Close

HEADLINES

Headlines published in the last 30 days are listed on SLW.

SGX RegCo urges audit committees of SPACs to carefully consider accounting treatment

SGX RegCo urges audit committees of SPACs to carefully consider accounting treatment

Source: Business Times
Article Date: 14 Jan 2022
Author: Tay Peck Gek

As the listing of SPACs or special purpose acquisition companies in Singapore is impending, the frontline market regulator has urged audit committees of these companies to carefully determine the accounting treatment and presentation.

As the listing of SPACs or special purpose acquisition companies in Singapore is impending, the frontline market regulator has urged audit committees of these companies to carefully determine the accounting treatment and presentation.

Singapore Exchange Regulation (SGX RegCo) chief executive officer Tan Boon Gin noted in his speech on Wednesday (Jan 12) at the ACRA-SGX-SID audit committee seminar that the listing of SPACs on SGX may present several novel accounting-related matters. The seminar was organised by the Accounting and Corporate Regulatory Authority (ACRA), SGX and the Singapore Institute of Directors (SID).

"For example, unlike traditional IPOs (initial public offerings), SPAC IPOs typically involve several financial instruments to be issued at the time of listing. These include financial instruments such as the IPO units comprising a share and a fraction of one warrant, founder shares and/or warrants," said Tan.

Audit committees of SPACs should therefore carefully consider the terms and circumstances in deciding on the accounting treatment and presentation for the various securities.

The choice of accounting standards - regardless of the Singapore, international or the United States financial reporting standards - may affect the accounting treatment and presentation for similar instruments under the respective financial reporting frameworks.

He added: "It is important for investors to appreciate the implications of the accounting treatment and what it means for them as shareholders and market participants."

Similarly, when the SPACs enter into business combinations with target companies - a move known as de-SPAC - audit committees will need to work closely with the external auditors on various issues, such as the accounting treatment for business combination and the target company's valuation, given that novel issues will arise.

He suggested that the committees deliberate on the reasonableness of the assumptions used in any forecasts and projections as well as whether they are consistent with the accounting policies adopted by the SPAC, and are presented in accordance with the relevant accounting standards.

"Audit committees must ensure that the information presented in the circular on the target company is complete and meaningful so that shareholders can make an informed decision on the transaction, including whether to redeem their shares at the relevant point in time."

Tan said that SGX is working together with the Institute of Singapore Chartered Accountants (ISCA) and the reporting accountants of each SPAC on the matters.

ISCA, he stated, is looking at providing guidance to practitioners on the common accounting considerations for SPAC transactions in Singapore.

Source: Business Times © Singapore Press Holdings Ltd. Permission required for reproduction.

 

Print
860

Latest Headlines

No content

A problem occurred while loading content.

Previous Next

Terms Of UsePrivacy StatementCopyright 2022 by Singapore Academy of Law
Back To Top