SINGAPORE - Many listed companies need to look at beefing up their financial reporting, Senior Minister of State for Finance and Transport Josephine Teo said on Wednesday.
Mrs Teo noted that a study of 257 listed companies with a total market capitalisation of $288.3 billion found that only about half of them had prepared their accounts well enough such that their accounts needed just a few adjustments by auditors.
The total audit adjustments that the 257 firms needed came up to a whopping $34 billion. These companies together account for nearly a third of the Singapore Exchange's total market cap.
On the other hand, there was a group of 33 companies whose accounts needed 20 or more adjustments by auditors, she said.
"Such adjustments should ... not be prevalent if the accounts are prepared correctly in the first place," she told an accountants' conference held at Raffles City Convention Centre.
Companies that are in a "growth stage" were the biggest culprits, Mrs Teo said, adding that these firms' accounting systems may not have kept pace with their expansion.
These are mostly firms that have a market capitalisation of between $100 million and $500 million, the Accounting and Corporate Regulatory Authority (Acra) said yesterday.
"When companies are at a growth stage, there is greater risk that this capability does not get built in tandem with the needs of the growing enterprise," she said.
Mrs Teo urged firms to "review the adequacy of your accounting systems and finance resources" and said that audit committees need to scrutinise their firms' preparation of financial statements more closely.
While auditors have done their jobs, "we should not rely on them solely as gatekeepers", she said.
Auditors usually propose adjustments during an audit to correct accounting errors.
Audit adjustments therefore are a gauge how well the accounts the firm prepared met accounting standards. the bigger the adjustment, the worse the originally prepared accounts.