ACRA’s 2025 Reporting Changes: What SMEs Must Do Now to Prepare for Stricter 2026 Compliance

Singapore’s financial reporting landscape is entering a period of major transition. With ACRA’s updated financial reporting rules taking effect from 2025, SMEs must prepare not only for revised disclosure requirements, but also for a more stringent audit and regulatory environment leading into 2026.

While FY2025 introduces these new reporting expectations, FY2026 will be the first full year of strict enforcement. This means SMEs have only one financial year to correct weaknesses in accounting processes, documentation, and governance practices — before enhanced scrutiny begins.

This guide breaks down:

• What changed in 2025
• Why 2026 will be significantly stricter
• What SMEs must do now
• How accountants, auditors, and corporate secretaries will adapt
• How PHP positions itself as your end-to-end compliance partner

This is written to help SMEs prepare for FY2025 closing and get ahead of 2026’s enforcement era.

1. What Changed in 2025? Key Updates SMEs Must Understand

ACRA’s 2025 reporting updates are designed to modernise disclosures, align reporting with updated IFRS principles, and raise accountability standards. Although not all changes are immediately visible, they have deep implications for how SMEs prepare their financial statements.

Below is a detailed breakdown of every major update, and what it means for small and medium-sized businesses.

1.1 Reduced Disclosures for SFRS for Small Entities — But Higher Accuracy Expected

SFRS for Small Entities now includes fewer disclosure requirements. On paper, this looks like reduced workload for accounting teams, but ACRA and auditors now expect stronger underlying documentation to support the numbers.

Disclosure areas now reduced include:

• Related party disclosures
• Breakdown of financial instruments
• Detailed fair value hierarchy information
• Impairment methodology explanations
• Payroll and employee benefits analyses
• Certain narrative accounting judgments

But ACRA’s expectations have increased in other areas:

• Clear audit trails
• Accurate monthly records
• Documented estimates and judgments
• Proper supporting schedules
• Consistent application of accounting policies

In other words: even though you disclose less, you must prove more.

1.2 Clarified Group Reporting and Consolidation Requirements

ACRA’s 2025 guidance tightens rules for SMEs with multiple entities — a common structure in Singapore.

Important clarifications include:

• Dormant subsidiaries may still require consolidation
• Overseas entities must be consolidated if control exists
• “Informal exemptions” are no longer acceptable
• Intercompany balances must be properly reconciled
• Directors must document consolidation decisions

Many SMEs have historically bypassed consolidation due to complexity or cost. In 2026, this will no longer be tolerated.

Common SME red flags going forward:

• Holding companies filing standalone FS
• Family-owned SME groups with unreconciled balances
• Overseas subsidiaries excluded without justification
• Dormant companies classified incorrectly

Auditors will ask tougher questions, and ACRA can escalate repeated non-compliance.

1.3 Updated Employee Benefits Reporting Standards

Employee benefits reporting is another major update in 2025 — and an area where many SMEs misreport.

Key clarifications include:

• Proper timing of bonus and commission recognition
• Annual leave accruals
• Director remuneration classification
• Benefits-in-kind reporting
• CPF and statutory contribution accuracy
• Short-term vs long-term benefits distinctions

Why this matters:

Employee benefits often form the largest expense line for SMEs. Misreporting can lead to:

• Understated liabilities
• Audit adjustments
• Director non-compliance
• Tax errors

2026 audits will pay special attention to employee benefits accuracy.

1.4 Alignment with Updated IFRS Requirements

ACRA’s 2025 updates incorporate certain IFRS changes to elevate reporting quality.

Areas affected include:

• SFRS 15 (Revenue from Contracts with Customers)
• SFRS 16 (Leases)
• SFRS 109 (Financial Instruments)
• Impairment review requirements
• Fair value measurements

This impacts SMEs that:

• Offer long-term or milestone-based services
• Collect deposits or advance payments
• Have multiple rental agreements
• Experience bad debts
• Use financing arrangements

Smaller companies must ensure their accounting policies reflect the updated frameworks, or risk inconsistent financial statements.

1.5 Stronger Governance Expectations

Although SMEs are not required to establish audit committees, ACRA is now raising governance expectations across the board.

Key governance expectations include:

• Documented accounting judgments
• Accurate director approvals
• Meeting minutes supporting decisions
• Clear internal controls
• Year-round financial oversight

This is a major shift — directors must now demonstrate stronger accountability over financial reporting.

2. What’s Coming in 2026? Why SMEs Must Prepare Now

2025 is the adjustment year, but 2026 will be the enforcement year. Expect tighter audits, enhanced XBRL validation, higher governance expectations, and fewer allowances for “catch-up accounting.”

2.1 Full Adoption and Enforcement of 2025 Standards

By 2026, all companies must use:

• Updated templates
• Updated accounting policies
• Updated disclosures
• Correct consolidation structure
• Proper documentation of judgments

Auditors will not accept financial statements that look like “last year’s template with new numbers.”

