Preparation of Financial Statements

1. Gathering Financial Data:

Transaction Records: Collect and verify all financial transactions from the company’s accounting system. This includes invoices, receipts, bank statements, and ledger entries.

Adjustments and Reconciliations: Make necessary adjustments for accrued expenses, deferred income, depreciation, and other accounting entries. Reconcile bank statements with the company’s records.

2. Preparing Core Financial Statements:

Balance Sheet (Statement of Financial Position): Shows the company’s assets, liabilities, and equity at the end of the reporting period. Assets must equal the sum of liabilities and equity.

Income Statement (Profit and Loss Statement): Summarizes revenues, costs, and expenses incurred during the reporting period to show the company’s profit or loss.

Cash Flow Statement: Provides a view of the company’s cash inflows and outflows from operating, investing, and financing activities.

Statement of Changes in Equity: Reflects changes in the company’s equity throughout the reporting period, including retained earnings and dividends paid.

3. Compliance with Accounting Standards:

Adherence to SFRS: In Singapore, financial statements must be prepared in accordance with the Singapore Financial Reporting Standards, which ensures consistency and comparability with other entities.

4. Notes to Financial Statements:

Detailed Explanations: Include notes providing details on accounting policies, additional information on specific accounts, and explanations of significant financial transactions or changes.

5. Management Review and Analysis:

Internal Review: Conduct a thorough review of the financial statements for accuracy and completeness. This often involves management or the finance team.

Analytical Review: Perform a variance and trend analysis comparing the current year's figures with prior periods and budgeted figures.

6. Audit Preparation (if applicable):

External Audit: Prepare for an external audit if required. This involves providing the auditors with financial statements, supporting documents, and explanations of various transactions.

7. Finalization and Approval:

Director’s Approval: Financial statements must be approved by the company's directors before they are issued or presented at the AGM.