THE financial markets in Singapore have evolved to meet the new challenges in a dynamically changing world. This is particularly the case for financial reporting. Accounting standards issued by the Singapore Accounting Standards Committee were enshrined into the regulatory framework with the passing of the Accounting Standards Act in 2007. This makes compliance with accounting standards legally mandatory. It removes any possible ambiguity as to the importance and relevance of complying with the accounting standards for financial statements to be deemed true and fair.

This provides a significant framework for directors to comply with Section 201 of the Companies Act, which holds all directors responsible for ensuring that the financial statements provide a true and fair view of the financial position and performance of the company. The presumption here is that the preparation of financial statements in compliance with the accounting standards will result in true and fair financial statements.

As asserted by the auditors, the preparation of financial statements is the responsibility of management and directors, who oversee the production process. In addition, the directors provide an explicit statement that the financial statements comply with the accounting standards and are true and fair.