SINGAPORE - From 2017 onwards, auditor's reports of listed companies will be more transparent and contain more information on key matters.
This will be the result of the enhanced auditor reporting standards that the Accounting and Corporate Regulatory Authority (Acra) and Institute of Singapore Chartered Accountants (ISCA) announced jointly on Thursday.
The new standards will take effect for audits of financial statements for periods ending on or after December 15, 2016.
Two key changes will be made in audit reports to help investors and other users in their decision-making by giving them more pertinent information on companies.
Firstly, auditors will be required to convey key audit matters in their financial statement reports beyond the current "pass/fail" opinion.
These key matters may include risk areas of the financial statements most susceptible to misstatements and estimates such as the valuation of investments.
Secondly, audtors have to give more disclosure on going concerns - a term referring to the ability of a company to continue its operations. Currently, auditors only need to highlight 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 an added responsibility on the auditors to ensure that a company has made adequate disclosures on going concern even if the circumstances do not lead to any material uncertainty.
The enhanced auditor reporting standards were first issued by the International Auditing and Assurance Standards Board in January 2015 to national audit regulators and professional bodies for localised adoption.
Welcoming the move, 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."
Noting the key role that public accountants will play in ensuring greater transparency in audited financial statements, Professor Tan Cheng Han, chairman of the Public Accountants Oversight Committee, which advises Acra, said, "The profession must take these added responsibilities seriously and seize this opportunity to bring the quality of audits to a new level."