Second Reading Speech By Mrs Lim Hwee Hua, The Minister Of State For Finance On The Accountants (Amendment) Bill 2006, at The Parliament, 15 Feb 200615 Feb 2006
Mr Speaker, Sir, I beg to move, "That the Bill be now read a second time".
2. This Bill amends the Accountants Act to enable accountants to form Limited Liability Partnerships, or LLPs, for public accountancy services.
3. The LLP business structure was introduced in April 2005 when the Limited Liability Partnerships Act was passed. This new business form is now available to most businesses and the take-up has been encouraging. From 11 April 2005 to 1 Jan 2006, a total of 947 LLPs were registered with the Accounting and Corporate Regulatory Authority (ACRA).
4. To enable the accounting profession to have the option of adopting the LLP structure as a vehicle for providing their services in Singapore, the Accountants Act has to be amended. Currently, public accountants can choose to operate as sole proprietors, ordinary partnerships or Accounting Corporations. The new LLP option will enable accountants to form structures that provide them with limited liability similar to companies, while preserving flexibility similar to ?partners? in a partnership. As accounting firms expand globally, the LLP option will be particularly relevant as a partner operating in one region would no longer have to be held accountable on an unlimited basis for liabilities arising from the actions of another partner operating in another region, simply because they belong to the same accounting partnership.
5. On an individual basis, however, a public accountant will remain professionally accountable for each audit he performs. A public accountant in an accounting LLP will therefore be held to the same standards of professional conduct and competence as a public accountant in an ordinary accounting partnership, including unlimited personal liability for his own wrongful acts or omissions.
6. LLPs for accountants have already been introduced in other countries like the UK, Jersey and US-Delaware where the response and feedback has been positive.
7. Sir, I shall now highlight the main amendments proposed in the Bill.
Main amendments to the Accountants Act
8. First, the Accountants Act is amended to specify that Accounting LLPs shall abide by the requirements laid out in the LLP Act and all other legislation applicable to LLPs. For instance, an accounting LLP and all other LLPs will be required to have at least two partners and lodge an annual declaration of solvency with the Registrar of LLPs.
9. Second, this Bill proposes that Accounting LLPs shall be subject to the same standards of governance, professional conduct and administrative care as are required of Accounting Firms (namely sole proprietorships and partnerships) and Accounting Corporations under the Accountants Act. For example, similar to other business structures providing public accountancy services, an Accounting LLP must be managed by one or more partners who are public accountants ordinarily resident in Singapore. Accounting LLPs shall also be overseen by the Public Accountants Oversight Committee (the PAOC) of ACRA in the provision of public accountancy services. The PAOC shall have the authority to investigate any complaint made against an Accounting LLP and institute disciplinary proceedings, if necessary. In addition, Accounting LLPs shall be subject to the same complaint and disciplinary processes, penalties and restrictions on employing disqualified persons as Accounting Firms and Accounting Corporations.
10. Finally, since partners of Accounting LLPs will enjoy limited liability similar to shareholders in Accounting Corporations, Accounting LLPs will also be subject to the investor and creditor safeguards applicable to Accounting Corporations. In particular, all Accounting LLPs will be required to maintain a minimum capital base of $50,000 and secure professional indemnity insurance of at least $1 million.
11. Mr Speaker Sir, allowing the formation of Accounting LLPs will facilitate the expansion and internationalisation of accounting services from Singapore. This will complement and further our strategy to develop Singapore into a services hub and a leading jurisdiction for business.
12. Mr Speaker, Sir, I beg to move.