From 15 August 2024 to 14 September 2024, the Monetary Authority of Singapore (“MAS“) conducted a public consultation on its proposals set out in the “Consultation Paper on Proposed Amendments to Requirements for Preparation of Financial Statements and Reports under the Code on Collective Investment Schemes”. In the consultation paper, MAS sought comments on the following key changes to the requirements for the preparation of financial statements under the Code on Collective Investment Schemes (“CIS Code“) for authorised collective investment schemes (which include real estate investment trusts (“REITs“)) (“Authorised Schemes“).
- Authorised Schemes to Adopt SFRS(I)
- Currently, under the CIS Code, the manager of an Authorised Scheme must prepare the financial statements for the semi-annual report and annual report for the Authorised Scheme in the manner prescribed by the Institute of Singapore Chartered Accountants (ISCA) in the Statement of Recommended Accounting Practice 7: Reporting Framework for Investment Funds (“RAP 7“).
- MAS proposes to require the manager of the Authorised Scheme to prepare the financial statements in accordance with the Singapore Financial Reporting Standards (International) (“SFRS(I)“). Other major fund jurisdictions, like Australia, Luxembourg, Ireland and Hong Kong, have permitted the use of International Financial Reporting Standards (“IFRS“) or mandated the use of IFRS-identical standards. As SFRS(I) is identical to the IFRS, an entity complying with SFRS(I) can elect to simultaneously include an explicit and unreserved statement of compliance with IFRS. Consequently, aligning the preparation of financial statements with international practices may lead to potential cost savings for managers of Authorised Schemes that offer international funds.
- MAS also sought views on whether there are other accounting standards, apart from SFRS(I), which may be suitable for the preparation of financial statements relating to Authorised Schemes.
- Exceptions for Certain REITs to adopt IFRS
- In addition, if the proposal for Authorised Schemes to adopt SFRS(I) is implemented, MAS proposes to allow REITs that had obtained a waiver from MAS from the requirement to prepare their financial statements in accordance with RAP 7, and have instead been preparing their financial statements in accordance with IFRS, to continue to do so.
- For a new REIT that is seeking to list on the Singapore Exchange Securities Trading Limited (SGX-ST), MAS proposes to allow it to prepare its financial statements in accordance with IFRS if the REIT’s sponsor and/or subsidiaries have been preparing their financial statements in accordance with IFRS prior to its listing.
- Retaining Certain RAP 7 Disclosures That Are Not in SFRS(I)
- SFRS(I) does not require certain disclosures relating to the statement of portfolio and statement of distributions (in the case of REITs) that are prescribed under RAP 7. Since disclosures of such information are important to the investors of Authorised Schemes, MAS proposes continuing mandating the disclosures by setting out the requirements in the CIS Code.
Proposed Implementation Timeline
MAS proposes requiring Authorised Schemes (including REITs) to start preparing their financial statements and reports for the Authorised Schemes in SFRS(I) for the financial year ending on or after 31 December 2027.
Click on the following link for more information:
- MAS “Consultation Paper on Proposed Amendments to Requirements for Preparation of Financial Statements and Reports under the Code on Collective Investment Schemes” (available on the MAS website at mas.gov.sg)
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