The Singapore Financial Reporting Standard for Small Entities (SFRS for Small Entities) is a simplified accounting framework used by many private companies. In August 2025, the Accounting Standards Committee (ASC) issued its third edition, aligned with the third edition of the international IFRS for SMEs Accounting Standard. It applies to financial years beginning on or after 1 January 2027.
Who Uses the SFRS for Small Entities?
Private companies without public accountability that meet at least two of three size criteria: total annual revenue of not more than S$10 million, total assets of not more than S$10 million, and not more than 50 employees. Many owner-managed and family companies in Singapore fall into this group.
Key Changes
- Revenue: a revised revenue section based on a simplified version of the five-step model in FRS 115. Companies will need to identify separate performance obligations in a contract and recognise revenue when (or as) each is satisfied.
- Fair value measurement: a new section on how to measure fair value and what to disclose, consistent with FRS 113.
- Financial instruments: the two previous sections are combined into a single section aligned with the classification principles of FRS 109. The option to apply the older recognition and measurement rules is removed. The expected credit loss model is not introduced; instead, more disclosure on overdue receivables (an ageing analysis) is required.
- Consolidation and business combinations: updated definition of control, in line with FRS 110, and revised requirements for business combinations and goodwill.
- Leases: no change. Small entities continue to account for operating leases off balance sheet, unlike FRS 116.
Example: Revenue from Bundled Contracts
A company sells a machine together with 12 months of maintenance for a single price. Under the new revenue section, the price is split between the machine and the maintenance service. Revenue for the machine is recognised on delivery, while revenue for maintenance is recognised over the 12 months.
Transition
The changes generally apply retrospectively, with specific transition reliefs, including for the new revenue and fair value sections. Companies with a December year-end should start collecting comparative information for FY2026 so they are ready for FY2027.
Should You Stay on the SFRS for Small Entities?
From 2027, small companies also have a new option: apply full FRS with the reduced disclosures of FRS 119. This may suit companies that prefer full FRS accounting (for example, for leases or impairment) but want shorter disclosures. The right choice depends on your stakeholders, banking relationships and group reporting needs.
How We Can Help You
We can review your contracts and balances for the impact of the new edition, help you decide between the SFRS for Small Entities and full FRS, and prepare your financial statements. Contact us to arrange a discussion.