Auditor reporting standards in Singapore will be raised from 2017 to ensure greater transparency over financials and governance in the corporate sector.
The enhanced auditor reporting standards were unveiled yesterday by the Institute of Singapore Chartered Accountants (Isca). The new standards have been approved by the Accounting and Corporate Regulatory Authority (Acra) and will take effect for financial periods ending on or after Dec 15 next year.
Under the enhanced standards, auditors will be required to highlight key audit matters in their financial statement reports beyond the current "pass/fail" opinion.
These key matters may include aspects of financial statements most vulnerable to mis-statements, and company estimates such as the valuation of investments.
Ambiguity over investment valuations has led to controversies in the corporate sector. This was one of the main criticisms that have been levelled at the embattled commodity firm Noble Group.
Another key change to the auditing standards will require further disclosure on going concerns, a term referring to the ability of an entity to continue its operations.
Currently, auditors need to highlight only those issues that result in a material uncertainty over a company's going concern, such as the loss of a major customer.
But the new standards will impose a responsibility on auditors to ensure that a company has made adequate disclosures on going concerns even if the circumstances do not lead to any material uncertainty.
The initiative by Isca and Acra will align auditor reporting standards here with the enhancement that the International Auditing and Assurance Standards Board is set to implement for periods ending on or after Dec 15 next year.
Acra chief executive Kenneth Yap said: "The expanded auditor's report supports our efforts to introduce more transparency in the marketplace by providing greater insight into the audit process and raising the quality of disclosure in financial statements.
"This will boost stakeholder confidence in our markets, and reinforce our reputation as a trusted place for business."
Mr David Gerald, Securities Investors Association's founder and chief executive, also welcomed the revised standards.
"For the first time, investors will have insights on the audit risks that are identified by auditors as well as the audit procedures.
"The introduction of the key audit matters would likely spur companies to be more careful in their valuation and to apply a consistent methodology in doing their valuation," Mr Gerald added.