Harmonization in IFRS rules and regulations - Amara Holdings case study

This report discusses the success of harmonisation in adoption of IFRS, with a case study on Amara Holdings Limited in Singapore. It covers reasons for harmonisation, issues involved, and recommendations.

Amara HOlding
International Accounting
Harmonization in IFRS rules and regulations
Name of the Author
University Name-

EXECUTIVE SUMMARY
With the increasing ramified economic changes, every organization needs to comply
with the domestic and international financial standards to mitigate the harmonization issues in
their international reporting frameworks. Current report under study deals with certain
discussions related to International Financial Reporting Standards (IFRS). The limelight topic
is the critical evaluation of the success of harmonisation in adoption of IFRS. The country
chosen for examination purpose is Singapore. For case study purposes, the company
illustrated is Amara Holdings Limited. The series in which report is presented involves the
reasons of harmonisation, issues involved, case study on Amara Holdings Limited depicting
the company’s financials consisting of equity, capitalization of development costs, effect of
deferred taxes, etc. Along with the case study involves, a statement pinpointing the basis of
research, and the issues involved. The report ends with certain conclusions and
recommendations. It is analysed that the main reason of harmonization is related to mitigate
the regulatory compliance issues related to domestic and international accounting standards.
THE adoption of IFRS was done with view to strengthen the transparency of the regulatory
compliance and accounting standard reporting framework of organization in long run.

Table of Contents
EXECUTIVE SUMMARY...................................................................................................................1
INTRODUCTION.................................................................................................................................3
REASONS FOR HARMONISATION..................................................................................................3
ISSUES IN HARMONISATION..........................................................................................................5
CASE STUDY OF AMARA HOLDINGS LIMITED...........................................................................6
RECOMMENDATIONS.......................................................................................................................8
Conclusion...........................................................................................................................................10
COMMENT ON RESEARCH (Self Reflection).................................................................................10
REFERENCES....................................................................................................................................12
Appendix.............................................................................................................................................14
Appendix-2..........................................................................................................................................17
FROM THE ANNUAL REPORT OF FINANCIAL YEAR 2017......................................................................17
Balance sheet of 2017.........................................................................................................................18
Profit and loss for 2017.......................................................................................................................18
OUTSTANDING LEASE COMMITMENTS 2017......................................................................................19
OUTSTANDING LEASE 2016.................................................................................................................19
FINANCIAL INSTRUMENTS 2016 AND 2017.........................................................................................20
BALANCE SHEET 2016..........................................................................................................................20

INTRODUCTION
IFRS is like a common communication tool for business affairs so that the accounts of
the companies on a global platform seem comparable and streamlined. These are the
accounting standards that are issues by International Accounting Standards Board (IASB)
(Larson & Herz, 2013). Harmonisation with IFRS stands as an effort to gradually bring a
reduction in the diversities involved in several accounting practices at the global level.
Further harmonisation with IFRS deals with removing the hindrances that obstruct purposeful
integration of IFRS with current financial system. But the process of harmonisation is not as
easy as the theory speaks about. The upcoming sections describe in detail the exact situation.
In Singapore, all companies that have their incorporation done in Singapore and the
Singapore branches of foreign companies are required to present their financial statements as
per Singapore Financial Reporting Standards (SFRS) as per the requirement of companies act
(Joshi, Yapa & Kraal, 2016). The substance of Singapore financial reporting standards is
same as International Financial Reporting Standards. It will not only strengthen the
disclosure and financial reporting standards process which will strengthen the disclosure
requirement of organization. However, after adopting the IFRS rules and regulations in
Singapore, the major changes in the accounting standards and applicable laws have been
found is related to contract laws, lease agreement and impairment test undertaken by the
companies.
REASONS FOR HARMONISATION
Before any particular reason can be established as a motivating factor behind
harmonisation, the most certain deal is the reduction of cross country diversities in
accounting practices. With the onset of globalisation, the whole world is working at the same
parlance with their own set of opportunities. However, at the international level the financial
reporting disparities probed a big issue. In order to mitigate the reporting and accounting
issues arise due to the domestic and international accounting standards, Singapore accepted
the parlances of the harmonization in its listed companies reporting. Researches have
suggested that the main reason behind the adoption of IFRS is getting larger access to
overseas and international capital markets (Garanina & Kormiltseva, 2014). It is so because,
with financial instruments prepared with the help of globally accepted accounting policies,

