New regulatory measures have been introduced to raise audit standards - a crucial factor in upholding investor confidence in Singapore's capital markets.
They involve the Accounting and Corporate Regulatory Authority (Acra) publishing the names of individual auditors who are not up to scratch. They could be individuals who fail two or more successive Acra inspections, auditors who have been issued with a restriction order or those who are no longer allowed to practise without another accountant looking over their shoulder.
The new rule will apply to all Acra inspections from April 1 next year.
ALL PUBLIC ACCOUNTANTS
From April next year, individuals who fail two or more successive Acra inspections and are issued a restriction order or are no longer allowed to practise independently will have their names published on the Acra website.
AUDITORS OF LISTED COMPANIES
• BDO, Deloitte, EY, KPMG and PwC will be held to a new gold standard - to reduce the percentage of inspected listed company-engagements with at least one deficient finding by 25 per cent, over the period from 2015 to 2019.
• New measurable targets will enhance the audit quality indicators for all audit firms introduced last October.
Acra has been publishing the names of public accountants whose licences have been suspended or cancelled for serious audit deficiencies since 2007.
Senior Minister of State for Law and Finance Indranee Rajah announced the new measures at the Singapore Accountancy Convention yesterday.
She told the convention that safeguarding market integrity is crucial in a time of economic uncertainty, where corporate governance and accounting scandals have rocked some markets.
"We should never take for granted the confidence that investors have in the quality and integrity of audits and financial reporting in Singapore," Ms Indranee said.
She also welcomed Acra's two new efforts to improve the audit quality of public-listed companies.
Acra said yesterday that it has set a target to reduce the percentage of inspected listed company-engagements with at least one deficient finding by 25 per cent, over the period from 2015 to 2019.
For a start, only the five biggest audit firms that perform listed company audits here - BDO, Deloitte, EY, KPMG and PwC - will be held to the standard.
Currently, Grant Thornton does not audit listed companies here.
Acra also plans to enhance its disclosure framework for audit quality indicators (AQIs), introduced last October, so companies are more informed of the quality of audit firms.
The watchdog has set quantitative benchmarks for six AQIs to give auditors and audit committees a better sense of what counts as good quality.
For example, an auditor's staff retention rate is one indicator of audit quality. Acra's target is for audit firms to keep their retention rate between 75 per cent and 80 per cent.
Some firms are already submitting AQI data to Acra twice a year. This data is not made public but audit committees and companies can request it from the audit firms.
Most auditors have welcomed Acra's moves. PwC Singapore executive chairman Yeoh Oon Jin said: "We all appreciate that a high-quality audit is critical to ensure smooth functioning of capital markets and this, in turn, supports the overall development of businesses and financial markets in Singapore."