SINGAPORE - High quality audits are crucial for upholding investor confidence in Singapore's capital markets, and new regulatory measures were introduced on Thursday (Aug 25) to raise the bar for auditors here.
To deter public accountants from repeatedly flouting proper audit procedures, the Accounting and Corporate Regulatory Authority (Acra) will be publishing on its website the names of individuals who fail two or more successive inspections by Acra, and are issued a restriction order or no longer allowed to practice without another accountant looking over their shoulder.
The new rule applies to all Acra inspections commencing April 1 next year. Acra has published the names of public accountants whose licenses have been suspended or cancelled for serious audit deficiencies since 2007.
To improve the audit quality of public-listed companies, Acra 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.
Acra takes its cue from the International Forum of Independent Audit Regulators, which started the "25 per cent reduction" initiative in April. For a start, only the five biggest audit firms that perform listed company-audits here will be held to the standard. These firms are BDO, Deloitte, EY, KPMG and PwC. Presently, Grant Thornton does not audit listed companies here.
To give companies more visibility over the quality of different audit firms, Acra is enhancing the usefulness of its disclosure framework for audit quality indicators (AQIs) introduced last October.
Acra has now set quantitative benchmarks for six AQIs, to give auditors and audit committees alike a better sense of what counts as good quality. For example, an auditor's staff retention rate is one indicator of audit quality, and Acra's target is for audit firms to keep their retention rate between 75 per cent and 80 per cent.
Currently, some audit firms are already submitting their AQI data to Acra on a twice-yearly basis. This data is not public, but audit committees and companies can request this data from the audit firms.