Speech by Ms Lai Wei Lin, Second Permanent Secretary for Finance at The Institute of Singapore Chartered Accountants (ISCA) Practitioners Conference on 28 October 202228 Oct 2022
Ladies and Gentlemen
1. A very good afternoon. It is my pleasure to join you here.
2. Great to be able to meet in person after more than two years of many virtual and hybrid meetings.
3. Today, we meet in times of uncertainty, and turbulence.
4. This year, most countries have started to recover from the global pandemic.
a. International travel has seen some recovery, though it is still not quite at pre-pandemic levels yet.
b. We continue to be on the alert for new strains of Covid-19 and we hope that the new strains will be milder, and that our newest vaccines will be effective.
5. At the same time, there are many challenges on the geopolitical front and in the macroeconomic environment abound.
a. In Europe, the war in Ukraine has exacerbated the energy crisis and led to a surge in fuel prices, as well as food shortages.
b. Inflation, as you all know, is a great challenge, aggravated by the war and supply chain delays due to the post-pandemic recovery.
c. With the contestation between US and China, we also see trade and technology bifurcation deepening.
6. The world in the next decade will be a very different one.
a. The days of cheap financing, cheap energy and cheap labour are over.
b. Countries also have to contend and be mindful of a new constraint – carbon, as we grapple with the existential threat of climate change.
7. And this means that we need to adapt how we do business – to be more productive, to be more resilient and to be more sustainable.
a. This in turn has implications for the accountancy sector as well.
8. Let me talk about the trends that lie ahead for accountants and auditors, and the opportunities they present.
9. The first, and perhaps the most salient trend after two years of COVID, is digitalisation.
10. COVID accelerated this by several years.
a. Many companies and industries made a quantum leap in digital adoption – with changes here to stay for the long haul.
11. Likewise, the accounting profession has seen significant opportunities to change the way you work and conduct business.
a. New digital tools enable faster access to data and audits.
b. Robotic process automation (RPA) relieves accountants from mundane tasks, giving more time for higher value-added activities analysis and strategic thinking.
12. I encourage accountancy leaders and all of you to take full advantage of such new technologies to redesign the work and job scopes of your team.
13. To further support and drive digitalisation among Small and Medium Practices (SMP), the Singapore Accountancy Commission (SAC) has set aside $2 million of funding under the Productivity Solutions Grant.
a. This grant will support SMPs to adopt accountancy sector-specific digital solutions in the areas of Audit, Tax, Corporate Secretariat, Practice Management, Data Analytics and Business Advisory.
b. The grant is expected to be open for application from Q2 next year. I look forward to many applications when that happens.
14. In addition, SMPs who are keen to embark on or further their digitalisation journey can reach out to ISCA’s SMP Centre of Excellence for advice and information.
a. This is a one stop virtual centre that equips firms with information and resources on Audit Quality, Practice Management and Skills & Talents, on top of digitalisation-related information.
15. Let me now move on to the second trend on sustainability, and our response to the pressing threat of climate change.
16. With the growing focus on, and commitment to net zero, one critical enabler will be sustainability reporting.
17. This is where accountants and auditors can play an important role.
a. By preparing and verifying sustainability reports and disclosures, you help to hold companies accountable for their sustainability targets.
18. The Singapore Exchange (SGX) has already mandated climate-related disclosures for all SGX-listed companies on a “comply or explain” basis starting from FY2022.
19. ACRA and the Singapore Exchange Regulation have set up a Sustainability Reporting Advisory Committee, comprising relevant industry stakeholders, to develop a sustainability reporting implementation roadmap for all Singapore-incorporated companies.
a. The Committee’s work is well underway. It has studied various reporting standards, bearing in mind the need for international convergence. At the same time, it is also considering the practicability and relevance of different standards.
b. With investors demanding more credible sustainability-related information, the Committee is also looking at the need for external assurance of sustainability reports filed by companies.
c. Finally, all this requires a step up in capability building efforts – for companies and for accounting firms.
d. The Committee intends to put out its recommendations for public consultation next year. I welcome everyone to provide your feedback then.
Changing Job Roles
20. Digitalisation and sustainability will have profound implications for the profession.
21. New job roles such as IT auditors who identify risks across networks, systems and processes, as well as ESG auditors, who provide assurance for sustainability reports, are emerging.