they become widely accepted (Biddle, Callahan, Hong & Knowles, 2016). This is in line with
increasing the capital investment made in country.
Along with the access which the Singapore will get much widely after adoption, the
adoption of IFRS ensures the investors that they are getting the best quality reports. The other
benefit which is a great driver when it comes to harmonisation is the reduction of
reconciliation costs because, now entities need not to converge with different countries’
accounting policies and prepare separate statements.
It is analyzed that if Singapore adopts the IFRS rules and regulations then it will result
to less reporting issues for the international companies which are working on international
level. It will also lead to cost benefits due to elimination of preparation of financial accounts
in accordance with different countries’ accounting policies, harmonisation brings into light
effective audit being conducted (Kusnadi, Leong, Suwardy & Wang, 2016) .
Singapore will strengthen its reporting requirement and transparent accounting busienss
practice if it adopts the IFRS rules and regulation in its economic. It will frame of policies in
preparation of accounts which makes it easier to audit them and at the same time gives results
that are internationally accepted. If company follow the IFRS rules and regulations then it
will avoid the unnecessary costing and charges of company in preparation of the financial
statement which will eventually make the business more cost effective. It is further analysed
that in case of conflict arise in the international financial reporting standards and domestic
reporting standards, company will comply with the IFRS rules and regulation. Singapore has
made mandatory for all the listed companies to comply with the IFRS rules and regulations as
it lower down the conflicts in domestic and international reporting frameworks and make
easy for the international companies to comply with the reporting compliance laws.
The process of harmonisation had been a well-planned and well-articulated process
for the country. The opinions of users across overseas as well as the organisations have been
considered before any finalisation. This had made IFRS much wide in scope and better than
any country’s individual accounting practice. Adoption of IFRS is being considered as the
‘best practice’ among almost countries of the world as it accrues certain benefits as reduction
in costs, wider access to overseas markets, standard benchmark for preparation of financial
instruments, better and highly efficient allocation of resources, decreased chances of resorting
to earnings management to manipulate accounts and etc.

ISSUES IN HARMONISATION
As already discussed, implementation of IFRS doesn’t seem as easy as the text says.
IFRS involves a drastic change in the accounting policies that are being followed by an
entity. The key decision of adopting the IFRS is related to that demanded attention included,
retention of optional accounting treatments; retention of Singapore specific disclosures; the
extent of application of IFRS (Edogbanya, Adejoh & Kamardin, 2014). The various
challenges involved in the process of harmonisation are discussed as follows: These issues
and challenges have emerged due to the different regulatory compliance program and less
effective harmonization process which each and every company needs to adopt in their
reporting frameworks. The Harmonization process is promoted so that every company could
adopt the standard reporting frameworks on the international level so that it would be less
confusing for the stakeholder in the interpretation of the financial transactions reported in the
financial statement. However, there are some of the issues have been found in the
harmonization process of accounting standard (Christensen, Lee, & Walker, 2007).
Singapore faced the issues while adopting the IFRS by the rulling party in its economic but at
the same time it was opposed by the opposition party as they lead the case towards the
overriding domestic compliance program and may result to domination on the domestic
regulatory accounting reporting compliance. The main issues which Singapore faced in
adoption of the IFRS were related to changes in the several acts such as Corporation act,
listing requirements and accounting rules. It leaded to big level of complexity and issues for
the Singapore while adopting the harmonization in its financial reporting. The staffs of any
organisation are well trained to follow the existing policies. Any change or updating in the
structure needs the requirement of change management. The staffs are required to get
acquainted with the benefits that the new system shall bring to them and the organisation.
This may call for union movements across the country and shall cause a situation of tension.
Accountant and financial mangers needs to learn all the IFRS and domestic accounting
standards to mitigate the international financial reporting issues with the international
business growth.
The employees are required to be trained about the changed policies and the procedures that
they need to learn and follow. The training needs to be done with the help of training
consultants which also adds to the cost. Government may need to extend financial aid to the
organisations. Different countries have different scope of accounting work and hence the

