Intangible assets such as intellectual property and goodwill are important sources of competitive advantage and economic value for any business. However, companies may face challenges in the valuation and reporting of intangible assets, particularly in this digital economy. This is exacerbated by a lack of standardised reporting principles.
To address this issue, the Accounting and Corporate Regulatory Authority (“ACRA“) and the Intellectual Property Office of Singapore (“IPOS“) jointly issued a public consultation paper on 14 December 2022 proposing an Intangibles Disclosure Framework (“Framework“) to help businesses disclose and communicate their intangibles.
The Framework is an initiative under the Singapore IP Strategy 2030 (“SIPS 2030“), a 10-year blueprint to strengthen Singapore’s position as a global intangible assets and intellectual property hub. One long-term goal of SIPS 2030 is to build a credible and trusted intangible asset valuation and reporting ecosystem to support enterprises in managing and commercialising their intangible assets. In this regard, through the development of the Framework, SIPS 2030 seeks to establish Singapore’s position as a frontrunner in the global community, as no jurisdiction has developed an intangible-specific disclosure or valuation framework.
The Framework outlines the four pillars that an enterprise should observe when disclosing their intangibles in a report and provides guidance for disclosure under these principles:
(a) Strategy. Disclose how intangibles contribute to business, strategy, and financial planning where such information is material.
(b) Identification. Disclose the nature and characteristics of the intangibles that fit into the definition provided, and categorise them.
(c) Measurement. Disclose the performance metrics and drivers used to assess an enterprise’s intangibles where such information is material.
(d) Management. Disclose how an enterprise identifies, assesses, and manages the risks and opportunities of its intangibles.
The Framework will help businesses communicate the value of their intangibles and maximise their economic potential, which will also serve to enhance information transparency and facilitate the commercialisation of intangibles. Enterprises with intangible assets should thus be aware of the principles set out in the proposed Framework and submit any feedback they may have to ACRA or IPOS by 28 February 2023, the closing date of the consultation.
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