Jurisdiction - Singapore
Reports and Analysis
Singapore – Proposed Amendments To The Accountants Act.

30 June, 2012

 
In May 2012, the Accounting and Corporate Regulatory Authority (“ACRA”) issued a consultation paper inviting views on the proposed amendments to the Accountants Act (Chapter 2 of Singapore) (“Accountants Act”). The last significant review of the Accountants Act was seven years ago and ACRA believes that the developments in Singapore and overseas have led to a need to update the Accountants Act so as to enable further progress.
 
Scope of ACRA’s regulation
 
One of the proposals of the consultation paper is to extend ACRA’s regulation to cover all audits of financial statements/information in Singapore, whether statutory or voluntary, as well as reviews of financial statements/information. Further, ACRA will be able to prescribe other assurance services to be included in its scope. ACRA will also have the right to inspect audits and reviews performed by a public accountant on a foreign entity raising funds in Singapore, for example, foreign incorporated companies listed on the Singapore Exchange (“SGX”). While audits of foreign issuers by
foreign auditors are not covered, this is an area that will be reviewed in due course.
 
Conditions of approval for accounting entities that conduct PIE engagements
 
Public interest entities (“PIE”) include entities that are listed on SGX or are in the process of issuing debt/equity instruments for trading on SGX, and financial institutions. To enhance the existing safeguards to ensure that PIEs appoint appropriate auditors on behalf of investors/stakeholders, ACRA is proposing additional conditions for accounting entities to conduct PIE engagements, for example, requiring the audit firm to have quality controls in place that comply with the Singapore Standard on Quality Control 1 (SSQC1) and submit these quality controls for ACRA’s review. This approach is in line with international practice where audit regulators license and supervise audit firms that serve the capital markets. Audit firms that audit large charities and institutions of public character will also be subject to the same requirements as those that audit PIEs. In addition to existing statutory inspections of the work of individual public accountants, ACRA is also proposing a firm-level inspection programme which inspects firms against SSQC1 as well as other matters that support audit quality. Similar to the current practice, ACRA will issue firms with a report after the firm level inspection. ACRA is proposing to require firms to respond to and improve on the noted deficiencies in the report. Where firms fail to address significant deficiencies or do not achieve progress on areas identified in previous inspections, ACRA may take further action such as placing restrictions on the audit firm’s practice. While ACRA does not intend to publish reports on individual firms as a standard practice after every inspection, ACRA is proposing that it should have the discretion to publish all or portions of a firm’s report if it is in public interest to do so, and it should be able to provide such reports to relevant regulators such as the Monetary Authority of Singapore and SGX.
 
Special investigation and the complaints and disciplinary process
 
ACRA intends to introduce a special investigation process that will investigate serious cases having an adverse impact on the public interest to complement the existing Practice Monitoring Programme, a quality review programme with a main objective of promoting ongoing improvement to audit quality. The orders and sanctions under the special investigation process will include restrictions on practice, censure, written undertakings, financial penalties, suspension and cancellation. This specific special investigation process will enable ACRA to investigate audit matters and protect public interest more consistently and effectively, improving its ability to deal with public interest cases of potential non-compliance with audit and review standards and related requirements. 
 
Registration and renewal process for public accountants
 
ACRA proposes to simplify the practical experience requirements for applicants to be public accountants, and focus on experience most important to audit quality and a public accountant’s responsibilities, in particular, requiring two years of higher level audit experience in an audit management role. This ensures that the aim of the registration requirements for public accountants being to prepare applicants for the responsibilities of taking charge of audits and providing assurance over financial information relied on by the public is met. 
 
Others
 
In addition to the key proposals outlined above, ACRA is also proposing amendments to the requirements for accounting entities and the requirements for public practice to ensure that these requirements are clear and remain relevant, such as clarifying the responsibilities of providing public accounting service, requiring public accountants to maintain audit experience, and removing the minimum capital requirements for accounting corporations and LLPs. 
 
The consultation exercise ends on 4 July 2012. The consultation paper is available for download on ACRA’s website at www.acra.gov.sg.
 
 

For further information, please contact:

 

Jolie Giouw, ATMD Bird & Bird

Jolie.Giouw@twobirds.com

 

 

 

 

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