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SINGAPORE Airlines (SIA) is proposing to appoint KPMG LLP in place of its outgoing auditor Ernst & Young LLP, the carrier announced in a letter to shareholders on Wednesday. Ernst & Young has served as SIA's external auditor for 43 years, since 1972.
"As part of the ongoing good corporate governance initiatives, the directors are of the view that it would be timely to effect a change of external auditor with effect from the financial year ended March 31, 2016," SIA said.
Accordingly, Ernst & Young will not be seeking reappointment at SIA's forthcoming 2015 annual general meeting (AGM), which is scheduled to be held on July 30.
An SIA spokesman told BT that the company was not in violation of rule 713 of SGX's Rulebook, which states that a company's audit partner (assigned by the audit firm) must not be in charge of more than five consecutive audits for a full financial year, and may return after two years.
KPMG, which is a member firm of KPMG International, was selected for the proposed appointment after the audit committee invited and evaluated competitive proposals from various audit firms, SIA said.
In selecting the audit firm, SIA's audit committee took into consideration factors such as the adequacy of resources and experience of the audit firm to be selected, and the audit engagement partner to be assigned to the audit, as well as the size and complexity of the company and its subsidiaries.
SIA's board of directors have taken into account the audit committee's recommendation, including the factors considered in their evaluation, and are satisfied that KPMG will be able to meet the audit requirements of the company, SIA said.
The KPMG audit partner who will be in charge of SIA's audit is Tham Sai Choy. Mr Tham has had more than 30 years of experience in providing audit and advisory services to a variety of clients, including companies listed on the Singapore Exchange (SGX). He has been managing partner of KPMG Singapore since 2010 and currently also serves as chairman of KPMG in the Asia-Pacific.
Separately, SIA's board of directors has proposed the renewal of the company's share buyback mandate at the 2015 AGM. At the 2014 extraordinary general meeting, shareholders had approved the renewal of a mandate to enable the company to purchase or otherwise acquire issued ordinary shares in the capital of the company. This mandate is set to expire on the date of the 2015 AGM.
As at June 3, SIA had purchased or acquired an aggregate of 6.98 million shares by way of on-market share buybacks, for a total consideration of S$68.98 million, excluding commission, brokerage and goods and services tax. On Wednesday, SIA's shares closed two cents up at S$10.75.