Opening Address By Mrs Lim Hwee Hua, Minister Of State For Finance And Transport, ICPAS Annual Dinner And Dance 2006, 27 Oct 2006

FUTURE OF THE ACCOUNTING PROFESSION IN A GLOBAL ECONOMY

Mr Tan Boen Eng, President of the Institute of Certified Public Accountants of Singapore,

Distinguished Guests, Ladies and Gentlemen,

I am very pleased to join you here this evening for the Institute's Annual Dinner and Dance 2006.

Introduction

2. It is great to see all of you dressed up to the nines and in the splendour of yesteryears. It is human nature to look back at the past with fond memories. But we all know it is important to live in the present and to try to anticipate the future. The environment in which we work has changed dramatically over the past few years. The new world economic order has ushered in an unprecedented era of interconnectivity of trade, business and communications. Our increasing involvement on the international stage means that we have to familiarise ourselves with a wider array of new rules and standards.

3. Accountants therefore play an important role in this increasingly complex business environment. Accountants are responsible for the spread of financial knowledge and help keep stakeholders apprised of the financial health of a business. It is clear that a strong accounting profession is fundamental to the economic success of every nation, more so now than ever before.

Adoption of international standards

4. One aspect of doing business internationally is working with a globally recognised set of accounting standards. This means acceptable standards that can be applied anywhere, from Singapore to New York, Tokyo to London. This helps prevent the confusion and errors that are associated with having multiple standards.

5. In Singapore, our accounting standards are modelled closely after the standards issued by the International Accounting Standards Board. The adoption of international accounting standards provides useful and relevant professional guidance, and enhances comparability, making Singapore an attractive place for people to do business. In this regard, I would like to commend ICPAS for its active participation in the standard setting process. The Institute provides valuable support in issuing exposure drafts on new standards and making recommendations to standards setting authority on their adoption.

6. Audit is another area that is increasingly assuming a global character. Here in Singapore, the Public Accountants Oversight Committee or the PAOC, conducts the Practice Monitoring Programmes in accordance with audit standards issued by ICPAS. These standards are equivalent to those issued by the International Federation of Accountants. This nexus serves as a form of quality assurance, that the audits performed by local auditors are comparable to those done by their international counterparts.

7. In this context, I am pleased to announce that the Accounting and Corporate Regulatory Authority or ACRA has recently joined 17 other independent audit regulatory organisations as founding members of the International Forum of Independent Audit Regulators. This forum will provide a platform for international regulators to collaborate and share their experiences. It will also provide a focus for contacts with other international organisations which have an interest in audit quality.

Pursuit of high professional standards and quality

8. As noted before, the benchmarks for quality and standards in the accounting profession have taken on a global dimension. Upholding professional standards is a shared responsibility between the Government and the accounting profession. For its part, the Government strives to regulate with a light touch. However, this is only possible when the accounting profession is zealous about upholding its reputation and maintaining acceptable standards of practice.

9. I am glad to note that ICPAS has taken many pro-active steps to enhance quality. An example would be ICPAS' pre-registration courses, which ensure that aspiring accountants remain up to date with the current rules and regulations, and have the relevant technical skills and knowledge before being allowed to register as public accountants.

10. Ladies and gentlemen, you are aware of the current tight market supply. The accounting profession must continue to strive to remain attractive to highly talented individuals (like yourselves). Over the past few years, there have been observations that the profession has not been attracting the brightest graduates in their cohorts, i.e. the graduates with good class honours or double degrees. These top graduates are often attracted to go into investment banking and the finance industry, where the starting salaries are a multiple of those in accounting firms.

11. Another observation was that all graduate recruits are accorded the same starting salary in accounting firms, regardless of their academic results in the university. I would urge accounting firms to start reviewing their hiring policies so as to avoid losing top accounting graduates to other industries. Otherwise, we may have a situation where the brightest accountants work in other sectors and are in turn audited by their less able counterparts.

12. It is good to hear that ICPAS and its training arm, the Singapore Accountancy Academy, are taking pro-active steps to promote accounting as a career, such as the recently commissioned TV programme to expose students and their parents to the accounting profession. I hope to see more of such initiatives going forward, as this will go a long way in raising the quality and professional standards.

Conclusion

13. Going forward, we can see that the global economy will continue to challenge the international accounting profession to compete and deliver quality accounts. The future of the profession rests on staying relevant, up to date and market oriented. But most fundamentally, it depends on a continued demonstration of professionalism, a commitment to acting in the public interest and not losing sight of the core role as custodians of transparency and integrity in financial reporting.

14. The work and high standing of institutes such as ICPAS are also vital to the reputation and effectiveness of professional accountants. I would like to take this opportunity to commend all those who have gone the extra mile and given their time and dedication to the various ICPAS committees.

15. With that, I wish you all an enjoyable evening ahead. Thank you.