SB-FRS 1001

STATUTORY BOARD
FINANCIAL SB-FRS 1001
REPORTING STANDARD

Accounting and Disclosure for

Non-Exchange Revenue

SB-FRS 1001 Accounting and Disclosure for Non-Exchange Revenue applies to Statutory Boards from
annual periods beginning on or after 1 January 2021. Earlier application is permitted.

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Contents
paragraphs

Statutory Board Financial Reporting Standard

Accounting and Disclosure for Non-Exchange Revenue

OBJECTIVE 1
SCOPE 2-3
DEFINITIONS 4
ACCOUNTING FOR NON-EXCHANGE REVENUE
Non-exchange revenue 5-14
Recognition of non-exchange revenue 15-30
Measurement of non-exchange revenue 31-37
DISCLOSURE FOR NON-EXCHANGE REVENUE 38-41

EFFECTIVE DATE 43

ANNEX A - Illustration of the Analysis of Initial Inflows of Resources

ANNEX B - Illustrative examples

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Statutory Board Financial Reporting Standard SB-FRS 1001 Accounting and Disclosure for Non-
Exchange Revenue is set out in paragraphs 1-43 and Annexes A and B. All the paragraphs have equal
authority. Paragraphs in bold type state the main principles. The Standard should be read in the
context of its objective, the Preface to Statutory Board Financial Reporting Standards and the SB-FRS
Conceptual Framework for Financial Reporting. SB-FRS 8 Accounting Policies, Changes in Accounting
Estimates and Errors provide a basis for selecting and applying accounting policies in the absence of
explicit guidance.

The principles in SB-FRS 1001 have been adapted from International Public Sector Accounting
Standards IPSAS 23 Revenue from Non-Exchange Transaction (Taxes and Transfers).

This SB-FRS includes select text and extracts from the Handbook of International Public Sector
Accounting Pronouncements, 2016 Edition, Handbook of International Public Sector Accounting
Pronouncements, 2017 Edition, and Handbook of International Public Sector Accounting
Pronouncements, 2018 Edition of the International Public Sector Accounting Standards Board,
published by IFAC and is used with permission of IFAC.

Use of the SB-FRS does not guarantee or represent compliance with the International Public Sector
Accounting Standards. Contact [email protected] for permission to reproduce, store or transmit,
or to make other similar uses of the Handbook of International Public Sector Accounting
Pronouncements, 2016 Edition, Handbook of International Public Sector Accounting Pronouncements,
2017 Edition, and Handbook of International Public Sector Accounting Pronouncements, 2018 Edition
or extracts thereof.

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Statutory Board Financial Reporting Standard (SB-FRS)

1001 Accounting and Disclosure for Non-Exchange
Revenue

Objective
1. The objective of this Standard is to specify the financial reporting requirements for non-exchange
revenue received by Statutory Boards (SBs).

Scope
2. This Standard addresses revenue arising from non-exchange transactions, except for
Government Grants (see SB-FRS 20 Accounting for Government Grants and Disclosure of
Government Assistance, SB-FRS Guidance Note 1 Accounting and Disclosures for Funds,
Grants, Accumulated Surplus and Reserves and SB-FRS Guidance Note 3 Accounting and
Disclosures for Trust Funds).

3. Revenue arising from exchange transactions is addressed in SB-FRS 115 Revenue from
Contract with Customers and SB-FRS Guidance Note 7 Accounting for Sponsorships Received.

Definitions
4. The following terms are used in this Standard with the meanings specified:

Conditions on transferred assets are stipulations that specify that the future economic benefits
embodied in the asset is required to be consumed by the recipient as specified or future
economic benefits must be returned to the transferor.

Control of an asset arises when the entity can use or otherwise benefit from the asset in pursuit
of its objectives, and can exclude or otherwise regulate the access of others to that benefit.

Restrictions on transferred assets are stipulations that limit or direct the purposes for which a
transferred asset may be used, but do not specify that future economic benefits is required to be
returned to the transferor if not deployed as specified.

