The Success of Harmonization in Singapore: A Case Study

This report provides a comprehensive analysis of accounting harmonization, focusing on the successful adoption of International Financial Reporting Standards (IFRS) in Singapore. It explores the reasons behind harmonization, including globalization, comparability of financial statements, consistency in financial reporting, and efficiency in auditing and stock markets. The report also addresses the issues related to harmonization, such as political, cultural, and social factors. A case study of Singapore and Singapore Airlines Limited is presented to illustrate the practical implementation and the extent of alignment with IFRS. The study examines how Singapore has successfully adopted IFRS and its impact on the company's financial reporting, offering insights into the benefits and challenges of harmonization in the Asian context. The report concludes with recommendations for other Asian countries seeking to harmonize their accounting standards. The report is a valuable resource for students and professionals interested in international accounting and financial reporting.

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Executive Summery
The paper is develop to understand the harmonization in the accounting standards. The paper
explain the concept of the harmonization along with their need and issues. The report also
analyse the case study of the Singapore to understand how the Singapore successfully
adopted the IFRS in their country to implement the harmonization in the accounting
standards of the Singapore companies. Further, this report analyse the case study of the
Singapore Airline Limited to understand the efficiency and the procedure of the company for
adopting the IFRS’s standards for the accounting in their financial reporting. Lastly, the paper
provides the recommendation to the Asian countries in the basis of the analysis performed.

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Table of Contents
Introduction................................................................................................................................3
Reason for Harmonization.........................................................................................................4
Issues of Harmonization.............................................................................................................6
Case study..................................................................................................................................8
Singapore’s Compliance with IFRS.......................................................................................8
The success of Harmonization in Singapore: Singapore Airlines Limited............................9
Conclusion................................................................................................................................10
Recommendation......................................................................................................................11
References................................................................................................................................12

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Introduction
In the current context, the accounting requirement of every country and regions are
different. The different country uses the different method to report their financial transactions
and event. The uses of the different methods in preparation and reporting of the accounting
information crates difficulties for the analyst and the investors as the comparing the two
companies become difficult if both the company uses the different method of reporting their
financial information. The different method of reporting the financial information deeply
affect the financial report of the company.
To avoid the difference between the reporting standards and the method among the
different companies of the different country, the International Accounting Standards Board is
established. The International Accounting Standard Board develop the set of the accounting
standards named International Financial Reporting Standards (IFRS) to promote the
uniformity in the financial reporting. The IFRS deals with the most of the internationally
important topic in the published accounting reports. The main objective of the IFRS is to
create the uniformity in the preparation method of the financial report. So that company
across the different countries also prepare their financial statement in the same manner. This
help the investors and the analyst to analyse the company as well as to compare the company
with the different companies even from the other countries.
The main objective of this paper is to understand the concept of the harmonization in
the accounting reporting by using the IFRS. The main is prepared to analyse the reason as
well as issues of the harmonization. This paper use the Singapore as example to understand
the how can the harmonization can be implement successful in any country. The report also
analyse the case of Singapore Airline to understand and explain the successful
implementation of the accounting harmonization.

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Reason for Harmonization
The one of the main reason behind the harmonization is the globalization which
promote harmonization by removing the variations. The harmonization in the world wide
level can benefits many nations as well as the companies and stakeholders. The
harmonization is simply a process of increasing the compatibility of accounting practices by
fixing the degree of variation (Li, Sougiannis & Wang, 2017). This also helps those
companies which have the desire to work in the multi nations. The harmonization is must
need in the today’s world of globalization as companies are not limited to their own or only
in a single country but expends its business in many other companies. If the accounting
policy and standards of the every country in which the company is operating then it became
easy for the company to report their financial information for every country they operates. As
well as, this also provide the uniformity in the financial reporting procedure of the company
for each country, which provide ease in combining and comparing the financial performance
of the company in different countries. Apart from that the followings are the some main
reason behind the harmonization: -
 Comparability of financial statement
The basis need of the harmonization is the comparability in the financial
statement. This is the fact that the comparison between two or more financial
statement is only possible if they are prepared in the basis of the same accounting
principle and standard. Hence, to compare the financial report, information or the
statement of the different company the harmonization is must needed (De George,
2016). The other suggestion regarding the harmonization is that the many companies
now a days, operates in different countries, hence the harmonization help then to
prepare the financial statement of their business operation in those country and
combining them in the basis of the hard and base accounting rule. Lastly, the