work varies differently. As the work is very different, so the process of work also differs
significantly. The IFRS being a standard benchmark are not consistent with every country’s
accounting procedures. Even the processes vary within a country. The cultural diversities also
hamper the harmonisation process. The developed countries stand at a dominant position in
formation of IFRS (Sharma, Joshi & Kansal, 2017). Even when it’s mandated to adopt IFRS,
certain entities do not comply with them completely. Different levels of compliance are seen
to be followed. Even the auditors are not completely able to express an opinion regarding the
compliance of IFRS.
It is analyzed that the cultural differences and issues will also prone to the harmonization in
IFRS rules in Singapore. For instance, Cultural differences are not easy to be avoided because
even at the notch of every changing city there is a different perspective regarding cultural
values. Harmonisation needs to deal with the cultural differences which are not easy to
implement (Christensen, Lee, & Walker, 2007).
In terms of Taxation, we have observed that Singapore is following different taxation
policies. The rates, computation of income, deductions allowed, incomes considered are all
different for different countries. Harmonisation has to completely do with these different
taxation policies for its successful implementation. As a result, they may stand contradictory
to that of Singapore. In addition to this, in context with the multinational companies, it is
observed that implementation of IFRS ETR (effective tax rates) or more volatile ETR..
Singapore will also have to face lower down its government fund due to the changes in
taxation rules. Furthermore, adoption of IFRS will lower down the foreign tax collected by
company from different multinational organization (Jackling, 2013).
Another significant issue is the monopoly standing of certain countries over Singapore in the
policy making hearing for harmonisation. Countries that are on a stronger footing to call for
their rights and put up their own recommendations in priority over that of Singapore probe
issues for adoption of harmonisation in Singapore (Sharma, Joshi & Kansal, 2017). Singapore
will have to change all of its financial reporting laws and regulations as per the IFRS rules
and regulation which might make companies more prone to increased cases of insider trading
in Singapore market (Bloomfield, et al. 2017).
Apart from the employees, the investors; accountants; auditors; users and preparers of
financial reports, needs to be taught well about the IFRS process and techniques. The main

challenge for Singapore comes up as being a follower of international standards than the
developer of standards for domestic entities (Nobes, 2013). Every company needs to hire the
legal compliance officer and public account who could record the financial transactions in the
books of accounts as per the domestic and international financial accounting standards
(Bloomfield, et al. 2017).
CASE STUDY OF AMARA HOLDINGS LIMITED
In this case, Singapore Company Amara Holding Company has been taken into consideration
to evaluate the consideration of harmonization of international and domestic financial
accounting rules in preparation and reporting of financial statements. Amara Holdings
Limited had been required to adopt the Singapore Financial Reporting Standards for the
presentation of financial statements. They have been found substantially similar to the
International Financial Reporting Standards. As evident, the historical cost method is used
except a few exceptions (Strouhal,, Horák, & Boksova, 2017).
As from January 1, 2017 the company has successfully adopted every new and revised
Financial Reporting Standard. Further the Accounting Standards Council (ASC) has come up
with the direction in December 2017 for adoption of a complete new framework being
Singapore Financial Reporting Standard (International) to be adopted by all Singapore-
incorporated companies listed on Singapore Exchange (SGX) for periods beginning on or
after 1 January 2018. These are to be applied retrospectively. Though management feel that,
the change shall not bring any material effect on the financials. The financial year 2017 is the
transitional period for which the new standards are being adopted just to see the change they
bring in the whole accounting presentation and financial figures.
Similarly, SFRS (I) 16, Leases, changes the method of accounting in case where the group is
a lessee when it comes to operating leases. And where the group is a lessor, the additional
disclosure requirements shall include group’s exposure to asset and credit risk. The table
shown below presents the financial figures available from the annual reports for financial
year 2017 that is depicted from the website of the company. However, management
anticipates that the adoption of this standard might result in the revenue figures of certain
revenue items to be changed. The disclosures mentioned above need to be made too.
Although the management doesn’t plan to adopt the standard in rush. All the figures are in
Singapore dollars and have been shown on a company basis and depicts the effect of

international standards on the financial figures by showing the balance sheet figures of
financial year 2016 i.e. one year before the adoption or transitional period and of financial
year 2017 that is the actual transitional period. The data for financial year 2018 cannot be
fetched as it is not yet prepared (Amara Holding Company, 2017).
SGD’000
Financial year 2017
(after IFRS adoption)
SGD’000
Financial year 2016
(before IFRS adoption)
Total equity (as on 31
December)
379,236 373,653
Development Properties 102,016 77,393
Depreciation charge 5,579 5,557
Outstanding lease commitments
(when group is lessor)
34,485 34,382
Financial instruments 15,327 21,936
Deferred tax liabilities 12,504 5,543
Provisions 6,570 (633)
(Please check the Appendix for the details)
These accounts reflects that after adoption of the IFRS rules and regulation, company has to
differently record the accounting and financial transactions in the books of accounts of
company. After assessing all the details, it could be inferred that company has kept its