Stipulations on transferred assets are terms in laws or regulations, or a binding arrangement,

imposed upon the use of a transferred asset by entities external to the SBs.

Terms defined in other SB-FRSs are used in this Standard with the same meaning as in those
Standards.

Accounting for Non-Exchange Revenue

Non-Exchange Revenue

5. Revenues received by SBs arise from both exchange and non-exchange transactions. Where
there is an exchange of approximately equal value, these are exchange transactions and are
addressed in other SB-FRSs, INT SB-FRSs and SB-FRS Guidance Notes.

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6. When a SB receives resources and provide no or nominal consideration directly in return, these
are clearly non-exchange revenue transactions and are addressed in this Standard. Some
examples of non-exchange revenue are taxes, levies, fines and penalties, donations, etc.

7. Taxes (such as income tax, property tax) are levied through legislation (i.e. laws and/or
regulations). Taxpayers pay taxes because the tax law mandates the payment of those taxes.
While the government will provide a variety of public services to taxpayers, it does not do so in
consideration for the payment of taxes.

8. Levies (such as aviation levy) are imposed on entities in accordance with legislation. These
levies may be paid or payable to the SBs.

9. Fines and penalties are economic benefits received or receivable by the SBs, as determined by
a court of law or other law enforcement body, as a consequence of a breach of laws or
regulations.

10. Donations arise when a SB receives an asset, including the right to receive cash or other forms
of asset without directly providing approximately equal value to the giving party or parties.
Donations include transfers of cash and other assets, services and promises to give. The
distinguishing characteristic of donations as compared to other forms of non-exchange
transactions is that these contributions are voluntary.

11. Donations are generally non-reciprocal transfers. However, there may be instances where
nominal consideration is provided by the SBs to the donors. For such donations, where the
considerations provided to the donors is significantly lower than that of the donations received,
such that it results in an unfair exchange transaction, they should be recognised as donations
received.

12. In some instances, SB may enter into a contract with the counterparty. This contract, which may
be in the form of an application form, stipulates the terms and conditions that the SB and the
other contractual party need to abide. Transactions arising from such contractual agreements
will be considered exchange in nature, unless they do not satisfy the criteria of contracts that are
within the scope of SB-FRS 115.

13. Taxes, levies, fines and penalties and donations satisfy the definition of non-exchange revenue
transaction because the payee transfers resources to the SB, without receiving approximately
equal value directly in exchange. In the event where fines and penalties arose from breaches
of the terms and conditions of an underlying contract, these fines and penalties are considered
exchange revenue because their incurrence are incidental to the contract.

14. Sometimes a transaction is a combination of an exchange and a non-exchange transactions. In

such an instance, each component is to be recognised separately based on the substance of
the transaction. The exchange component is recognised according to the principles and
requirements of other SB-FRSs, INT SB-FRSs and SB-FRS Guidance Notes, whereas the non-
exchange component is recognised according to the principles and requirements of this
Standard. Where it is not possible to distinguish separate exchange and non-exchange
components, the transaction is treated as a non-exchange transaction.

Recognition of Non-Exchange Revenue

15. An inflow of resources from a non-exchange transaction that meets the definition of asset
shall be recognised as revenue, except to the extent that a liability is also recognised in
respect of that same inflow, when and only when:

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(a) The SB obtains control of the resources or has an enforceable claim to the resources;

(b) It is probable that the economic benefits associated with the asset will flow to the SB;
and

(c) The amount of the resources flowed in can be measured reliably.

16. When a present obligation recognised as a liability in respect of an inflow of resources

from a non-exchange transaction recognised as an asset has been satisfied, a SB shall
reduce the carrying amount of the liability recognised and recognise an amount of
revenue equal to that reduction.

17. Revenue comprises gross inflows of economic benefits received or receivable by the SB, which
represents an increase in net assets / equity, other than increases relating to contributions from
owners.

