Must a director understand financial statements of the company?

Yes. A company director in Singapore is expected to understand the company’s financial statements.

Directors have a legal duty to act in the best interests of the company and to exercise reasonable care, skill, and diligence. This includes being able to read and interpret key financial documents such as the balance sheet, profit and loss statement, and cash flow statement.

Even if accounting tasks are delegated to professionals, directors remain responsible for ensuring that the financial information is accurate, up to date, and properly maintained. A lack of financial understanding is not an acceptable excuse for failing to fulfil these duties.