Second Reading Speech By The Second Minister For Finance, Mr Lim Hng Kiang, On The Accounting And Corporate Regulatory Authority Bill 2004 at The Parliament, 6 Feb 200406 Feb 2004
Mr Speaker, Sir, I beg to move,"That the Bill be now read a second time".
2 Currently, the Registry of Companies and Businesses, or RCB, is responsible for the incorporation of companies and the registration of businesses. It seeks to ensure that companies and businesses comply with the relevant laws, and maintains a repository of financial reports and business information. The Public Accountants Board, or PAB, registers and regulates public accountants who are qualified to sign off companies' accounts as auditors. It also maintains professional auditing standards.
Rationale for Merger
3 As part of our efforts to promote a more conducive business environment, we have been moving towards a disclosure based regime for business regulation. This requires enhancing our regulatory framework for monitoring and enforcing companies' compliance with disclosure requirements and accounting standards.
4 Sir, it is with this end that the Government announced its plans to merge RCB and PAB, in May last year. The merger will achieve synergies between the monitoring of companies' compliance with disclosure requirements and the regulation of public accountants performing statutory audit. The merger will consolidate within a single government entity the expertise to carry out these functions effectively.
Accounting and Corporate Regulatory Authority
5 The Accounting and Corporate Regulatory Authority Bill provides for the formation of the new statutory board on 1 April 2004. To reflect its role as a regulator of corporate entities, businesses and public accountants, the statutory board will be called the Accounting and Corporate Regulatory Authority, or ACRA for short.
6 ACRA's mission will be "To provide a responsive and forward looking regulatory environment for companies, businesses and public accountants, conducive to enterprise and growth in Singapore." ACRA will maintain a strong focus on issues concerning businesses, such as developing the corporate law framework, accounting, and corporate governance. It will also register and regulate public accountants who act as auditors of companies.
7 As a regulatory agency, a substantial part of ACRA's work will be to ensure that companies, businesses and auditors observe relevant standards and comply with legal requirements. However, an effective enforcement regime cannot rely solely on tough penalties for offenders. ACRA will promote greater awareness and understanding of the requirements and standards. It will engage its stakeholders regularly through public consultations.
8 Another important aspect of ACRA's work is to promote a business-friendly environment. This is fundamental to our drive to make Singapore an attractive global hub for business. ACRA will support the work of the Council on Corporate Disclosure and Governance, a private-sector led committee set up to prescribe accounting standards in Singapore and advise the Government on corporate governance and disclosure matters. ACRA will also work closely with other government agencies as well as professional organisations such as the Institute of Certified Public Accountants of Singapore and the Singapore Institute of Directors to maintain high auditing standards and to help companies adopt good disclosure and corporate governance practices.
9 To achieve its mission and meet the challenges ahead, the ACRA Board will comprise private sector representatives and professionals as well as people from the public sector and academia.
Main Provisions in the Bill
10 Sir, I shall now highlight the main features of the Bill. Parts I and II of the Bill establish ACRA as a statutory board under the purview of the Ministry of Finance. Specifically, Clause 5 empowers the Minister to appoint up to a maximum of 16 Board members, with two appointed in their capacity as representatives from the Institute of Certified Public Accountants of Singapore.
11 Part III sets out ACRA's functions and powers which are essentially those already undertaken by RCB and PAB today. In addition, ACRA will represent the Government internationally for matters relating to the registration and regulation of business entities and public accountants, and promote public awareness on new business structures, compliance requirements, and corporate governance practices.
12 Part IV of the Bill sets out the provisions for the appointment of the Chief Executive and officers of the Board. It also gives protection from personal liability to an officer or employee in discharging his duties in good faith.
13 Part V specifies that ACRA will be set up as a self-funding statutory board with full revenue retention. Clause 16 of the Bill requires ACRA to submit a copy of all annual estimates and supplementary estimates to the Minister for Finance, and to publish a summary of the estimates in the Gazette.
14 Part VI of the Bill provides for the transfer of property, assets, liabilities and employees to ACRA. Existing staff of RCB and PAB will be transferred to ACRA at no worse-off terms than today. Part VII contains legal provisions for the effective functioning of the Authority.
15 Sir, in closing, let me reiterate that the formation of ACRA will synergise the expertise of RCB and PAB. ACRA will be well placed to advance our corporate governance, financial reporting, and disclosure standards.
16 Mr Speaker, Sir, I beg to move.