Proposed changes to Accountants Act to enhance regulator's oversight and audit quality

THE long-awaited proposed amendments to Singapore's Accountants Act have been announced by the Ministry of Finance (MOF) and the Accounting and Corporate Regulatory Authority (Acra). The public is invited to give its feedback on these proposals from now until Nov 13.

In announcing the proposed amendments, MOF and Acra said the suggested changes to the current legislation "seek to promote audit quality, in order to enhance Singapore's standing as a trusted business location through better assurance of information available to investors and the public".

"To achieve these, the Bill includes key amendments to enhance the audit regulatory regime and introduce measures for better compliance with professional requirements and standards by both public accountants and accounting entities. These amendments also align Singapore's regulatory practices with those in jurisdictions that have established independent audit regulation," they said on Thursday (Oct 14).

Broadly, the proposed changes will enhance and specify the reach and oversight of the industry's regulator.

For a start, Acra's regulatory oversight will be enhanced to include inspections of: accounting entities (AEs), which include accounting corporations, firms or limited liability partnerships, for compliance with quality control standards (QC inspections); and AEs and public accountants (PAs) for compliance with Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) requirements.

The proposed changes specify Acra's powers to conduct QC inspections on AEs, mandate AEs to remediate lapses uncovered during the inspections and impose sanctions on AEs where necessary, "so that audit firms will deliver consistent high audit quality" - in line with the practices of other audit regulators in Australia, Canada, the United Kingdom and the United States.

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign UpVIEW ALL

AML/CFT inspections are also expected to address AML/CFT risks, in line with recommendations made by global money laundering and terrorist financing watchdog, the Financial Action Task Force (FATF).

Another suggestion will have Acra replacing its Practice Monitoring Programme - currently operating on a binary level (subjects either pass or fail) - with a 3-tier framework that will assess them as "satisfactory", "needs improvement" or "not satisfactory".

The programme ascertains whether public accountants have complied with prescribed auditing standards, methods, procedures etc.

Proposed changes include specifying the sanctions for engagement-level inspections that may be imposed, and extends the new framework to QC inspections as well.

Acra's regulatory powers could also be enhanced so that other orders, such as remedial actions, may be imposed on suspended PAs and AEs. Currently, such orders cannot be imposed on these suspended entities, as they are not deemed to be PAs and AEs during their suspension.

The proposed changes also specify that PAs and AEs may be suspended for up to 2 years if they refuse to undergo Acra's regulatory inspections "without reasonable excuse".

The suggestions also cover amending the maximum financial penalties that can be imposed on AEs under disciplinary proceedings to S$250,000, to align with the maximum financial penalties that can be imposed on them under QC inspections.

These and other proposed changes - along with the draft Accountants Act Bill 2021 - can be found on MOF's website (www.mof.gov.sg), Acra's website (www.acra.gov.sg) and the REACH consultation portal (www.reach.gov.sg). Those who wish to provide feedback should email their comments to MOF_Public_Consultation@mof.gov.sg and indicate "Public Consultation on Accountants (Amendment) Bill 2021" in the subject line.