ACRA and IPOS seek feedback on proposed Intangibles Disclosure Framework to increase transparency and commercialisation of intangibles : Rahmat Lim & Partners

30 January 2023

From 14 December 2022 to 28 February 2023, the Intellectual Property Office of Singapore (“IPOS”) and the Accounting and Corporate Regulatory Authority (“ACRA”) are conducting a joint public consultation on the proposed Intangibles Disclosure Framework (“Framework”).

The Framework aims to outline key principles for enterprises to identify and communicate the details of their intangibles and provide stakeholders with standardised information about an enterprise’s intangibles. Under the Framework, an intangible is defined as “a non-monetary resource that manifests itself by its economic properties; it does not have physical substance but grants rights and/or economic benefits to its owner”. The intangible assets defined under the prescribed accounting standards in Singapore are a subset of intangibles defined under the Framework.

Standardised information will allow stakeholders to make more informed assessments of the business and financial prospects, thereby facilitating the commercialisation of the intangibles. Harmonised disclosures can also help investors and lenders make comparisons, enabling the improvement of flow of funds into enterprises that invest wisely in intangibles. An enterprise can opt to disclose their intangibles as part of an annual report or in a standalone report.

The key disclosure principles in the Framework are anchored on four pillars:

Strategy: This pillar supports the disclosure and communication of how intangibles are relevant to, and used in, an enterprise’s overall corporate strategy.

Identification: This pillar recommends how an enterprise should describe the nature and characteristics of their intangibles, and proposes for intangibles to be classified into six categories: marketing, customer, artistic, contract, technology and human capital-related.

Measurement: This pillar guides an enterprise on how it should disclose the performance metrics and drivers of their intangibles. Value-related information to be disclosed should ideally be quantitative in nature and capable of assisting in the valuation of said intangibles, such as metrics and value drivers. It is recommended that the disclosure of the monetary value of an enterprise’s intangibles should be optional.

Management: This pillar provides guidance on how an enterprise may disclose the manner in which it identifies, assesses, and manages the risks and opportunities related to its intangibles. It is recommended that an enterprise should also disclose how its processes for the identification, assessment, and management of intangibles-related risks are integrated into its overall group risk management practices.

The Framework is a key initiative under the Singapore Intellectual Property Strategy 2030, a national roadmap that aims to strengthen Singapore’s position as a global hub for intangible assets and intellectual property. A public-private initiative supported by the Ministry of Finance, the Framework was developed by the Intangibles Disclosure Industry Working Group which comprises representatives from the accounting, valuation, legal and finance sectors.

Reference materials

The following materials are available on the IPOS website www.ipos.gov.sg: