Introduction

FRS 118 (Presentation and Disclosure in Financial Statements) applies to annual reporting periods beginning on or after 1 January 2027, with earlier application permitted. The standard introduces enhanced presentation and disclosure requirements to improve transparency, consistency and comparability in financial reporting.

 

A) Why the Amendment is Important for Singapore Companies

FRS 118 replaces the presentation requirements of FRS 1 with a more structured, principle-based model. Key changes include the classification of income and expenses into five defined categories: Operating, Investing, Financing, Income Taxes and Discontinued Operations, as well as the introduction of mandatory profit subtotals. FRS 118 enhances transparency, consistency and comparability in financial reporting.

 

B) Who is Responsible and Accountable

Directors and those charged with governance are ultimately accountable for financial reporting. Finance teams are responsible for implementing FRS 118 and preparing compliant financial statements, while external auditors independently assess compliance and report significant findings.

The board is accountable for oversight, while finance teams are responsible for implementation.

 

C) How Companies Can Prepare for SFRS (I) 18

 

Understand the Requirements

• Review the amendment in detail, focusing on new disclosure rules, presentation formats, and treatment of uncertainties
• Engage with professional service providers and regulators early to clarify expectation.

 

Train Finance Teams

• Conduct internal/external trainings to familiarize staff with the new standards
• Emphasize judgement areas such as materiality and uncertainty disclosures

 

Update Systems & Templates

• Align ERP and reporting software with SFRS (I) 18 requirements
• Revise internal reporting templates to reflect new aggregation/disaggregation rules

 

Run Mock Reporting Exercises

• Prepare trial financial statements under SFRS (I) 18 before the effective date
• Identify gaps in disclosure and presentation

 

Annual Review & Audit

• Review disclosure quality and consistency of presentation
• Confirm that comparative information is properly disclosed

 

FRS 118 may require changes to chart of accounts, reporting processes and systems. Classification of items such as interest income and dividends will require careful assessment based on the entity’s primary business activities.

 

D) Key Takeaways

Preparing for FRS 118 extends beyond technical compliance. It may require changes to reporting processes, systems, governance oversight and financial statement presentation.

 

Prepared by our Singapore Corporate Services Team

Applicable to entities preparing financial statements in accordance with Singapore FRS.

Information is accurate as of 8 October 2026

 

Disclaimer: This article is intended for general informational purposes only and does not constitute legal, regulatory, or professional advice. While efforts have been made to ensure that the information provided is accurate and aligned with Singapore laws and regulatory practices as at the date of publication, regulations and interpretations may change. Readers should not rely on this article as a substitute for professional advice and are encouraged to seek specific legal or corporate advice tailored to their individual circumstances before taking any action.