Despite an increase in retrenchments in Singapore’s economy, the accounting services industry has continued to carry out expansion plans, with many graduates having a wide selection of related programs to study in order to prepare themselves for this industry. Understanding the strategic role that the accounting industry plays in a modern economy such as Singapore is, without a doubt, crucial for those pursuing careers in this industry.
While the City-State continues to pursue its digital transformation, the role of accounting services cannot be overemphasized, as small businesses can be assured that the myriad rules and regulations in Singapore are adhered to. Bigger businesses with more global operations can be confident in the management of cross-border liabilities, risks, and financial obligations.
Singapore’s international standing is evident in the growth and development of its financial markets, while its reputation as a business-friendly environment has ensured the establishment and operation of robust financial market infrastructure. This, in turn, influences the robustness of its financial services and professional services sectors.
Singapore has built a critical mass in its accounting services industry, making it one of the world’s most established accounting hubs for multinational conglomerates and small and medium-sized enterprises (SMEs). Equipped with high-quality, international accounting firms and a solid base of professionals with various lines of expertise including bookkeeping, financial accounting, and corporate secretarial services, Singapore’s accounting services sector can cater to the different needs of various clients – ranging from those who require basic services to more integrated solutions.
Importance of Accounting Services in Singapore
Implementation begins with the recording of transactions, which is a vital stage as it results in clear and consistent data. Accounting records furnish family businesses with comprehensive and structured reports demonstrating financial position, performance results, project progress and progress as well as payback, and key performance indicators (KPIs) of its management to judge the sustainability of the business and the degree to which objectives have been achieved as they describe the firm’s wealth. These records will allow family businesses to make sound business decisions and efficiently handle personal and/or business operations.
Accountants contribute significantly to closing the gap between the modern business management lifecycle and the bookkeeping of transactions. Accounting plays a key role in debating on the relevance of available management information due to the excess of quantitative data at a firm level which provides finance executives with testimony to develop reforms. The survival of such businesses is attributed to the significance of accounting development as a recorded and analyzed business information tool.
In Singapore, as of 2019, 22,924 accounting services firms were confirmed to be active. It was shown in the literature that with the knowledge of accounting software and cloud computing services like Xero, accounting is practicable with little effort. As such, this increasing trend is no surprise. The intensification of demand for accounting services depicts the significance of accounting services in supplementing the competitive corporate world and addressing accounting, financial reporting, management, and advisory needs while ensuring that financial information is correctly processed.
Accounting services enhance the success of enterprises in operating their businesses in various ways. These include the provision of critical information to stakeholders, the development of financial performance metrics for management, the ability to track project success and the sustainability of the business, and the provision of forecasts to assist in strategic planning and operations. When implemented correctly, accounting provides solutions to financial management problems and financial management of small businesses.
Maintaining Financial Records
Maintaining financial records is an activity which all organizations, regardless of size or industry, engage in. Accountants aid organizations in maintaining financial records so that managers may subsequently use the information to make more informed decisions about the best interests of the organization, and thus assess their financial performance. Though financial records were initially the only records made by accountants, accounting functions have been found to affect practically every aspect of an organization, and are now seen as fundamental to the success a business may experience in its sector. By entrusting their financials to an accountant, an organization gains access to the five following accounting functions: recording financial transactions, making entries, expanding and communicating accounting information, automating and personalizing financial documentation, and ensuring an organization’s financial books comply with tax submission requirements. In countries such as Singapore where accountants are generally well educated, they are well equipped to give accounting services. Others such as accounting clerks, students, and self-employed individuals are also able to lend their services at a more cost-effective rate than full-time workers. This demand for accounting services is illustrated via the four accounting models that are available to Singapore’s businesses. While a fixed price model may be of particular interest to SMEs which typically have small-scale operations, this subsection serves to provide a look at the three further accounting models that are common among business owners in Singapore, their suitability to a business based on its scale, and how they comply with tax regulatory requirements.
Ensuring Compliance with Regulations
By linking transparency to compliance, they find that firms are more likely to comply with corporate governance practices when a higher volume of reports is publicly available. Audit intensity, rather than audit fees, might in this case be arguably closer to the tax compliance literature by, in some manner, assigning a necessity-like status to what variables influence whether firms comply with accounting and reporting regulations? Moreover, the choice of the independent audit process as the primary dependent variable stands out as this emphasizes the monitoring component, rather than the discipline, which might be closer to related studies of enforcement of intellectual property rights and compliance. In fact, corporate finance and related accounting studies that have recently surfaced with rich disclosures on corporate governance evaluation metrics, such as Bebchuk, Cohen, and Ferrell, or the event-triggered governance announcements by Fich and Shivdasani, conclude on the capital market consequences of ‘quality’ governance practices rather than extensive governance activities.
