A new framework to disclose and communicate the value of intangible assets (IA) was launched on Sept 4, alongside new resources to help enterprises manage and commercialise their intellectual property (IP).
The Intangibles Disclosure Framework (IDF), unveiled by the Intellectual Property Office of Singapore (IPOS) and Accounting and Corporate Regulatory Authority (ACRA), is among the first in the world.
IA is growing in importance. According to a press release by IPOS, more than 90% of value from the S&P 500 is made up of intangible assets. With the growing importance of IA, the IDF provides a systematic and consistent way to disclose and communicate IA such as brand value, patents or registered designs. Enterprises are also encouraged to disclose IA beyond those recognised under the accounting standards (e.g., human capital and/or internally generated intangibles) under the voluntary framework.
The disclosure principles in the IDF are anchored in four pillars:
Strategy: Helps enterprises communicate how their IA contribute to their overall corporate strategy.
Identification: Recommends how enterprises should categorise IA based on their nature and characteristics, facilitating comparability.
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Measurement: Guides enterprises and stakeholders to make better assessments of the performance of enterprises’ IA through relevant metrics.
Management: Helps enterprises identify, assess, and manage risks and opportunities related to their IA.
“Harmonising intangibles disclosure will provide more clarity in assessing the financial prospects within our sector, and potentially boost funding prospects which will enable businesses like ours to truly grow with IP”, says Kurt Wee, Founder and CEO of Celligenics, a biotech start-up which is a spin-off of the Agency for Science, Technology & Research (A*STAR)
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In April 2021, Singapore launched the Singapore Intellectual Property Strategy 2030 (SIPS 2030), a national roadmap that aims to strengthen Singapore’s position as a global IA and IP hub.
One long-term goal of SIPS 2030 is to build a credible and trusted intangible asset valuation and reporting ecosystem, supporting enterprises in managing and commercialising their intangible assets. This is to help enterprises unlock benefits from their intangible assets, contributing to their overall business strategy and value.
Globally, intangible asset valuation and reporting remains at a nascent stage currently. No jurisdiction has developed an intangible-specific disclosure or valuation framework.
Standardised information will allow stakeholders to make more informed assessments of the business and financial prospects, thereby facilitating the commercialisation of the intangibles. In addition, harmonised disclosures can help investors and lenders make comparisons, thereby improving the flow of funds into enterprises that invest wisely in intangibles.