18. A SB can recognise an asset when it has an enforceable claim to the resources, i.e. the use of
the transferred asset are contained in laws, regulations, or other binding arrangements. For
example, promises to give1 from donor to SBs shall be recognised as donations, only if sufficient
evidence in the form of verifiable documentation that a promise was made and received by the
SB. An announcement of an intention to transfer resources is not sufficient to identify resources
as controlled by the SB.

19. Sometimes, the SBs act as an agent of the government for collections of non-exchange revenue.
Amounts collected as an agent of the government or another government organisation or other
third parties will not give rise to an increase in net assets or revenue of the agent. This is
because the agent entity cannot control the use of, or otherwise benefit from, the collected assets
in the pursuit of its objectives.

Gross Accounting of Revenue and Cost

20. Where an entity incurs some costs in relation to revenue arising from a non-exchange transaction,
the revenue is the gross inflow of future economic benefits, and any outflow of resources is
recognised as a cost of the transaction.

Consideration of Obligations under the Non-Exchange Transaction

21. A present obligation is a duty to act or perform in a certain way, and may give rise to a liability in
respect of any non-exchange transaction. Present obligations may be imposed by stipulations
in laws or regulations or binding arrangements establishing the basis of transfers. They may
also arise from the normal operating environment, such as the recognition of advance receipts.

22. Stipulations relating to a transferred asset may be either conditions or restrictions. Conditions
on a transferred asset give rise to a present obligation on initial recognition, thus resulting in the
recognition of a liability until the conditions are fulfilled. However, restrictions on a transferred
asset do not impose on the recipient of the asset a present obligation to transfer future economic
benefits to third parties when control of the asset is initially gained, thus a liability need not be
recognised. Instead, revenue is recognised immediately.

23. Advance receipts are amounts received before a non-exchange transaction arrangement
becomes binding, thus giving rise to an asset and a present obligation.

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A promise to give is an agreement to donate cash or assets to the SB.

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24. Meeting conditions on a transferred asset may be either within the SB’s control or reliant on
external factors outside its control. Where meeting such conditions are within the SB’s control
and there is sufficient evidence that the conditions will be met, then income should be
recognised. Where uncertainty exists as to whether the recipient SB can meet conditions within
its control, income should not be recognised but deferred as a liability until certainty exists that
the conditions imposed can be met.

25. Conditions such as the submission of accounts or certification of expenditure can be seen as
simply an administrative requirement as opposed to a condition that might prevent the
recognition of income.

26. There may be conditions that specify the time period in which the expenditure of resources
received can take place. Such a pre-condition for use limits the SB’s ability to expend the
resources until the time condition is met. For example, the receipt in advance of a donation
specified to cover an expenditure that must take place in a future accounting period should be
accounted for as a deferred income and recognised as a liability until the accounting period in
which the recipient SB is allowed by the condition to expend the resource.

27. Where the existence of a condition prevents the recognition of an incoming resource, a
contingent asset should be disclosed where it is probable (but not virtually certain) that the
condition will be met in the future.

28. Recognition of resources received without pre-conditions should not be deferred even if the
resources received are in advance of the performance of the activity, if the SB is the party in
control of the timing of the activity. In such cases, the SB has entitlement to the resource with
the timing of the expenditure being within the discretion of the SB.

Recognition of Services Received

29. For services received to be recognised as non-exchange revenue, the services must

(a) Create or enhance non-financial assets; or

(b) Require specialised skills which are usually provided by individuals with the professional
competency and would typically need to be purchased if not provided by donation.
Examples include professional services by accountants, architects, doctors, engineers,
lawyers, etc.

30. In accordance with the preceding paragraphs, when a SB recognises an increase in net assets
as a result of a non-exchange transaction, it recognises revenue. If it has recognised a liability
in respect of the inflow of resources arising from the non-exchange transaction, when the liability
is subsequently reduced, because the non-exchange transaction become binding or a condition
is satisfied, it recognises revenue. If an inflow of resources satisfies the definition of contributions
from owners, it is not recognised as a liability or revenue.