business more transparent and strengthen its disclosure requirement to make its stakeholders
aware with its all the financial and non-financial transaction.
RECOMMENDATIONS
There are several recommendations which need to be followed by organizations to mitigate
the IFRS harmonization issues and cases.
Though the IFRS have been implemented, though they still require certain modifications.
Modifications need to be implemented with proper planning and serious consideration. The
harmonisation process needs to be strategically planned and has to be in line with legal
requirements.
Just planning about the implementation and implementing the IFRS is not enough for the
success of harmonisation. It’s required that every user is communicated about the changes in
the financial reporting process that shall follow after implementation. Work should be done in
order to ensure transparency and accountability. The communication content should also
include the transition process and plans. This is necessary to make the users knowledgeable
to ensure successful implementation.
Successful harmonisation requires placing adequate resources for implementation of IFRS.
Various consultation lines must be opened that provide clarity to the users for proper
implementation of IFRS.
The IFRS shouldn’t focus only on the needs of large enterprises. The standards must
incorporate within areas that address the needs of small and medium enterprises. The
complexities involved in the large entities are different from the cases of small and medium
enterprises (Perera & Chand, 2015).
As discussed, proper training of the parties involved in use and implementation of IFRS
being the auditors, accountants, investors, analysts and others should be undertaken to
educate them about the same.
Greater autonomy should be provided to the oversight board because this board is responsible
for setting standards, reviewing implementation, etc. The board itself should improve its
processes by implementing people who are technically qualified and their continuous training
must be preferred.

Before any amendment is made, a draft should be made at prior end and the same should be
disseminated among the professionals and general public to demand their feedback and areas
of improvement and other constructive opinions.
Implementation of IFRS and to bring harmonisation should not be thought over as a one-
time process but it should be taken as an on-going activity which shall require continual
planning and modifications.
Continuous support must be extended by the related professional bodies for successful
harmonisation effort.
Further, the education of IFRS should be mandated from university accounting education.
Certification course for IFRS education must be initiated that will hold importance in
grasping better employment to the professionals (Jackling, 2013).
Further the Accounting Standards Council (ASC) has shown that company has adopted new
framework being Singapore Financial Reporting Standard (International) to be adopted by all
Singapore-incorporated companies listed on Singapore Exchange (SGX) for periods
beginning on or after 1 January 2018. These are to be applied retrospectively. Though
management feel that, the change shall not bring any material effect on the financial
statements which will strengthen the financial reporting frameworks on international level.
Conclusion
After analysing all the details and case study of harmonization of the IFRS in
Singapore, it could be inferred that harmonization in the domestic and international
accounting standards is very much necessary for the effective financial reporting of the in
country. The main complexity which Singapore has faced in adoption of IFRS rules in
reporting of the financial statement is related to disclosure or transparency, economic issues
and legal compliance program. It has been analysed that government of Singapore has
effectively manage the harmonization issues in its reporting framework which have
strengthen the reporting and accounting frameworks to international level. Now in the end, it
could be inferred that IFRS reporting frameworks have shown that Singapore has changed the
value of the amounts of financial transactions recorded by companies in its economic in 2016
and 2017 throughout the time.

COMMENT ON RESEARCH (Self Reflection)
The research topic tends to be a burning issue as certain dilemmas regarding the
preparation of financial statements as per the internationally adopted IFRS. The focus is
shifted in the harmonisation process that follows the new implementation. The research is
conducted with the use of information available about the text of International Financial
Reporting Standards and the financials of company extracted from company’s (Amara
Holdings Limited Singapore) website as known to be annual reports. This research has been
conducted after collecting the required international financial reporting information and other
details shown in the annual reporting of company. In addition to this, secondary sources such
as use of journal articles, web information and official gazettes have been used to collect the
required amount of data. This information has assisted me to analysis the reasons and issues
related to harmonization of the international and domestic accounting standards in
preparation of the financial statement with the reporting authority.
The analysis done shows the transparency and accountability with which the company has
followed the standards issued as IFRS. At an initial stage the company has successfully
fragmented the whole process in three phases being the assessment and planning phase,
design phase and the implementation phase. Before the IFRS are completely complied with,
the group has adopted the Singapore Financial Reporting Standards. It is observed that a lot
of judgement is involved while adopting the IFRS. As available from the annual reports on
the website of company, the latest available is for the financial year 2008. The reports for
older financial years are not available on public portal. As a result the whole analysis is done
as per the availability of the reports.
The research required a lot of analysis and personal judgement to opine regarding the success
or failure. Though the adoption of IFRS and related harmonisation seems a success in case of
Amara Holdings Limited, but for the users of financial statements it becomes challenging to
understand the reconciliation figures presented in the annual reports that prevail between the
financial figures attributing to the accounts prepared in line with Singapore GAAP and
Singapore Financial Reporting Standards from the information evident from the financials
presented in the annual report for the financial year 2005. The main issue in communication
of finding is related to this challenge as it becomes difficult to interpret the information from
that report to get an idea and form an opinion regarding the effects that adoption of IFRS
brought in the financial information presentation and disclosure on a practical and not

theoretical platform. These collected data have shown that all the companies operating their
business on international level have mitigated the harmonization issues on international level.
The annual report of company has also been used to determine the impact of before and after
adoption of IFRS rules and regulations on the financial reporting of company on international
level.

