26 August, 2014
Legal News & Analysis – Asia Pacific – Singapore – Regulatory & Compliance
The Monetary Authority of Singapore, the Accounting and Corporate Regulatory Authority, and the Singapore Exchange have issued a revised Guidebook for Audit Committees in Singapore (“Guidebook”).
This is the second edition of the Guidebook which was last issued in October 2008. The new edition of the Guidebook updates it to take into account the revision to the Code of Corporate Governance in May 2012, as well as other relevant changes in regulations and guidelines. The revised Guidebook also contains new and updated case studies, and introduces guidance on new areas of concern to Audit Committees (“AC”) that were not covered previously.
The revised Guidebook comprises the following six sections:
- AC Composition: This section aims to provide guidance for current and prospective AC members to assess their independence and suitability for membership in the AC. It also outlines the roles and responsibilities of AC members.
- AC Agenda: The second section sets the scope of the AC, including its interaction with the Board, its annual workplan and periodic meetings, as well as its oversight responsibility over interested person transactions and the whistle-blowing policy.
- Risk Management and Internal Controls: This section outlines the common risk governance structures and the various frameworks to ensure that the company’s risk management and internal control system is adequate and effective.
- Internal Audit: This section examines the considerations when deciding whether the internal audit function should be in-house or outsourced. It also covers the common issues relating to the AC’s oversight over the internal audit function.
- Financial Reporting: A key duty of the AC is to review the significant financial reporting issues and judgements so as to ensure the integrity of the company’s financial statements. This section also highlights factors indicative of weaknesses in the financial reporting process.
- External Audit: The last section describes the role of external auditors, factors that the AC should consider when evaluating the independence of external auditors, as well as considerations for the appointment of external auditors, their remuneration, and terms of engagement.
Each section opens with a table listing certain key relevant regulatory requirements and guidelines for ACs with respect to that particular area. The best practices subsection that follows focuses on areas in which ACs often face uncertainty, as well as provides practical solutions and guidance to issues ACs commonly encounter. Each section ends with the detailed regulatory requirements and guidelines that were listed at the start of each section.
The review of the Guidebook was conducted by a Work Group comprising industry practitioners and stakeholders. The Work Group received support from secretariat staff from the Monetary Authority of Singapore, the Accounting and Corporate Regulatory Authority, and the Singapore Exchange, and resource support from KPMG LLP, PricewaterhouseCoopers LLP, and WongPartnership LLP.
The Guidebook may be obtained at the following links:
- From the site of the Monetary Authority of Singapore;
- From the site of the Accounting and Corporate Regulatory Authority; and
- From the site of the Singapore Exchange.
For further information, please contact:
Annabelle Yip, Partner, WongPartnership
Joy Tan, Partner, WongPartnership