THE accounting profession's regulator will be raising the bar for public accountants here, to ensure that the quality of audits remains high - given that "audit remains the profession's most valuable asset", but also "the accounting sector's greatest risk".
Come February, practitioners will need to - instead of just chalking up three years of audit experience - gain another two years of audit management experience before they can qualify as public accountants.
The change was announced by the Accounting and Corporate Regulatory Authority's (Acra) chief executive, Kenneth Yap, yesterday, in his speech at the ISCA Auditing and Assurance Conference, held as part of the Singapore Accountancy Convention 2014 organised by the Institute of Singapore Chartered Accountants (ISCA).
"The heart of the accounting profession's public standing and relevance is the high quality and absolute integrity of its audit and assurance function," he said.
He noted that the global financial crisis has led some to doubt and question the value and relevance of audit. "But the great irony, of course, is that the critique underscores the enduring role that everyone still expects audit to play in the marketplace. You wouldn't criticise or attempt to reform something that was past its relevance."
But, Mr Yap added, the profession and its regulators need to ensure the quality of audit remains high because it holds a position of high trust.
"Audit remains the profession's most valuable asset. It is the platform on which the profession stands or falls. From audit, the profession gains unparalleled access and insight across all industries.
"And yet, paradoxically, audit is also the accounting sector's greatest risk and one that is most difficult to manage," he said.
Contributing to the quality of an audit, he noted, is the experience of the auditor. "No system or process can substitute for the proper exercise of an individual's professional judgement and scepticism when assessing the accuracy of financial information.
"This is why we consider that, amongst the requirements to register as a public accountant, the experience component is perhaps the most crucial. It is the distinguishing factor between a qualified accountant, and one who is ready to discharge a higher calling as a public accountant upholding the public interest."
From Feb 1, 2015, all public accountants will need to have accumulated 2,500 hours of experience in audit management, estimated to take about two years. In this, they must have independently and competently performed certain key audit functions involving planning and leading an audit, and forming and reporting on the audit's conclusions.
And, to ensure that the audit management experience is gained at an appropriately senior level, the 2,500 hours will only count after an applicant has completed their professional accountancy training.
For ISCA members, the 2,500 hours will have to come after qualifying as a full ISCA member, which normally takes one to three years of post-qualification experience (ie such as after gaining an accountancy degree); non-ISCA members will need to have completed an equivalent amount of post-qualification experience.
And, from 2019, the 2,500 hours will have to come after applicants have completed the Singapore Qualification Programme or a recognised equivalent professional qualification.
Mr Yap noted: "At present, Acra generally requires applicants to have three years of audit experience, without specifying that the experience must relate to the management aspect of an audit. In practice, we find that most applicants too easily meet this threshold."
Taken together, the new process of qualification would take at least five years.
The revised requirements were drawn up in consultation with the professional accountancy bodies and representatives from both large and small audit firms.