Audit committees urged to safeguard reporting standards

Directors serving on audit committees must ensure the integrity of financial statements and the auditing process.

The message was highlighted yesterday by key regulators at the annual Audit Committee Seminar.

Singapore Exchange chief executive Loh Boon Chye said: "Investors rely on the boards of companies they invest in, in particular the audit committees, to govern crucial areas, including the safeguarding of assets and the reporting of financials."

The point was further underlined by Mr Kenneth Yap, chief executive of the Accounting and Corporate Regulatory Authority (Acra).

"The audit committees must set the bar high and demand that the management produces high-quality financial statements, and ensure that they choose the right auditors, properly supervise the audit process and provide greater transparency for investors," he said.

Mr Yap also urged the 400 or so audit committee and board members at the event to pay attention to key reporting areas - such as control over investees, impairment testing and sale-and-leaseback transactions - in the upcoming financial reports for last year.

These areas have been earmarked as among the key points for review in the Financial Reporting Surveillance Programme (FRSP).

The first FRSP review was concluded by Acra in October last year with the aim to ensure better compliance among listed firms, as regulators continue to enhance the financial reporting and auditing framework.

Acra and the Institute of Singapore Chartered Accountants also announced a string of enhanced requirements for financial reporting in July last year. The new standards will take effect for audits of financial statements for periods ending on or after Dec 15 this year.

The changes will include requirements for auditors to elaborate more on key risk areas in a financial statement, and to ensure a company has sufficient disclosures on its going concerns - a term referring to the ability to continue operations.

Singapore will adopt these enhanced auditing standards as part of the global initiative launched by the International Auditing and Assurance Standards Board last January.

Yesterday's seminar was organised by the SGX, Acra and the Singapore Institute of Directors.

A version of this article appeared in the print edition of The Straits Times on January 13, 2016, with the headline 'Audit committees urged to safeguard reporting standards'. Print Edition | Subscribe