Outsourced Accounting Services Help You With Preparing Financial Statement
Most small and medium companies in Singapore outsource many of their tasks. This is to save money that they would otherwise be paying for their employees. If they want to appoint an employee for each of these tasks, they will pay not just the salary but also other perks. In addition to this, they will also have to spend time managing these employees. There are some tasks which the company must get its employees to do because they bring revenue to the company. Many of the other functions are supportive and hence don’t bring any returns. Accounting services is one such function that is very important and requires experts. Outsourcing accounting work can help the company in maintaining accounts properly and in compilation financial statements.
Understanding The Need For Compilation Financial Statements
The companies that find it difficult to perform the accounting functions are mostly small and medium. Many of these firms are exempt from auditing. But they are also mandated by the ACRA to submit their financial statements. The unaudited financial statements are essential to be prepared by all the companies. This statement will give all the information about the financial transactions and status of the company.
The financial statement has to be compiled as per the Singapore Financial Reporting Standards. It is a statement that will give the shareholding position of the company. It will also have a record of the assets and liabilities of the company. There will be a detailed mention of the total sales that the company did and what costs it incurred for the sales. The earnings before and after the payment of taxes are given in this statement.
If the company has received income by means other than sales of the products that are also mentioned in the statement. You must include any income you have made by the disposal of any of the assets. The bank loans that the company has and the interest paid towards it are also mentioned. In total, the financial statement is a total representation of the company’s financial dealings in the year.
Knowing What An Audited Financial Statement Is?
For many companies, the ACRA mandates that the financial statement must be audited by external auditors who will check the entries and affirm that they are correct. The auditors will also check every figure that you have mentioned in the financial statement. They will check whether the inventory that you have mentioned in your statement is physically available with you. The auditor must be a qualified practicing accountant. He or she must confirm that what you have mentioned is a true statement of your company’s financial position.
An auditor will also check how the accounts are being maintained. They can share their opinions about accounting is being done and whether you are following the right practices. The auditor can also make a mention of any information that is missing. If you have refused to share any information that will also be mentioned. Getting a good review by the auditor is very essential for the companies. Getting a bad review can create a lot of problems for the companies including from the investors.
The auditors will also check your internal operations. They will check whether the company has enough controls in place to see that the financial position is good. They will see if there are people who can monitor the spending and ask questions if there are bad practices. The persons who are authorized to spend money must have someone who is checking the way it is being spent. In the absence of such a system, the auditors will check for any fraudulent activities. The auditors must protect the interests of the shareholders of the company.
Getting auditing done by a certified accountant and this can be very expensive. The audited financial statements will also take a lot of time to be prepared. All companies except those which are exempt from it must submit the audited financial statement to the ACRA. Companies must keep in position an auditor within three months from the date of incorporation with the ACRA. It is compulsory to audit the accounts every year.
Understanding The Need For Unaudited Financial Statements
Unaudited financial statements are the same as audited financial statements recording the same figures and details. The difference is that there has been no audit of the accounts conducted by certified public accountants. ACRA allows small companies to submit financial statements without auditing them. This is done considering their low turnover and the expenses involved in getting their statements audited. The ACRA assumes that the figures mentioned are correct and everything is in order.
The companies that are allowed to submit unaudited financial statements are small companies with a turnover of less than S$5 million in a financial year. The companies that don’t have more than 20 individual shareholders are allowed to submit the unaudited statements. The company must not have any corporate shareholding. The scale of fraud, if any, is limited in such companies and the number of shareholders who will be affected is also less. There will be no public that will be affected by not auditing the statements of such companies.
The Advantages Of Unaudited Financial Statements
The main advantage that the small companies get from being able to submit unaudited financial statements is that they don’t have to spend money on auditing which can be quite expensive. The unaudited statements will also give all the details that are needed for knowing the correct financial position of the company. It will show the profits made by the company. Information about the assets and liabilities of the company can be seen in this statement.
Getting an unaudited financial statement is beneficial even for companies that need auditing to be done. They can get the statement without much delay. Auditing can take many months and this can delay the management in knowing the position of the company. The unaudited statement will give information necessary for running the company in the right manner.
Unaudited Financial Statement Packages
Accounting service providers can prepare the unaudited financial statements for you on time to submit to the ACRA. There are different packages based on the requirements of each company. The service providers have different charges for different types of companies. There are separate packages for dormant companies, small and medium companies, and other active companies. For companies that have more than 12 months financial period, there will be additional charges.
If there are companies with multiple types of fixed assets there will be extra charges. Companies that have hire-purchase amounts pending or other loans then there will be additional charges levied. If you need a presentation of each expense group for the company you still have to pay extra for it. Companies involved in the construction business will have to be compliant with FRS 11 and this will need to be paid extra. Any company which has invested in financial instruments will also be charged extra while preparing the statement.
Other Services Offered By Outsourcing Companies
These outsourcing companies offer various other services for small and medium companies in Singapore. The preparation of the financial statement in the XBRL format is a service that you can get from the service providers. It is a language that is used internationally for reporting of business activities. Reporting in this language helps companies with branches overseas to have one form of reporting that can be integrated. It also helps the information in the report to be shared easily online without having to download it.
The service providers in Singapore help to extract various reports that are useful for the company. The receivables statement is one such statement that gives you information about the payment that is pending from your customers. Getting updated information on this is needed for you to collect your payments on time. When you avail of the online software, you can see this statement on the mobile phone itself when you are with the customers. You will be able to show this and make a request for payment. This can greatly help in having enough cash for the daily operation of the company.
When you outsource your accounting work to a reputed service provider you are also ensuring the confidentiality of the details. These companies are highly experienced in the job and will take good care to keep your records safe. With the use of modern technology, the service providers ensure that there is no leak of your data. The data is safely stored with enough back-ups to support in case of any problems. The outsourcing companies also help in interacting with auditors where there is a need and discussing issues with them. They will clear the doubts for the auditors without needing your presence.