it is still advisable to have XBRL-compatible accounting systems in such instances in order to be scaled in future.

Some actions to prepare and file XBRL financial statements.

Step 1: Overview of XBRL Filing Requirements of ACRA.

The first step that companies must undertake is to revise the latest instructions provided by ACRA in order to identify the XBRL format. The proper taxonomy version makes it compatible with BizFinx filing portal by ACRA.

Step 2 : Prepare Financial Statements.

Conversion of financial statements should be done after the board of directors has finalized and approved them. Correct categorization of the data in this phase eliminates wrong tagging in the future.

Step 3: Tagging Financial Data with BizFinx Software.

ACRA offers BizFinx Preparation Tool to XBRL tagging. This software enables users to map financial information onto the appropriate taxonomy items, validate the file and produce the XBRL submission document.

Step 4: Validate and Submit

When the file is ready, it has to be checked to see whether there are any missing or wrong tags. On validation, the XBRL file may be posted through the portal of the BizFile+ of ACRA. An issuance of a confirmation notice will be done with successful submission.

Problems to be Met and the Solution.

Complex Tagging and Classification.

Tagging process can be complicated to companies that are new to XBRL. Hiring professional accounting/corporate service firms that have expertise on XBRL would be a sure way of doing things correctly according to the ACRA standards.

Professional updates to Taxonomy.

ACRA continuously revises the XBRL taxonomy to meet new accounting standards. Firms ought to keep up with these developments to prevent errors in filing and rejection.

Time Constraints

It is also time consuming to prepare XBRL files particularly at the closing of the financial year. Workload and risk can be dramatically minimized by using accounting software to automate the process or hire XBRL filing specialists to do the work.

Future of XBRL in Singapore

Co-innovation with AI and Automation.

XBRL will be used in automation and artificial intelligence-driven financial analysis as Singapore transforms to a fully digital regulatory setting. Those firms that adopt digital reporting will be ahead of others in their compliance and gain better insights into their data.

In the Direction of More Data Transparency.

XBRL usage is projected to grow, and more forms of financial disclosures will be covered, and there is a possibility of environmental, social, and governance (ESG) reporting being integrated in the future. This is in line with the Singaporean promise of ensuring sustainable and transparent business operations.

Conclusion to What Is XBRL and Why Is It Required in Singapore

XBRL will be a significant move to digitalization and financial transparency in the corporate ecosystem in Singapore. Knowing and meeting the requirement of XBRL filing in Singapore companies implies that businesses can respond to the requirement in a timely manner and enhance their reputation of accountability.

Finally, the intent and significance of XBRL reporting to the ACRA compliance is not all about regulation, but all about increasing the integrity, efficiency, as well as reliability of financial information upon which Singapore can be promoted as a global financial centre.