Singapore-domiciled funds report under SFRS(I) 9, the Singapore-equivalent of IFRS 9. The two are aligned, and together they govern how a fund classifies, measures and impairs its financial instruments — which is to say, how your net asset value is actually struck. Here is what fund accountants and CFOs need to hold in their heads.
Classification: the two-part test
IFRS 9 classifies financial assets using two tests:
- Business model — are the assets held to collect contractual cash flows, held to collect and sell, or held for trading / managed on a fair-value basis?
- SPPI — are the contractual cash flows solely payments of principal and interest?
The two combine into three measurement categories: amortised cost, fair value through other comprehensive income (FVOCI), and fair value through profit or loss (FVTPL).
For most funds, the answer is FVTPL
Because a typical PE, VC or hedge fund manages its portfolio on a fair-value basis and reports performance to LPs on that basis, the great majority of its instruments fall into FVTPL. Equity investments are measured at fair value by default (the FVOCI election exists but is rarely used by funds, since it bars recycling gains to profit or loss). Where a fund holds debt instruments to collect contractual cash flows — certain private credit or bond positions — amortised cost can apply, and that is where the expected-credit-loss rules bite.
The fair-value hierarchy
Fair value itself follows IFRS 13's three levels, which drive your disclosures:
- Level 1 — quoted prices in active markets (listed equities, liquid bonds).
- Level 2 — observable inputs other than quoted prices (many OTC instruments).
- Level 3 — unobservable inputs (most private-company holdings) — the level that demands a defensible valuation policy and the most scrutiny at audit.
Expected credit losses
For assets at amortised cost or debt at FVOCI, IFRS 9 replaced the old "incurred loss" model with a forward-looking expected credit loss (ECL) model — you recognise expected losses before a default occurs, staged by changes in credit risk. For an equity-heavy fund this is often immaterial; for a credit fund it is central.
Where this becomes journal entries
The accounting policy is only useful once it produces clean entries every period. Three of the most error-prone are worth automating:
- Amortised-cost debt — effective-interest amortisation of premium or discount. Generate the entries with our Bond Accounting JE Generator (IFRS 9).
- FX revaluation — closing-rate restatement of monetary items under IAS 21, via the FX Revaluation JE Generator.
- Subscriptions and redemptions — unit pricing and the NAV impact of investor flows, via the Subscription / Redemption JE Generator.
Getting classification right at the start — and keeping the entries consistent every close — is what makes a fund audit-ready rather than audit-anxious.
This guide is general information, not accounting or audit advice. Apply IFRS 9 / SFRS(I) 9 to your specific facts with your auditor.
aama.io runs IFRS 9 / SFRS(I) 9 fund accounting — classification, fair-value reporting and NAV — on one platform. Book a demo to see it on your structure.