2.2 End of “Year-End Cleanup” Accounting Practices

Many SMEs still rely on annual cleanup accounting, where most adjustments are made during audit or tax filing. This will no longer be acceptable due to:

• Revised revenue timing
• Updated leave and benefits rules
• Consolidation requirements
• IFRS-aligned adjustments
• XBRL validation logic

In 2026, companies must shift to:

• Monthly bookkeeping
• Monthly reconciliations
• Quarterly management accounts
• Quarterly impairment assessments
• Year-round documentation

This avoids audit delays and non-compliance.

2.3 Advanced XBRL Validation and Error Detection

ACRA’s XBRL system has been enhanced to automatically detect inconsistencies.

2026 XBRL validations can detect:

• Missing disclosures
• Mismatched comparatives
• Incorrect classification
• Outlier ratios
• Template misuse
• Unusual balances

If your FS is prepared poorly, your XBRL will fail — resulting in resubmissions, penalties, or escalated review.

2.4 Directors Will Face Higher Accountability

Directors will be expected to show that they understand:

• Revenue recognition methods
• Employee benefits liabilities
• Consolidation decisions
• Major judgments and estimates
• The accuracy of financial statements

Signing inaccurate financial statements exposes directors to regulatory risk.

2.5 Corporate Secretaries Will Be Asked to Ensure Higher Accuracy

Since the corporate secretary files the Annual Return, they will be indirectly responsible for ensuring:

• FS align with directors’ statements
• AGM approvals follow deadlines
• Group structures are reflected accurately
• Registers are maintained
• Filing errors do not occur

This increases the need for closer alignment between CoSec and Accounting teams — a positioning advantage for PHP.

3. How SMEs Can Prepare Now: The 2025 → 2026 Compliance Action Plan

SMEs that prepare during FY2025 will enter 2026 with minimal disruption. This action plan guides SMEs through every area that needs strengthening.

3.1 Update All Financial Statement Templates and Formats

Companies must update:

• SFRS templates
• SFRS for Small Entities templates
• Consolidation templates
• Dormant company templates
• Notes and disclosures
• XBRL templates

Outdated templates are a common cause of audit overruns and filing rejection.

3.2 Strengthen Payroll and Employee Benefits Reporting

Before closing FY2025, SMEs should review:

• Bonus and commission accruals
• Leave liability calculations
• Director remuneration classification
• Benefits-in-kind
• Foreign worker levy
• CPF contributions
• Reimbursement policies

This reduces audit adjustments and ensures compliance.

3.3 Review Group Structures and Consolidation Needs

For SMEs with multiple entities:

• Reassess if consolidation is required
• Determine if subsidiaries are truly dormant
• Review shareholding and control
• Update subsidiary registers
• Reconcile intercompany balances
• Prepare consolidation schedules

SME groups that skip consolidation will face escalations in 2026.

3.4 Adopt Monthly Accounting Instead of Annual Accounting

Move to:

• Monthly closings
• Monthly bank reconciliations
• AR/AP aging
• Audit trail documentation
• Fixed asset registers
• Revenue documentation
• Updated loan schedules

This avoids massive year-end corrections.

3.5 Strengthen Documentation and Governance Processes

Create or update:

• Accounting policy documents
• Key judgments documentation
• Estimates registers
• Revenue recognition memos
• Board minutes
• Director approval workflows

This supports ACRA’s higher governance expectations.

4. How PHP Helps SMEs Navigate 2025 and Prepare for 2026

PHP positions itself as a full compliance ecosystem, not just an accounting vendor.

✔ Monthly Accounting & SFRS-Compliant Bookkeeping

Clean, accurate records to avoid audit issues.

✔ Year-End Accounting Transition Support

We upgrade templates, policies, disclosures, and FS structure.

✔ Audit Support & Consolidation Services

For multi-entity groups and holding companies.

✔ Corporate Secretary Governance Alignment

Ensuring accurate FS approval, AGM/AR compliance, and statutory accuracy.

✔ XBRL Filing With 2026 Validation Compatibility

Avoid rejections, errors, and inconsistencies.

✔ Full Documentation Support

Judgment memos, estimates, accounting policies, and governance records.

This positions PHP as a proactive, compliance-first partner for SMEs entering a stricter regulatory era.

5. Conclusion: 2025 Is the Transition Year — 2026 Will Be the Enforcement Year

ACRA’s 2025 updates are not just technical accounting changes. They represent a nationwide shift in reporting expectations, transparency, and governance. 2025 is the year to prepare. 2026 is the year ACRA enforces. SMEs that wait until the last minute risk:

• Audit delays
• Non-compliance penalties
• Director accountability issues
• XBRL rejection
• Governance red flags

Companies that act now will be confident, compliant, and ready for Singapore’s stricter financial reporting environment.