Disclosure And Accounting Standards Committee May 2001 Public Consultation04 Apr 2001
The Disclosure and Accounting Standards Committee (the 'Committee') issued a public Consultation Paper ('December 2000 Consultation Paper') on 6 December 2000 to gather comments and feedback on the preliminary views of the Committee. The Committee had since received comments from a total of 48 respondents to its December 2000 Consultation Paper, and would like to take this opportunity to express its appreciation to these respondents for their valued comments.
The Committee has given due consideration to all feedback received. As the Committee has significantly revised some of its original proposals, it would like to put forth its draft report ('May 2001 Report') for a second round of public consultation.
The following highlights the key recommendations that have been revised since the Committee first issued its Consultation Paper in December 2000.
Prescribed Accounting Standards
The Committee recommends that International Accounting Standards or IAS be adopted as the accounting standards for Singapore. Each time a new IAS is issued, it will be carefully studied and the timing for its smooth adoption in Singapore settled on. The standards adopted would be the prescribed accounting standards and be termed 'International Accounting Standards (Singapore)' or 'IAS (Singapore)' for short.
The recommendation on IAS (Singapore) notwithstanding, the Committee has sought to strike a balance for companies that have to use some other accounting standards in pursuit of their business. The Singapore Exchange currently allows foreign companies to use certain alternative accounting standards. The Committee feels that Singapore-incorporated companies on the Singapore Exchange should similarly be permitted to use alternative standards, as long as there are sufficient safeguards in place to protect investors. It therefore proposes that listed Singapore-incorporated companies be permitted to use allowed alternative standards if they are also listed on foreign exchanges that require these standards. For such dual-listed companies, the Committee feels that analyst reports would be available to help investors to compare the company with other companies in that industry on the foreign exchange, so that the need to have such analyst reports comparing against other companies on the Singapore Exchange would be less critical.
To give flexibility also to companies which are not listed, the Committee recommends that they be similarly allowed to use alternative accounting standards if they have good business reasons for doing so, subject to specific approval from the Ministry of Finance.
Accounting Standards Setting Process
In line with the practices in the US, UK and Australia, the Committee recommends that the Minister for Finance establish a panel on corporate governance with representation from businesses and organisations such as the Institute of Certified Public Accountants of Singapore, Investment Management Association of Singapore, Singapore Exchange, Securities Investors Association of Singapore and Singapore Institute of Directors.
The panel would undertake the prescription of accounting standards in Singapore, after considering if there are overriding reasons why an IAS should not be adopted, or adopted immediately, as a prescribed accounting standard in Singapore.
In addition, the panel would review and recommend to the Government enhancements in corporate governance and disclosure practices on a regular basis.
Independence of Public Accountants
Public accountants have an important role in society. The investing public, as also other stakeholders, relies on public accountants for sound financial accounting and reporting. It is therefore important to ensure the objectivity and integrity of public accountants in their capacity as company auditors.
In line with the practices in leading jurisdictions, the Committee recommends that auditors be prohibited from providing certain non-audit services to their audit clients, if the client is statutorily required to file its financial statements with the Registry of Companies and Businesses. Specifically, the recommendation is to disallow company auditors of non-exempt companies from undertaking bookkeeping and company secretarial functions in the company.
To enable auditors to make the necessary arrangements with their audit clients, the Committee recommends that prohibition of these services will only come into effect from January 2003. 75% of companies in Singapore are exempt companies, and so will not be affected by this recommendation.
The Committee recognises the importance of seeking views from the public in order to enhance reporting and disclosure standards and to safeguard public interests. Interested parties are invited to provide their comments and feedback on the DASC draft report. Comments may be sent via email to firstname.lastname@example.org or via fax to 337 4134. The Committee hopes to receive comments by 22 June 2001 before it submits its report to the Government. Thank you.
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MINISTRY OF FINANCE