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Acra sharpens focus on errant directors
[SINGAPORE] The Accounting and Corporate Regulatory Authority (Acra) will push out more initiatives with the view to strengthen the competencies of company directors, said Deputy Prime Minister and Finance Minister Tharman Shanmugaratnam.
Acra will roll out a directors' compliance programme, said Mr Tharman, who was speaking at a dinner yesterday to mark Acra's 10th anniversary.
The programme is targeted at training some 10,000 first-time directors who fail to comply with key and basic statutory requirements under the Companies Act. These include holding the annual general meeting and the timely filing of annual returns.
The training is offered in place of prosecution, Mr Tharman added.
Acra said it issues about 10,000 letters for filing offences every year to both first-time errant directors and repeat offenders.
This compliance programme, to begin in June, comes as an internal study by Acra showed that many first-time errant directors are ignorant of statutory requirements and are not aware of their duties and responsibilities. Directors who participate will attend a half-day session on topics such as basic accounting and principles of good corporate governance.
Acra will also partner the Singapore Institute of Directors to provide training in financial reporting to directors aimed at helping them fulfil their duty of ensuring the accuracy of financial statements, said Mr Tharman. The training will apply to directors of both listed companies and large non-listed firms, he added.
Other initiatives are in the pipeline, or should be coming to fruition soon.
Following an agreement announced in January between Acra and the Institute of Singapore Chartered Accountants, Acra will widen the scope of its financial reporting surveillance, by reviewing a sample of financial statements from listed companies as well as non- listed firms that report a large turnover and market capitalisation. Acra said in January that the exercise, which is to cover financial statements that have been given a clean bill of health by auditors, is being carried out with a view to taking regulatory action against errant directors.
Mr Tharman also noted that several small companies will soon be exempted from statutory audit, once upcoming Companies Act amendments are put in place. One of the changes, proposed in 2012, is to have the threshold for statutory audit raised from $5 million to $10 million in annual revenue. The move, aimed at reducing the regulatory burden on small businesses, will reduce compliance costs for a further 10 per cent of companies, or about 25,000 small firms, said Mr Tharman.
On the digital front, Acra will be launching a virtual institute of corporate law. Among other things, the institute will work with Acra legal officers on law reforms, said Mr Tharman.
And by the year's end, Acra will have launched its new filing and information retrieval system for businesses and the public known as Next Generation Bizfile, said Mr Tharman. "In an era of Big Data, companies want to be able to effectively mine data."
Mr Tharman highlighted that regulators have to maintain balance when looking at the three pillars of government regulation, market-based disclosure and discipline, as well as responsibility of the investor.
"Relying primarily on government regulation tends to introduce moral hazard, and weakens the incentive for investors to . . . do their due diligence," he said. "But neither can we rely exclusively on market discipline or leave investors to figure out what is real or false."