INSITE - Singapore - 02 Oct 2023
- Jodha Legal
- Oct 2, 2023
- 2 min read
NEW FRAMEWORK FOR ENTERPRISES TO DISCLOSE AND COMMUNICATE INTANGIBLE ASSETS LAUNCHED
Summary: As the world economy focuses more on innovation and intangible assets, the worth of a business is no longer just about physical assets. In recognition of this change, Singapore has introduced an intangible-specific disclosure framework.
On September 4, 2023, the Accounting and Corporate Regulatory Authority ("ACRA") and the Intellectual Property Office of Singapore ("IPOS") collaboratively unveiled the Intangibles Disclosure Framework ("IDF Framework"). This Framework is a component of the Singapore Intellectual Property (IP) Strategy 2030, which plays a vital role in aiding businesses in leveraging their intangible assets for commercial purposes.
In Detail:
The Framework helps businesses to share the worth of intangible assets, like brand value, patents, human capital, and internally created intangibles, by setting out the important rules for companies to follow when reporting on their intangible assets.
The disclosure principles in the IDF are anchored in four pillars:
Strategy: Helps enterprises communicate how their IA contributes to their corporate strategy.
Identification: Recommends how enterprises should categorise IA based on their nature and characteristics, facilitating comparability.
Measurement: Guides enterprises and stakeholders to better assess the performance of enterprises’ IA through relevant metrics.
Management: Helps enterprises identify, assess, and manage risks and opportunities related to their IA.
Key Feature of the Framework:
The Framework aims to help companies to give stakeholders clear and consistent information about their intangible assets. In this way, stakeholders can make a better-informed judgment about the company's business and the financial prospects in the market.
Companies can choose how they want to report their intangible assets to stakeholders. The Framework doesn't override or replace existing rules and regulations in accounting or reporting.
Companies can also share information about their intangible assets in annual or standalone reports. If a standalone report is used, it's best to release it alongside the financial statements.
Benefits of adopting the Framework for enterprises:
Enhanced access to financing and improved intangible asset management to support business objectives and risk mitigation.
Increased understanding of the value of intangible assets.
Improved communication of an enterprise's growth potential.
Opportunities to attract investments and collaborations.
Strategies to promote the use of the Framework:
Demonstrating practical applications of the Framework and showcasing its results.
Strengthening industry and government support to complement Framework adoption.
Developing capabilities for effectively utilizing the Framework.
As digitalization and innovation grow, the value of intangible assets becomes more important. This Framework helps the enterprises to manage and extract value from these intangibles. By following the Framework's disclosure steps (strategy, identification, measurement, management), enterprises can better understand their intangible assets and find ways to make the most of them.
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