ACRA's Oversight of Auditors Whose Audit Opinions of Listed Companies Found Wanting
Parliamentary Question by Mr Png Eng Huat:
To ask the Deputy Prime Minister and Minister for Finance: (a) what oversight does ACRA have over auditors whose audit opinions of listed companies are later found to be wanting; and (b) what action is taken against such audit firms or their partners when they are found to be negligent.
Parliamentary Reply by Deputy Prime Minister and Minister for Finance Mr Heng Swee Keat:
Under the Accountants Act, the Public Accountants Oversight Committee or PAOC is empowered to inspect public accountants’ audits of companies’ financial statements. The PAOC is a Board committee under the Accounting and Corporate Regulatory Authority or ACRA. The inspections assess public accountants’ compliance with the Singapore Standards on Auditing, which are consistent with international auditing standards.
The PAOC’s inspections aim to deter audit deficiencies and raise audit quality. Public accountants with audit deficiencies will be sanctioned. Depending on the severity of the deficiencies, the PAOC can inspect the public accountant again, require the public accountant’s work to be reviewed by another public accountant, restrict the type of services that the public accountant can provide, or suspend or cancel the public accountant’s license. The names of public accountants whose licenses have been suspended or cancelled will also be published on the ACRA website.
The current audit inspections cover public accountants. Later this year, we plan to amend the Accountants Act to expand audit inspections to audit firms and to apply sanctions for audit firms’ lapses. The proposed amendments will hold audit firms to higher accountability.
Our regulatory measures are aimed at providing greater assurance to the public that audits by public accountants meet prevailing standards. However, all parties involved in companies, including directors, audit committees, management, and the accounting profession, have a responsibility and a role to play in ensuring the quality of financial reporting. Investors too need to take appropriate steps to understand the health of the companies and apprise themselves of risks versus returns, when deciding whether to make an investment.