REFERENCES
Amara Holding Company, (2017) Annual report, retrieved from
https://ir.amaraholdings.com/static-files/4887358d-d5b6-4554-a610-26c8f640d2c9,
Biddle, G. C., Callahan, C. M., Hong, H. A., & Knowles, R. L. (2016). Do Adoptions of
International Financial Reporting Standards Enhance Capital Investment Efficiency?.
Bloomfield, M. J., Brüggemann, U., Christensen, H. B., & Leuz, C. (2017). The Effect of
Regulatory Harmonization on Cross‐Border Labor Migration: Evidence from the
Accounting Profession. Journal of Accounting Research, 55(1), 35-78.
Christensen, H. B., Lee, E., & Walker, M. (2007). Cross-sectional variation in the economic
consequences of international accounting harmonization: The case of mandatory IFRS
adoption in the UK. The International Journal of Accounting, 42(4), 341-379.
Edogbanya, A., & Kamardin, H. (2014). Adoption of international financial reporting
standards in Nigeria: concepts and issues. Journal of Advance Management Science,
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Garanina, T. A., & Kormiltseva, P. S. (2014). The effect of International Financial Reporting
Standards (IFRS) adoption on the value relevance of financial reporting: a case of
Russia. In Accounting in Central and Eastern Europe (pp. 27-60). Emerald Group
Publishing Limited.
Jackling, B. (2013). Global adoption of International Financial Reporting Standards:
implications for accounting education. Issues in Accounting Education, 28(2), 209-
220.
Joshi, M., Yapa, P. W. S., & Kraal, D. (2016). IFRS adoption in ASEAN countries:
perceptions of professional accountants from Singapore, Malaysia and Indonesia.
International Journal of Managerial Finance, 12(2), 211-240.
Kusnadi, Y., Leong, K. S., Suwardy, T., & Wang, J. (2016). Audit committees and financial
reporting quality in Singapore. Journal of business ethics, 139(1), 197-214.

Larson, R. K., & Herz, P. J. (2013). A multi-issue/multi-period analysis of the geographic
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431-433.

Appendix
AMARA HOLDINGS LTD (A34) Cash Flow Flag BALANCE SHEET
Fiscal year ends in December. SGD in millions
except per share data.
2013-
12
2014-
12
2015-
12
2016-
12
2017-
12
Assets
Current assets
Cash
Cash and cash equivalents 13 13 13 16 9
Total cash 13 13 13 16 9
Receivables 13 6 6 8 10
Inventories 0 0 0 0 0
Prepaid expenses 1
Other current assets 46 60 55 80 102
Total current assets 74 78 75 104 122
Non-current assets
Property, plant and equipment

Gross property, plant and equipment 233 280 271 294 320
Accumulated Depreciation -57 -65 -63 -68 -74
Net property, plant and equipment 176 215 207 226 246
Goodwill 1 1 1 1 1
Intangible assets 0 0 7 7 0
Deferred income taxes 0 0 0 0
Other long-term assets 320 340 380 387 383
Total non-current assets 497 557 595 621 631
Total assets 571 635 671 725 752
Liabilities and stockholders' equity
Liabilities
Current liabilities
Short-term debt 13 23 62 61 67
Capital leases 0 0 0 0
Accounts payable 24 24 23 26 27
Taxes payable 6 4 4 3 3

Total current liabilities 43 50 89 90 98
Non-current liabilities
Long-term debt 209 236 225 250 259
Capital leases 0 0 0 0
Deferred taxes liabilities 7 5 5 6 13
Minority interest 0 0 0 0 0
Other long-term liabilities 6 5 5 5 4
Total non-current liabilities 221 247 236 261 275
Total liabilities 264 297 324 351 373
Stockholders' equity
Additional paid-in capital 126 126 126 126 126
Retained earnings 198 205 236 243
Treasury stock 0 -1 -1 -1
Accumulated other comprehensive income 181 15 17 13 12
Total stockholders' equity 307 338 346 374 380

Total liabilities and stockholders' equity 571 635 671 725 752

Appendix-2
FROM THE ANNUAL REPORT OF FINANCIAL YEAR 2017

Profit and loss for 2017

OUTSTANDING LEASE COMMITMENTS 2017

OUTSTANDING LEASE 2016

FINANCIAL INSTRUMENTS 2016 AND 2017

BALANCE SHEET 2016