Ermita and Hosein claim that the role of the auditor is an essential part of the wider compliance regime as they verify independently and provide credibility to the audited company’s reports on their activities. This, in turn, contributes to the level of trust in the company’s operations. Gilad and Schneider suggest that credibility is enhanced further in regulated industries where boards and auditors are appointed by relevant government authorities and their procedures laid out in legislation, as in the UK healthcare market. Gajewski posited that the degree of compliance is necessary for the existence of trust in the corporate sector and its growth prospects. Cronqvist and Yu studied a survey of more than 13,000 directors around the world and corroborated evidence on the importance of the auditor in helping board members to learn about the firm and the risk of receiving more ‘qualified’ audit opinions. These additional layers of external assessment on the company’s operations highlight the potentially reciprocal gesture of trust between investors and the board in relation to auditing services.
Providing Financial Analysis and Insights
One core competency of the best accounting firms is offering data that provides insights into a company’s financial performance, including revenue, costs, and other inputs. By providing thorough, strategic financial analyses, companies can use their financial data to more accurately forecast future business operations. In this way, a better recognition of challenges and opportunities allows for better business strategy planning, which in turn leads to more positive financial performance. Also, as opposed to more traditional accountants who mainly focus on bookkeeping or tax filing, standout business management accountants not only compile financial records but also analyze this data in-depth in order to propose financial strategies. It has been found that companies in Singapore which benefit from these insights and advice avail themselves of higher profitability and revenues.
Accounting services involve more than managing a company’s finances. When properly conducted, accounting services can also provide detailed insights into a company’s financial performance and strategic financial advice for business managers. In Singapore, the assistance of highly-qualified accounting professionals makes it possible to go beyond the traditional role of an accountant, offering deep financial analysis and valuable insights that can identify potential areas of improvement and growth for businesses. With the right kind of accounting services, businesses can better utilize their resources and work towards achieving expansion and success.
Types of Accounting Services in Singapore
- Audit Exempt Compilation Report: This is for more complex corporate entities with corporate shareholdings, cross-holding, and multiple operations. These companies are not exempted from the statutory audit requirement. The accounts will have to be prepared as per the Singapore Financial Reporting Standards and will include the Auditor’s Report. Currently, extra-statutory required reports include independent auditors’ report and omissions. The legal filing requirements for the compilation of the audited financial statements are a much more complex task and require a qualified professional to do so, usually at a higher fee. It may require appointing an inexperienced professional to combine with a licensed filing agent.
- Compilation of Unaudited Financial Statements: This is for companies, non-corporate entities, and companies that are preparing their accounts as per the financial reporting standards (FRS). It is to be filed in XBRL format and is extremely tedious administrative work.
- Compilation of financial statements: This is mainly done for non-trading companies and individuals who own only investment holding companies. It can be done by an uncertified professional as well as a licensed filing agent at a single annual fee and without XBRL format. It requires a statement by the company director to declare that the accounts have been prepared as per the Singapore Financial Reporting Standards (SFRS) and as per the Companies Act.
In Singapore, there are several types of accounting services available to businesses. The Accounting and Corporate Regulatory Authority (ACRA) has recommended three types of accounting services Singapore for businesses, and these have different legal filing requirements. They are:
Bookkeeping Services
Whether you are running a lucrative business for many years or you are still working on turning your business idea into reality, there is one thing that all business owners have a general consensus on: you need to keep accurate and up-to-date accounting records. Many business owners are already on board with using accounting software for ease of management. Some business owners still rely on their individually created Excel or manual bookkeeping. That is where accounting services in Singapore step in. There are just so many business decisions that you have to consider on a daily basis. If you would like to outsource your bookkeeping to us, kindly contact us to discuss your needs. In the meantime, find out more about the topic in this bookkeeping services guide. This will give you a better insight into what is regional bookkeeping and accounting regulations and the best practices to adopt for your Singapore business.
