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ACRA introduces framework to improve audit quality in Singapore
THE Accounting and Corporate Regulatory Authority (ACRA) on Wednesday introduced an Audit Quality Indicators (AQIs) Disclosure Framework which breaks new ground as it is the first time the big-four audit firms have collectively agreed to provide audit committees of listed companies with a set of comparable indicators on the auditors' ability and commitment to deliver quality audits.
This, said ACRA, is crucial in helping audit committees better evaluate and select the right auditors.
The AQIs comprise eight comparable quality markers that correlate closely with audit quality based on ACRA's observations from inspecting auditors over the past decade. These include hours spent by senior audit team members involved in the audit, relevant experience of the senior audit team members and results from internal and external inspections of auditors.
The AQIs Disclosure Framework is the first of its kind in the region.
Audit committees will be able to utilise the AQIs Framework from Jan 1, 2016. The big-four accounting firms have confirmed their support for the framework and will communicate their AQIs data directly to audit committees each year when the process to re-appoint the incumbent auditor or appoint a new auditor is carried out.
Announcing the AQIs Framework during his keynote address at the CPA Australia Congress conference today, ACRA chief executive Kenneth Yap urged audit committees to view the AQIs as key tools that can help them obtain higher quality audits.
He also noted that "the AQIs alone are not a silver bullet that guarantee high quality audits. They do, however, provide audit committees with a comparable basis on which to conduct a conversation on the effort, experience and resources that an audit firm will bring to bear on a particular audit".
He said: "I am confident that audit committees that utilise the AQIs will see audit quality improve over time. This bodes well for Singapore's reputation as a transparent and trusted business hub."