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harmonization helps stakeholder as well as management of the company to
understand the financial report of the company for different countries easily as they
are similar and reliable. This helps the investor to understand the financial
performance of the company in better way and to make their financial decision.
 Consistency in financial reporting
The next need of the harmonization is to provide consistency in the financial
reporting of the firms. The main objective of the International Financial Reporting
Standards is to provide the consistency in the financial reporting by setting up the
single accounting standards for every country. Using the single method to report the
financial information helps the companies to prepare their financial statement in more
easy way for their different operational countries (Christensen, 2015). This provide
the advantage to the internationally operating companies as they do not need to adopt
their domestic accounting standards and simply proceed with their adopted
international standards by making only minor changes. The harmonization in the
accounting information also reduce the cost as well as time for the companies
operating in other countries.
 Efficiency in Auditing
The harmonization also increase the efficiency in the auditing the financial
report of the company as the companies follows the same accounting standards and
the rules for their financial reporting. This also allow the international auditing
companies to perform the audit of any company of any country (Schaltegger &
Burritt, 2017). The harmonization also save the money and time of the auditor as
become easy for the auditor to audit those firm which follow the same accounting
policy for the reporting their financial performance. This also provide the

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independency to the auditor of any country to audit the financial report of the any
company belonging from any country. Lastly, this benefits the company by providing
the way to prepare a single financial report for the every unit of different countries
rather preparing the different reports for the each companies.
 Efficiency in stock market
Lastly, the harmonization helps the company to increase their performance in
the inventory market. As for instance, if the any company issues their shares and it
passes their country boarder then it became important that the financial report of the
company is also understandable to investors of the other countries. The harmonization
does this work for the company and companies easily attract the investors of the other
countries too (El-Firjani & Faraj, 2016). Further, if any company is trading in more
than one stock exchange, then the harmonization saves the money and time of the
company to prepare the financial statement for both countries as then only need to
prepare the single financial report for both the country’s stock exchange. Lastly, the
investor always look for the best investment across the globe, hence, the
harmonization helps the investors to understand the financial report of the any
countries based company as all follow the same accounting standard to report their
financial performance.
Issues of Harmonization
The harmonization in the financial accounting and reporting at international level is
depended on the perception of the different countries towards the International Financial
Reporting Standards. One more important thing is that the harmonization is different from the
standardization (Kai, Loh & Lian, 2017). The harmonization is the process of providing the
uniformity among the accounting standards used by the companies by avoiding the variation

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in the accounting standards. While, the standardization is the technique of unifying the
requirement of the financial reporting to make them similar. The variation in the accounting
standards are increase because of the various reason and factors like political, social, cultural
and like. Those are explained below: -
 Political
The adaptation of the accounting standard of the company in any country is
deeply affected by the political parties. The political parties mainly choose and
recommend the accounting standards to the companies in country wide. Hence, the
biggest issue regarding the harmonization is the political factor of the countries
(Dhaliwal, He & Pereira, 2018). The political parties of the different countries is
different and they all adopt or develop their own accounting standards as per their
convenience. This creates the biggest issue in establishing the harmonization in the
financial accounting reporting as the different country adopt the different
accounting standards as per their need.
 Culture
The other issue related with the harmonization is the culture difference
between the countries. Although, it is the biggest criticism that the International
Accounting Standard Board did not completely consider the culture differences
among the countries. The cultural differences is particularly applicable to the
developing countries, where accounting attitudes, language obstacles and the
different sociological effect the interpretation of the countries. Hence, the culture of
the different country brings the issues in implementing the harmonization in the
accounting reporting of the country (Joshi, Yapa & Kraal, 2016). This also involve
the language barrier and the accounting attitude of the country might be different.

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Hence, to implement the harmonization in the accounting reporting the company
first need to translate the financial report in their language. So, that the user of the
financial report can understand the financial report of the company clearly.
 Social
The other biggest drawback of harmonization in the financial reporting is the
increase in the expenses for the small companies because of the additional compliance
necessities. In the normal context, the small firm invest more percentage of their profit
compare to the big companies, hence the changes for this can affect the small company
deeply (Karekar, 2016). Lastly, when any country adopt the internal accounting
standard to implement the harmonization in the financial information reporting, then
the existing company, accountant as well as the auditors of the country need to change
their entire accounting knowledge and method of their performance. This require the
additional time as well as cost. Hence, this is also a noticeable issue in implementing
the harmonization in the financial and accounting reporting as this consume more time
as well as more fund.
Case study
The chosen case study for this paper is the case study of Singapore and the Singapore
Airlines Limited as the Singapore is one those country which support and implemented the
International Financial Reporting Standard among the Asian countries. The chosen case study
is used to explain how the Singapore has adopted IFRS to harmonization successfully. The
Singapore Airline Limited is also consider in this case to analyse the extent of the alignment
that is practiced in the country.