Simplify the process of running a business by allowing experts to handle your bookkeeping for you. Our team of experts at Alliance LLC is ready, willing, and able to assist you with any bookkeeping services you may require. Our bookkeeping services cover the following areas: we are comfortable working with different currencies, issue tax invoices, and keep track of debtors and creditors. We also offer monthly preparation of payroll, issue pay slips, as well as CPF computations and payments. We will keep track of trading of stock, fixed asset register qualifications, and limitations. Are you preparing for corporate audits? We can assist you by maintaining the necessary accounting records based on the Singapore statutory and tax regulations.
Tax Preparation and Planning
As the government adjusts its tax system to bring in more overseas revenues, the responsibility for understanding and complying with these increasingly complex regulations will rest on corporate clients and their tax agents. Similar to the traditional services described in the past, tax preparation has different tax agents preparing and submitting the tax forms to the relevant tax authorities. Tax Planning Services require tax agents to discuss with their clients plans to increase or reduce tax liabilities by methodically taking advantage of advantageous taxes, exemptions, deductions, and legal exemptions. Given the complexity of corporate operations, auditors familiar with all discrepancies should assess the relevant tax legislation at the end of the reporting season. As accountants, tax agents should regularly read relevant tax codes and manage client certifications through ongoing training.
Tax preparation and planning services involve helping clients prepare their tax returns and planning how they can save on taxes based on their financial situation. Tax can be a major source of lost profit and, unlike other costs, cannot be used to create a competitive edge. For example, find that for every $1 million in revenue that South Carolina software companies raised, the company’s founders will have to pay about $100,000 of personal taxes, about a tenth of their total venture funding amount. Companies in Singapore typically face a corporate tax rate of 17%, touted as one of the lowest globally, and the government plans to proceed with further planned cuts as part of its efforts to attract more companies to establish their regional headquarters or base main treasury functions in the nation (i.e., the service incentive for treasury and brokering transactions). Additional tax incentives are available for specific industries.
Auditing Services
High audit fees, in turn, reduce management earnings management behavior given the increase in the likelihood of being detected. Furthermore, auditors play an important role by having the responsibility of expressing an opinion about the management’s financial statement as to whether the financial statement is prepared accurately in accordance with financial reporting standards. This is crucial and important to the stakeholders such as the government, creditors, suppliers, customers, financial institutions and shareholders and any other potential investors. This is because they rely on this audit report depending on how the management performs the business operations. The directors and members of the audit committee relied on the auditors’ opinions in the audit reports when they make decisions about the matching of audit fee and profitability. To do this, audit fees are quoted based on the requirements for specific services rendered. A report by the Committee of Sponsoring Organizations of the Treadway Commissions attributed agency conflicts to the following three interrelated entities – the compensation committees, auditors, and the accounting standards.
The auditing services aim to add credibility and reliability to the financial statements prepared by the management. They also accumulate rights for the shareholders as they rely on financial statements to aid in making proper investment choices. This is because there is information asymmetry between the management who has more information regarding the firm’s financial performance and the shareholders. When the shareholders rely on the financial statements, it enables them to monitor the management to reduce the agency costs. Agency costs arise when the management place their self-interests ahead of the interest of the shareholders. When shareholders rely on the financial statements to monitor the management, it reduces the agency costs and therefore increases the value of the firm, thereby contributing to positive financial performance. Hence, a reliable financial statement plays a key role in contributing to shareholder wealth and may have an impact on the reputation of the firm. By having higher profits and a higher reputation, it helps to generate more customers which in turn contributes to the high audit fees.
Choosing the Right Accounting Service Provider in Singapore
It can be incredibly daunting for entrepreneurs to decide between the various accounting service providers that Singapore has due to the wide variety of accounting professionals that the service space offers. Questions asked can include which accounting professionals to look out for; the type of accounting firm to onboard, those which will provide specialized and in-depth services or broader services; as well as what services they require – limited services like bookkeeping, or more comprehensive services like actual audit practices. Regardless of the services chosen, it is important to remember that accounting remains critically relevant when commencing a business. Those businesses with formal accounting, bookkeeping records, and systems can generally avoid many costly pitfalls that can be associated with beginning large endeavors, for example, incorrect tax reporting, incorrect valuation of stock or losses. Therefore, finding the right fit from an array of accounting firm choices will be an incredibly important task for many small and medium enterprises.
