Opening Speech by Mr Raymond Lim, Minister for Prime Minister's Office and Second Minister for Finance and Foreign Affairs, at The ICPAS Annual Dinner 2005 on 21 October 2005, 8.15 pm at the Oriental Ballroom21 Oct 2005
MAKE SINGAPORE THE TRUSTED REFERENCE FOR ACCOUNTING
Mr Tan Boen Eng, President of the Institute of Certified Public Accountants of Singapore,
Ladies and Gentlemen
I am pleased to join you here this evening for the Institute's Annual Dinner & Dance 2005.
2. The mission of the Institute of Certified Public Accountants of Singapore, or ICPAS, is to "develop, support and enhance the integrity, status and interests of the accountancy profession in Singapore". I cannot emphasize enough the importance of ICPAS' mission, not only in advancing the future of the accountancy profession, but also in strengthening the credibility and integrity of the wider Singapore economy.
3. Over the years, Singapore has established a reputation of being trustworthy and corruption-free. This reputation is a key factor that has helped us successfully attract businesses and investors to Singapore. Trust will continue to be critical for all aspects of business. It is something precious which we should strive to retain and enhance. Otherwise, once lost, it will be hard to regain.
4. Trust is founded on two key thrusts. The first is the pursuit of global standards that are recognised and trusted internationally. The second is the pursuit of substance over form in meeting these standards. ICPAS and the accountancy profession play a vital role in developing both these pillars. Allow me to elaborate.
Pursuing Global Standards
5. As Singapore strives to attract global businesses and investments, the standards we adopt must be recognised and trusted by international investors and business communities. To align Singapore's corporate governance and disclosure practices with international standards, the Government has introduced a number of changes over the last few years. The most significant change is that, since Jan 2003, companies in Singapore have been required to comply with Singapore Financial Reporting Standards or FRS. These FRSs are modelled closely after the standards issued by the International Accounting Standards Board.
6. In Aug 2002, the Council on Corporate Disclosure and Governance, or CCDG, was formed to prescribe accounting standards in Singapore. This council is an independent body that is represented by relevant stakeholders from both the private and public sectors.
7. ICPAS renders invaluable support to the CCDG in setting robust yet practical accounting standards. Besides actively participating in the public consultations conducted by the CCDG, ICPAS, as the accountancy industry's professional body, also issues exposure drafts and makes recommendations to the CCDG on the adoption of new accounting standards.
Pursuing Substance over Form
8. Setting international standards per se is of little use if companies do not, in abiding by these standards, keep to the spirit behind these standards. [As Plato noted, "good people do not need laws to tell them to act responsibly, while bad people will (try to) find a way around the laws".] As auditors of financial statements, accountants are important gatekeepers who help ensure that standards and best practices are carried out by management in substance, and not simply in form.
9. The past few years have been tough for accountants all over the world, as the public's and investors' faith in their role as gatekeepers has been shaken by scandals involving companies such as Enron and Parmalat. [The Danish have an old saying that "lawyers and painters can soon change white to black." Unfortunately, the recent scandals have prompted some to say that "accountants and painters are equally able to change red to black."] This is a perception that we must correct.
10. As preparers and auditors of financial information, accountants are ideally placed to highlight any corporate wrong-doing and regain the credibility of financial reports. To emphasise the importance of proper disclosure and putting in place people with the right values and mindsets, the Code of Corporate Governance was recently revised to clarify the responsibility of Audit Committees in ensuring the integrity of companies' financial statements, internal controls and internal audit functions. The accountancy profession plays an important role in helping Audit Committees shoulder this critical responsibility.
11. Accountants must enjoy the full confidence of the public in order to perform their jobs effectively. To strengthen confidence in auditors, both in fact and in perception, the Public Accountants Oversight Committee was set up in April 2004 to strengthen the regulatory framework for the accountancy profession in Singapore. The Practice Monitoring Programme, which reviews audit work performed locally, was also legislated in April 2004. This programme helps to raise the confidence of investors in the auditing standards in Singapore, thereby enhancing our position as the leading business hub in the region.
Continuing Education and International Exposure
12. The pursuit of global standards in Singapore can only be effectively achieved if accountants embark on continuous professional education and increase their international exposure. In today's rapidly changing world, knowledge can become obsolete and standards can change quickly. Thus, a one-off education and qualification are insufficient if Singapore and the accountancy profession in Singapore are to be the trusted points of reference going forward.
13. I am heartened that ICPAS recognises the importance of staying relevant and continually organises courses through its training arm, the Singapore Society of Accountants, to help accountants upgrade themselves.
14. ICPAS has also worked hard to seal Mutual Recognition Agreements or MRAs with accounting associations in Australia and the UK, and is currently in the process of sealing one with India. These MRAs help to increase the mobility of accountancy services and broaden the international exposure of accountancy professionals based in Singapore.
15. In conclusion, I would like to commend ICPAS for its active role in the standards-setting process and in promoting the competency of accountants in Singapore. Singapore attracts talents, businesses and wealth because we maintain high standards of quality, efficiency and integrity. We are a trusted reference in the region and globally. ICPAS has its critical role in continually reinforcing that trust in the accountancy profession through pursuing high standards, garnering the support of, and maintaining discipline among your members to observe those standards. It is both your privilege and responsibility to play your part in strengthening investors' confidence in Singapore, and enhancing our status as a business and financial centre.
16. On this note, I wish all of you an enjoyable evening of good food and company. Thank you.