| Summary: | This study aims to detennine the degree of comparability of financial statements from 1983 to
1992 in each of the three respective industries -- Banking and Finance, Hotel and Property, as
well as to assess the extent to which financial statements published by the listed companies
from 1983 to 1992 are comparable.
The interest in this area of study was aroused mainly due to the importance of having
comparable financial statements in helping users to make investments decisions as stressed by
many authoritative bodies of accounting. Similar studies on comparability of financial
statements have been carried out in other countries like the United Kingdom and Hong Kong.
But, such studies have yet been conducted in Singapore.
The relevant sections of the Statements of Accounting Standards (SASs), Singapore's
Companies Act as well as the Exposure Drafts (issued by the Institute of Accounting
Standards Committee under the Comparability Project) provided the necessary infonnation for
this study. Apart from these sources, additional information were obtained from accountingrelated
journals, magazines and books. The annual reports of the selected listed companies
form the primary data for the analysis.This study focuses on eight accounting policies, namely inventory valuation, depreciation of
fixed assets, construction contracts, income tax, foreign currency translation, valuation of long
and short term investments, and; investments in associates.
A statistical method, known as Hirschrnan-Herfindahl Index (H index), was used in analysing
the collected data. The H index is a numerical figure which measures the degree of
concentration on one or a limited number of accounting alternatives, that is to measure the
comparability of financial statements.
From the analysis, it was found that the comparability of financial statements of Singapore
listed companies in respect of the eight accounting policies was high from 1983 to 1992. The
contributing factor for such high degree of comparability is due to the SASs which influence
the choice of accounting method adopted by companies.
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