Is the valuation required for accounting, SFRS(I) or IFRS purposes?

When auditors will review the work, the valuation must fit the accounting requirement—not merely produce a plausible number.

Singapore reporting frameworks

Confirm the applicable framework before modelling begins

SFRS(I) means Singapore Financial Reporting Standards (International), together with SFRS(I) Interpretations issued by the Accounting Standards Committee. Singapore also has Financial Reporting Standards (FRSs), SFRS for Small Entities and other purpose-specific frameworks. The applicable framework depends on the reporting entity and circumstances.

The SFRS(I) framework was introduced as a framework identical to IFRS Standards for mandatory application by Singapore-incorporated companies listed on SGX for annual periods beginning on or after 1 January 2018; eligible non-listed companies may also apply it. For a current assignment, confirm the applicable standard, annual volume, transition provisions and effective date rather than assuming that “IFRS” is sufficient scoping.

That distinction can affect the valuation objective, unit of account, cash-flow basis, treatment of market-participant assumptions, tax effects, disclosures and the evidence auditors expect.

Audit-facing assignments

Accounting knowledge improves efficiency

Auditors assess management’s expert, the methods used, significant assumptions, data and consistency with the applicable financial reporting framework. A valuer with strong accounting knowledge—or a qualified accountant on the team—can anticipate questions and communicate in the language of the standard.

Business combinations

Purchase price allocation can involve identifiable intangible assets, contingent consideration, deferred tax and goodwill. The valuation and accounting entries are closely linked.

Impairment testing

Value in use and fair value less costs of disposal require careful treatment of cash-generating units, forecasts, discount rates, terminal growth and consistency with budgets.

Share-based payments

Options and awards may require models that reflect exercise price, volatility, expected life, dividends, vesting and market conditions.

Financial instruments

Convertible notes, derivatives, preference shares and contingent consideration may require probability, option-pricing or simulation techniques.

Prepare for auditor review from the beginning

Agree the valuation date, accounting standard, unit of account, basis of value and expected documentation before modelling starts. Late changes to these foundations can require substantial rework.

Questions to ask the valuer

Has the team handled audit review under the relevant standard?
Who will answer the auditor’s valuation specialist?
Are key assumptions reconciled to management budgets and accounting records?
Does the fee include reasonable review questions and model updates?

Primary references

This guide is educational and not legal, tax, accounting or investment advice. Requirements change; confirm the current position with the relevant adviser or authority.