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Singapore’s Compliance with IFRS
There are few countries in the world which supported the IFRS in their earlier
developing days, Singapore is one of them (SIA., 2017). The financial reporting authorities of
Singapore set up the Council on Corporate Disclosure and Governance (CCDG) in the 2002,
with the objective to replace the Institute of Certified Public Accountants of Singapore
(ISCA), which was the existing standards setter for the companies of the Singapore (Deloitte,
2019). Then the Council on Corporate Disclosure and Governance (CCDG) is replaced by
setting up the Accounting Standards Council (ASC) in 2007. Then the newly introduce
accounting standard setter that is Accounting Standards Council (ASC) made some important
decision and reported their strategic course to combine the SFRS and the IFRS for the
indexed businesses of Singapore (ACS, 2018). The ACS was also liable for setting up the
accounting information and reporting requirement of the companies. However, Singapore
implemented the IFRS standards basically in the phases in their accounting standards. These
requirement of the accounting standards are basically known as the Singapore Financial
Reporting Standards, although they do not adopt the IFRIC 2 standards.
After that in 2010, ASC set the new standards for the small and medium size entities
by following the IFRS for small entities and firms (IFRS, 2017 ). This standard of the
Singapore is mainly similar to the IFRS standards for the small firms, as the ASC developed
the SFRS in the basis of the IFRS framework for the small and medium enterprises which
does not have more than 50 employees.
The success of Harmonization in Singapore: Singapore Airlines Limited
Singapore Airlines Limited is the flagship airline company of the Singapore. The
Singapore Airline Company is listed on the Singapore Stock Exchange. The airline prepare
and report their financial activities as per the Singapore financial reporting requirement
(Singapore Airlines, 2018). In the basis of the annual report of the company, the reason

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behind choosing the accounting standards is the meaning that the company is consistent with
the previous year by adopting the some necessary changes in the accounting guidelines those
are mentioned in the column of the financial report (Hawksford, 2019). For example that
company voluntary adopted the FRS 109 in 2016. This standard is adopted by the company to
report the fuel hedging and group strategy management in a better way. FRS 109 also
replaces the loss model of FRS 39 with an expected credit loss model (ISCA, 2017). The
company also applied the new impairment version in relation to the positive loan committee,
longer equity investment and money guarantee contracts.
Further, the Singapore Airline Limited follows the SRFS (I) from the financial year
2018 as it is recommended by the Singapore Stock Exchange. Hence, the company published
their 12 months financial report at the year ending 31 march 2019 in the basis of the SFRS (I)
and in the aid of the International Accounting Standards Board (IASB).
Conclusion
The paper concludes that the harmonization is the process of unfirming the accounting
standards by eliminating the variances. The need of the harmonization is rapidly increased in
the recent times due to the globalization and various other factors. The need of the
harmonization increasing day by the day. The some main needs of the harmonization in the
financial accounting and reporting are the need of comparability in the financial statement,
efficiency in auditing, need of consistency, development of financial market and the various
others. On the other hand, the harmonization also face several issues while implementing in
the financial accounting standard of any country. The some important issues related to the
implementing harmonization in the accounting are the political, social and cultural factor of
the every country. The Singapore is one of those country which supported and implement the
IFRS in the very initial stage in the Asia. The Singapore is the perfect example of how can
any country successfully implement the harmonization in their accounting reporting. The

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Singapore implemented the IFRS in their country in the different phases which strategy leads
them to success. The Singapore Airline Limited is also a give the perfect example of adopting
the harmonization by voluntary adopting the IFRS in their accounting reporting.
Recommendation
As Asia is the fastest growing area in the world in the macroeconomic degree. Asia
have the collective voices, techniques and the power to set and assist to set the world wide
standards. Hence, this report recommends to every country of Asia to adopt the international
accounting standards to implement the harmonization throughout the Asia. This will help the
Asia to set the co - ordination with the other countries of the world as well as among the
countries of Asia. This also increase the business of the countries of as it attract the foreign
investment too.

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References
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Standards Council Singapore
Christensen, H. B., Lee, E., Walker, M., & Zeng, C. (2015). Incentives or standards: What
determines accounting quality changes around IFRS adoption?. European Accounting
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singapore/

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IFRS. (2017 ). IFRS Foundation, Who we are and what we do. Retrieved from The IFRS
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