Keynote Address by Mrs Tan Ching Yee, Permanent Secretary for Finance, at the Institute of Singapore Chartered Accountants (ISCA) Practitioners Conference on Tuesday, 29 October 2019, at the Sands Expo and Convention Centre

Maintaining Trust and Competitiveness

Mr Kon Yin Tong, President of ISCA,
Distinguished Guests, 
Ladies and Gentlemen,

Good morning.

1. Thank you for inviting me to the ISCA Practitioners Conference. It is my pleasure to be here.

Changing Business Landscape

2. Today, Singapore is known for our business-friendly and trusted regulatory environment.

a. Singapore has been ranked second in the World Bank’s Ease of Doing Business ranking for four consecutive years. 

b. Recent corporate governance reports by CLSA and the Asian Corporate Governance Association also ranked Singapore amongst the top three jurisdictions in Asia.

3. Putting these rankings together is interesting. They show that we need to set standards even as we make things hassle-free and easier for businesses. It is not about being a free-for-all place, nor with being concerned only with compliance with rules and regulations.

4. These needs to strike a good balance have contributed to Singapore’s competitiveness. They place us in a good position to tackle future challenges.

a. But we cannot stand still. We should stay alert to the risks and challenges facing our economy.

b. On the macroeconomic front, the IMF expects global growth in 2019 to slow to 3%, amidst global uncertainties.

c. Many companies and professions are also at risk of being disrupted by technology. Accountancy and accountants are not exempted from this tide of change.

d. Besides new technologies, there have also been conversations globally on the roles and responsibilities of auditors as the safeguards to financial statement quality.

5. We will need our own forward-looking responses to changes around us – as a system and as individual practitioners. Let me speak about each in turn.

Upcoming Public Consultation on Proposed Amendments to the Accountants Act

6. Updating and refreshing our regulatory regime is crucial to maintaining public trust in the work of the accountancy profession.

a. Many of you would know that ACRA has been working on proposals to update the regulatory regime for public accountants.

b. The aim is to promote high-quality audits, so that there is greater assurance that the work of public accountants meets today’s standards. The proposals also seek to align the regulatory regime to industry and international developments.

7. In the coming months, ACRA will be seeking your feedback on proposed amendments to the Accountants Act that will allow us to do these. Let me highlight three of them.

a. First, on inspections. Currently, ACRA’s statutory audit inspection programme covers public accountants’ audit engagements. ACRA proposes to widen the scope of the inspection programme to cover statutory inspections of Public Accounting Entities, or PAEs for short. The focus of the inspections will be on compliance with quality control standards. The intention is for PAEs to remediate quality control lapses uncovered during inspections. Good quality control is a key ingredient for consistent high-quality audits. This proposed change will align Singapore’s regulatory regime to the practices of audit regulators in Australia, Canada, and the United States.

b. Second, on disclosures. In instances of severe audit deficiencies, ACRA proposes to require public accountants to disclose inspection outcomes and findings to those charged with governance, such as the audit committees of listed entities. This disclosure seeks to enhance the transparency of the audit inspection process. Through the disclosure, companies and auditors can have meaningful discussions on audit quality matters and findings.

c. Third, on information sharing. ACRA proposes to amend the Accountants Act to empower ACRA to enter into information-sharing arrangements with foreign regulatory authorities. Let me elaborate on the thinking behind this proposal. Companies increasingly operate across jurisdictions. As auditors, you may have to rely on the work of foreign component auditors when doing your audit. Similarly, many of you may be component auditors yourselves. It can be a challenge for audit regulators worldwide to check and maintain the high quality of such audits. Information sharing among audit regulators will help to enhance the public’s trust in group audits. However, we are very mindful of concerns of confidentiality and the proper use of information, so there will be safeguards to ensure confidentiality and the proper use of information.

Need for Practitioners to Remain Competitive

8. Beyond regulatory changes, we need all stakeholders – directors, audit committees, management, investors, and the accountancy profession – to play their part.

9. There have been many encouraging moves by the profession. Let me share some with you.

a. The first is on the adoption of digital tools. One of the key observations in ACRA’s 2019 Practice Monitoring Programme report, which will be released soon, is that PAEs are using digital tools in audits. PAEs are developing and leveraging on audit software in the planning, risk assessment, and execution of audit procedures. This helps to reduce human errors, and more importantly, allow you to focus your valuable talent on the non-routine, non-mundane parts of audit.

b. The second example is on innovation. Some firms have set up digital and innovation centres to test out cutting-edge technologies in Singapore. This is a welcome development, given the increasing pervasiveness and importance of new technologies in our business landscape.

c. The third example is on the support for upskilling and reskilling of accountancy professionals. Amidst the changing times, many PAEs are providing support and incentives to help staff upskill and reskill. They are taking this opportunity to prepare for the future and be ready to offer services that are in demand. For example, PwC Singapore will be investing $10 million to upgrade staff’s digital skills in data automation, visualisation, and robotic process automation. Similarly, KPMG Singapore will also be giving a 20% pay increment to auditors who obtain the Chartered Accountant of Singapore designation by July 2020.

10. But much more can be done.

a. PAEs, in particular Small and Medium-Practices (SMPs) that wish to leverage on technologies to improve their operations, can now check out the Accountancy Industry Digital Plan, or IDP for short. Developed jointly by SAC, ISCA, and IMDA, the Accountancy IDP includes a suite of initiatives to help SMPs go digital. SMPs looking for information on digital solutions and training can do so at the virtual ISCA SMP Centre.

b. Accountancy practitioners, who wish to upskill and reskill, can also choose from a suite of training programmes. The Singapore Chartered Accountant Qualification (SCAQ) is one example. ISCA also conducts various training programmes, such as the Infrastructure and Project Finance Qualification, to help practitioners develop skills in growth areas.

Conclusion

11. The current economic conditions point to deep and structural changes in the global economy. It is timely for the profession to press on with innovation and the adoption of digital technology, even as we update our regulatory regime. I am grateful that we are doing so amidst strong collaborations and partnerships among our many stakeholders – ISCA, SAC, ACRA, and businesses.

12. Thank you very much and have a fruitful conference ahead.