Opening Address by Mrs Lim Hwee Hua, Minister of State for Finance and Transport, ICPAS Annual Dinner and Dance 2007, Grand Hyatt Singapore, Grand Ballroom, Friday, 26 October 2007

ROLE OF ICPAS - PAST ACHIEVEMENTS, CURRENT CONTRIBUTIONS AND FUTURE EXPECTATIONS

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 2007.

Introduction

2. I am sure this year's dress theme of "Bling and Glitter", with the reference back to the hip-hop culture, would finally put to rest the myth that accountants are dull and stolid people!

3. Far from being passive, accountants have adapted well to changes. The accounting landscape has altered dramatically over the years and will continue to do so. While the landscape has changed, what remains constant is the importance of having sound financial information. Investors need properly prepared financial information and adequate disclosure to make resource allocation decisions. Hence, if the process of generating reliable and credible financial information in Singapore were somehow distorted or if the integrity of the financial information were called into question, investors would start to look elsewhere to invest.

4. The recent PricewaterhouseCoopers' 2007 Global Economic Crime Survey found that fraud continues to be a major threat to companies worldwide, despite greater regulation and control. In the same survey, it was reported that Singapore, in particular, seems to have had more economic crime, of the accounting fraud and asset misappropriation nature. In 2007, 19 percent of companies here reported being victims of economic crime, up from 16 percent in 2005.

5. While the increase in the incidence of economic crime here could be partly attributed to the fraud controls paradox - where tightening controls may lead to an increase in the detection of fraud cases in the short term - what should attract our attention is the potential damage this might have on public confidence in the quality of information.

6. Accountants in business and auditors play an important role in safeguarding Singapore's reputation for integrity and trust. We need to put in place a rigorous system that consistently promotes reliable and credible financial information. To accomplish this, we would require the cooperation and collaboration of all the stakeholders involved in the corporate reporting process. In this regard, ICPAS plays a pivotal role.

Involvement of ICPAS in the Standards Setting Process

7. As all of you are aware by now, the Council on Corporate Disclosure and Governance or CCDG has been dissolved and, in its place, we have created a new Accounting Standards Council or ASC. The ASC has a wider ambit to prescribe accounting standards, not only for companies but also for other entities like societies, charities and cooperatives.

8. I am pleased to announce that Ms Euleen Goh, the Chairman of International Enterprise Singapore and former CEO of Standard Chartered Bank Singapore will serve as the Chairperson of the inaugural ASC. Besides Ms Euleen Goh, the ASC also consists of representatives from the different stakeholder groups such as the accounting profession, the users and preparers of financial information, academia and government. More details on the composition of the ASC would be available on the MOF website and has been released to the media.

9. I would like to use this opportunity to thank ICPAS for its strong support for CCDG, and would strongly urge you to continue to work closely with the new ASC. This is to ensure that the local accounting standards prescribed not only are consistent with the International Financial Reporting Standards but also address the concerns of the entities for whom the accounting standards would apply to.

10. Besides accounting standards, ICPAS has also been actively involved in the setting of auditing standards in Singapore. The adoption of high quality auditing standards is a fundamental building block for assuring transparency, integrity and credibility of audits. We believe more collaboration between ICPAS and the Public Accountants Oversight Committee of ACRA, which oversees the Practice Monitoring Programme also known as PMP, would be useful. This, coupled with efforts from ICPAS to help professionals keep abreast of the latest standards and developments, would go a long way in improving the quality of audit performed by all audit firms in Singapore.

Development of the Accounting Profession

11. Specifically, we are happy to note that ICPAS has been playing its part to help the smaller-sized auditing firms. One such note-worthy ICPAS' initiative is its "Audit Manual for Small Companies". This aims to provide guidance for the smaller-sized accounting firms, which tends to be auditors for small companies, by incorporating the documentation required to enable compliance with Singapore Standards on Auditing. I understand that ICPAS has taken care to draft the manual in a manner that would allow audit practitioners to apply it in their audit work to meet the specific nature and requirements of the different audit engagements. I hope the audit community would find the ICPAS Audit Manual helpful.

12. This audit manual is also a timely response to the results of the PMP reviews conducted on public accountants for the period from April 2005 to March 2007, which was announced by ACRA in July this year. The manual should elevate the quality of the audit work conducted by the smaller-sized audit firms to a level consistent and comparable to the work done by their larger counterparts. This should also better prepare these smaller-sized firms for the requirements of the PMP reviews.

13. In addition, I have heard feedback from smaller-sized accounting firms that they would appreciate it if ICPAS could offer more assistance in terms of technical support and training to the smaller accounting firms. I hope ICPAS would consider their request and start by providing more training to the accountants of these smaller firms, so as to equip them with the relevant skill sets to do more value-added work.

14. With Singapore's growing reputation as a regional financial hub, as evident by the rising number of listings on the Singapore Exchange, there is certainly room to accommodate more accounting entities that are able to cater to the increasing demands for accountancy services from these new listed companies. This will be good for our financial market as it fosters an environment of healthy competition and increases the availability of audit choices for corporations.

Corporate Governance and ICPAS

15. Recent reports have highlighted examples of private associations reinforcing their corporate governance structures to promote greater public accountability, as the need for a sound corporate governance framework is not unique to profit-oriented entities. ICPAS, as a private association and a professional body representing accountants, should take the lead in putting in place a sound corporate governance system for itself. ICPAS is not only accountable to its professional members but also, to a certain extent, the wider community, given that the whole accounting profession tends to take its cue from ICPAS.

16. In this regard, it is encouraging to note that ICPAS has recently revamped the composition of its Auditing and Assurance Standards Committee, so as to allow a broader representation from key stakeholders to be involved, which would hence contribute to the robustness of the standards setting process. I look forward to more such initiatives from ICPAS.

Conclusion

17. In conclusion, as the accounting profession continues to evolve in tandem with the changing economic conditions, the challenge for ICPAS, as t he professional body, is to stay at the forefront of these changes. With a proven track record of professionalism and competence, I am confident that ICPAS will continue to adapt so as to maintain its relevance and significance into the future.

18. I would also like to urge all accountants to make full use of the resources provided by ICPAS. There is a Turkish proverb that goes, "A good companion shortens the longest road". In many ways, ICPAS is that good companion which will make your journey towards greater professionalism as an accountant, an easier and more enjoyable one.

19. With that, I wish you all an evening filled with good cheer, pleasant company and scintillating conversations. Thank you.