Measurement of Non-Exchange Revenue

31. An asset acquired through a non-exchange transaction shall initially be measured at its
fair value at the date of acquisition.

32. The amount recognised as a liability shall be the best estimate of the amount required to
settle the present obligation at the reporting date.

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33. Revenue from non-exchange transactions shall be measured at the amount of the
increase in net assets recognised by the SB.

34. Fair value is the amount for which an asset could be exchanged, or a liability settled, between
knowledgeable, willing parties in an arm’s length transaction.

35. Revenue in the form of goods or services may be measured by referring to either the fair value
of the goods or services received or the fair value of the asset or the asset enhancement
resulting from the services. A possible proxy on the fair value of the goods or services received
will be the consideration that would have to be paid by the SB if it had purchased the good or
service.

36. When, as a result of a non-exchange transaction, a SB recognises an asset, it also recognises

revenue equivalent to the amount of the asset measured in accordance with paragraph 30,
unless it is also required to recognise a liability. Where a liability is required to be recognised it
will be measured in accordance with the requirements of paragraph 31, and the amount of the
increase in net assets, if any, will be recognised as revenue. When a liability is subsequently
reduced, because a non-exchange transaction arrangement becoming binding, the amount of
the reduction in the liability will be recognised as revenue.

37. Annex A illustrates the process that a SB undertakes when there is an inflow of resources to
determine whether revenue arises.

Disclosure for Non-Exchange Revenue

38. The objective of the disclosure requirements is for SB to disclose sufficient information to enable
users of financial statements to understand the nature, amount, timing and uncertainty of
revenue and cash flows arising from non-exchange revenue.

39. SBs should provide the following disclosures:

i. The accounting policies applied in recognising non-exchange revenue;

ii. The amount of non-exchange revenue recognised during the period by major classes;

iii. The amount of receivables recognised in respect of non-exchange revenue;

iv. Nature of any non-exchange revenue not recognised in the financial statements due to
unreliability of the value of the non-exchange revenue;

v. Details of any restrictions and conditions imposed on non-exchange revenue; and

vi. Valuation basis for non-cash non-exchange revenue.

40. For promises to give, the following shall be disclosed.

Unconditional promises to give:

i. The amount of promises receivable in less than one year, in one to five years, and in more
than five years; and

ii. The amount of allowance for uncollectible promises receivable, if any.

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Conditional promises to give:

i. The total of the amounts promised; and

ii. A description and amount for each group of promises having similar characteristics,
including the nature of the conditions attached.

41. Where the recognition of non-exchange revenue is deferred, a reconciliation of deferred revenue
at the beginning and end of the year should be provided showing:

i. Amount recognised as deferred revenue in current year that increases the deferred revenue
balance; and

ii. Amount recognised as income in current year that decreased the deferred revenue balance.

42. A SB shall consider the level of detail necessary to satisfy the disclosure objective and how
much emphasis to place on each of the various requirements. A SB shall aggregate or
disaggregate disclosures so that useful information is not obscured by either the inclusion of a
large amount of insignificant detail or the aggregation of items that have substantially different
characteristics.

Effective Date
43. This Standard is operative for financial statements covering periods beginning on or after 1
January 2018. Earlier application is permitted. If a SB applies this Standard earlier, it shall
disclose that fact.

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Annex A

Illustration of the Analysis of Initial Inflows of Resources

The purpose of this flowchart is to summarise the main recognition requirements of this Standard. The
flowchart is illustrative only; it does not take the place of this Standard. It is provided as an aid to
interpreting this Standard.

Does the inflow give rise No Do not recognise an

to an item that meets the increase in an asset,
definition of an asset? consider disclosure.

Yes

Does the inflow satisfy the No Do not recognise an

criteria for recognition as increase in an asset,
an asset? consider disclosure.

Yes

Does the inflow result No No Refer to other SB-FRSs,

Is the transaction a non-
from a contribution from INT SB-FRSs or SB-FRS
exchange transaction?
owners? Guidance Notes.