Singapore’s abundance of accounting services has enabled companies to leverage professional expertise to carry out essential accounting functions. Singapore is home to a wide variety of accounting service professionals including Certified Public Accountants (CPA), Chartered Accountants, accountancy firms, and qualified bookkeepers to do a wide spectrum of accounting activities including financial statement audits, tax preparation, cost accounting, and internal audit functions, just to name a few. Depending on the size of their business, relevant skills, and available resources, businesses operating in Singapore generally decide between the two types of accounting services that are available for them: limited external accounting services like bookkeeping or full-fledged services like an audit which is usually associated with a more formal accounting department. In addition, many accounting professionals and consulting firms assist businesses, including startups and small-medium enterprises, on accounting and compliance requirements.
Assessing Expertise and Experience
Working experience allows the firm to gather technical knowledge, build networks, and increase their in-depth understandings of the types of businesses normally served by the firm. Executing engagements without changes in the engagement partners, which imply customer satisfaction, as well as having the same engagement partners for over at least three years, is additional markers of expertise. It hedges against unnecessary surprises arising from the possible negative performance swings associated with constant changes in the personnel in charge. Moreover, changes in engagement partners have been found to affect the quality of the financial reports prepared by auditors.
A senior partner having completed a training program such as those on how to conduct quality audits is another cue to expertise. Such only begins after 8-9 years of experiencing, concurring with that of Glover. These steps also incorporate important features of performance motivators and further build on the best practices recommendations outlined by the observers above and among others.
Our first measure to determine expertise is from firms’ capabilities to undertake more complex engagements. The threshold of keeping the ordinary partner to ratio slightly above 14.93, equivalent to 15 employees, is in line with the suggestion by DeAngelo. Further, we also incorporate revenue and business entity size among covariates to control for their slight moderating effects on firms’ higher capabilities. Those studied required larger revenue thresholds to register in one size classification higher for partner to worker ratio than smaller firms.
Regulators and business stakeholders keen on assessing the perceived quality of services provided by an accounting firm can gain more tangible evidence through considerations of that firm’s expertise and experience. These are proxies traditionally adopted in relevant literature to assess the perceived quality of services, evidence increasingly relied on when credible measures for most quality and performance aspects are still largely elusive.
Considering Service Fees and Pricing Models
Fees are an essential aspect to consider when looking to hire an accounting firm for the first time. Most accounting firms offer exclusive pricing, owing to the variety of business services and solutions that the service generally includes. Knowing the pricing model, therefore, can be quite the dilemma for SMEs. As an accounting firm, we can safely say that our tailored and strategic-oriented approach generally includes an hourly rate charged based on the type and number of services required in addressing our clients’ needs. Time and expertise fees apply to business services such as strategic and operational accounting and finance management, including managing accounting software, taking care of tax preparation and submission requirements, handling payroll, invoice, or other financial management issues, and other tasks as deemed essential to the needs and requirements of the client.
There are many reasons for engaging an accounting firm, and cost is often essential to consider. However, one is reminded that one should not put cost on par with professional assistance because the savings one gets may not be acceptable in return. Engaging a good accounting firm, equipped with knowledge and experience to handle one’s business needs, offers many value-added benefits that money cannot buy. In making a decision about which of the right company incorporation services are best for one, it is important to seek the professional advice of accounting firms in Singapore. Or one can visit customers’ feedback and experiences of a company to understand more about it. After all, the returns of a wise decision are always rewarding and lasting.
Evaluating Client Reviews and Testimonials
Unfortunately, it may seem daunting to source for this type of information. Business owners, particularly small businesses, often lack the time to scour customer testimonials available on different sites due to managerial time constraints. Hence, they are not able to evaluate clients’ feedback systematically by comparing reviews from different platforms. Furthermore, the ability to solicit client testimonials and evaluations is now easily manipulated by recent advances in information technology. Testing the source of client testimonials or ensuring delivery accuracy are common challenges in evaluating the credibility of these messages. Therefore, it is recommended for business owners who are considering incorporating accounting services within their company’s ecosystem to seek direct testimonials and word-of-mouth referrals from trusted sources.
The popularity of internet technology has allowed information sharing to accelerate rapidly. The ease of publishing these types of material has also led to an exponential increase in marketing messages platformed on webpages and blogs. It is not easy for business owners to evaluate accounting services based on the marketing messages. However, client reviews and testimonials often provide a more accurate and reliable source as service feedback, as these are from existing or previous customers. These reviews and testimonials report the experience received when the service is used. Clients have the ability to provide honest testimony about the level of service and professionalism they have received from their service provider.