22. As industry and business continue to evolve, we can expect accounting job roles to become more multi-disciplinary and diversified.
a. This means that we need to continuously upskill and cross-train accountants and auditors to take on these new roles.
b. This is no different from the challenges faced by other segments of the workforce.
23. I am therefore pleased to hear that ISCA has convened an advisory panel to assess and provide recommendations to the SAC on possible enhancements to the Singapore Chartered Accountant Qualification (SCAQ).
a. This is timely and valuable as we do want the SCAQ programme and syllabus to stay future-ready and industry-relevant.
b. I look forward to the recommendations of the panel.
24. On the Government’s end, we are also looking at how to better forge synergies across adjacent fields, to support the increasingly multi-disciplinary nature of new growth areas.
a. One example is in bringing together audit and valuation expertise for complex valuation projects. It is useful for accountants to have some knowledge to perform valuation-related work, including ESG and intangible assets valuation.
b. In recognition of this synergy, the Institute of Valuers and Appraisers Singapore (IVAS) recently introduced a new exemption pathway for Chartered Accountants of Singapore (CA(Singapore)) to gain the Chartered Valuer & Appraiser qualification more quickly.
c. From December 2022, CA(Singapore) who pass the Business Value, Governance and Risk module of the SCAQ, will be exempted from module 1 of the Chartered Valuer & Appraiser (CVA) Programme.
25. At the same time, we also need to ensure a pipeline of talent to the profession, especially as accounting job roles evolve.
a. To this end, the Ministry of Finance and the SAC have convened a committee, comprising key industry players and academia, to develop and recommend strategies to enhance the attractiveness of the accounting profession. We will share more details in due time.
26. I would also like to encourage ISCA and accountancy leaders like all of you, to work together to attract talent to the sector.
a. The fact is the aspirations of young professionals are changing. They seek greater sense of fulfilment and purpose in work. They also desire better work-life balance and flexible work arrangements.
b. Accountancy firms will have to find ways to accommodate their aspirations.
c. Competition for talent has also become keener, so accountancy firms may also need to review their pay structures and career progression.
Uplifting Audit Quality
27. Besides attracting talent to the sector, we also need to work together to uplift audit quality.
28. Earlier last month, Singapore overtook Hong Kong to become the top financial centre in Asia and the third in the world, just behind London and New York1.
a. As Singapore grows as a business and financial hub, there will be rising demand for high quality, trustworthy, and credible audit services.
b. Our reputation as a pro-business and trusted hub hinges on the continued high quality, capability and ethical standards of our accounting professionals and firms here.
29. This is why the Government continuously reviews and updates our regulatory regime to maintain trust in the work of the accounting profession.
30. Most of you would be aware of the latest amendments to the Accountants Act to introduce quality control (QC) inspections on accounting entities as a statutory requirement.
a. To support the industry in complying with the new regulations, ISCA has launched a quality management toolkit and will roll out a voluntary compliance programme to help review accounting entities’ QC policies and implementation.
b. I thank ISCA for their continuous partnership on QC inspections and taking the lead to support the industry.
31. At the same time, I wish to assure everyone that ACRA will take a risk-based approach to the QC inspections to avoid unnecessary compliance burden.
a. Greater focus will be placed on inspecting firms that audit higher-risk Public Interest Entities (PIE) clients.
b. Accounting entities that audit lower-risk non-PIEs will be inspected less frequently.
c. In addition, accounting entities that performed well in their previous inspections will be subjected to less frequent inspections.
32. On the Government’s part, we will also transform ourselves to better serve the industry.
a. We will be merging ACRA, SAC and the Accounting Standards Council (ASC) into a single entity.
b. This allows us to harness greater synergies across regulation, standards-setting and sector development, which is currently undertaken by these three separate entities. This allows for more holistic policy and regulatory oversight of the accountancy sector.
c. We aim to complete the merger by the first half of 2023.
33. In conclusion, digitalisation and sustainability are two big trends that are here to stay.
a. They will bring many new opportunities, and will also require the profession to transform the way they work.
34. Regardless of how the profession evolves, accountants will always be invaluable assets to their organisations.
a. Be it in analysing and reporting financial information, providing assurance on IT and sustainability, or uncovering questionable practices.
b. After all, accountants are “doctors” of organisations, monitoring the pulse and rhythm of the business.
35. So, I encourage all of you to stay nimble, equip yourselves with relevant knowledge and skill sets, and seize new opportunities ahead.
36. Thank you all very much.