Yes
Yes
Refer to other SB-FRSs,
INT SB-FRSs or SB-FRS
Guidance Notes.

No Recognise
Has the entity satisfied all of the present
obligations related to the inflow? An asset and revenue to the extent
that a liability is not also
recognised; and
Yes
A liability to the extent that the
present obligations have not been
satisfied.
Recognise an asset and recognise
revenue.

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Adapted from IPSAS 23 Revenue from Non-Exchange Transaction (Taxes and Transfers)
Annex B

Illustrative examples
These illustrative examples accompany, but are not part of, SB-FRS 1001.

Example 1: Fines and Penalties

Scenario

44. Following a change in legislation, Statutory Board A is required to channel fines and penalties
resulting from a breach in law and regulations back to the Government. These fines and
penalties are collected by Statutory Board A on behalf of the Government.

Assessment

45. When Statutory Board A has an enforceable claim over the fines and penalties, such as through
the issuance of summons, a fine receivable and a corresponding amount owing to the
Government will be recorded. When the offender pays the fines and penalties to Statutory Board
A, the fine receivable will be reduced. Subsequently, when Statutory Board A channelled the
fines and penalties back to the Government, the amount owing to the Government will be
reduced.

46. Before the change in legislation, these fines and penalties are a form of non-exchange revenue
of Statutory Board A.

Example 2: Donations with Attached Conditions

Scenario

47. Company C donates $1 million to Statutory Board B and specifically instructs Statutory Board B
to only use this funding to meet the needs of the less privileged in Singapore within one year
from the date of receipt. Any unused sum within one year will have to be returned to Company
C. After one year, $300,000 has not been used for the stated purpose.

Assessment

48. While the requirement to use the donated sum for the less privileged in Singapore is a restriction
placed on the funding received, the requirement to return the unused sum to Company C within
one year is a condition instead. Upon receipt, a deferred income / liability is recognised. This
will be reversed and a total income of $700,000 will be recognised when (or as) the donated
funds have been used for its stated purpose. After one year, deferred income of $300,000
remains on the balance sheet, which will be derecognised when the funds are returned to
Company C in full.

Example 3: Donated Service-in-kind

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Scenario

49. Designer D offers to donate his professional service to design the office building for Statutory
Board E for free. Statutory Board E would have to spend $400,000 if it were to buy this service.
The useful life of the office building is estimated to be 25 years.

Assessment
50. When Statutory Board E uses Designer D’s professional service, a donation income, AND, an
asset will be recognised. This asset, comprising of the total capitalised costs of the office
building, will be depreciated over 25 years in accordance with SB-FRS 16 Property, Plant and
Equipment.

Example 4: Waiver of Outstanding Amounts Owed

Scenario

51. Statutory Board F purchases drinks from Supplier G. After knowing that these drinks will be
used by Statutory Board F for charitable purposes, the supplier decides to donate drinks and
issues a credit note to Statutory Board F.

Assessment

52. Statutory Board F will record an account payable after it has purchased drinks from Supplier G.
Upon receipt of the credit note, this liability will be reversed, AND, donation income will be
recorded.

Example 5: Donations where Nominal Considerations are Provided

Scenario

53. Company H gives cash of $100,000 to Statutory Board I. In return, Statutory Board I is expected
to send speakers to a 2-day conference. The estimated cost to Statutory Board I of providing
this service is approximately $400.

Assessment

54. According to SB-FRS Guidance Note 7 Accounting for Sponsorships Received, a sponsorship
arises when a Statutory Board receives cash, other assets or services and is expected to provide
consideration to the sponsor. In instances where nominal consideration is provided, the transfer
of assets should be recognised as donation received. An acknowledgement of the donor would
not be deemed as consideration.

55. As the value of the consideration provided by Statutory Board I is nominal ($400) relative to the
cash received ($100,000), this cash given by Company H should be accounted as a donation
by Statutory Board I.

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