Second Reading Speech by Mrs Josephine Teo, Minister of State for Finance and Transport on the Singapore Accountancy Commission Bill at The Parliament, 14 Jan 2013

1. Mr Speaker, Sir, I beg to move, “That the Bill be now read a Second time.”

2.  Sir, let me first set out the context for the proposed Bill to establish the Singapore Accountancy Commission, or SAC for short.

Introduction

3. Singapore’s reputation as a trusted business hub is underpinned by our emphasis on strong corporate governance and a robust regulatory environment. In part, this has been due to the quality of our accountancy professionals in preparing and upholding financial reporting standards and best practices.

4. The accountancy sector is also experiencing strong growth. In the 10 years between 2000 and 2010, operating receipts grew at a compounded annual growth rate of about 6% while export of services increased twelve-fold^1.

5. Accountancy related firms alone employ more than 11,000 workers, with the majority being professional staff. This is comparable to the medical and legal sectors which have about 5,000 

² 

, and 10,000 

³ 

professionals respectively. Many accountancy trained
professionals also serve in key roles like chief financial officers and finance executives within companies

⁴

 . In short, the accountancy sector is an important contributor to Singapore’s vibrant business landscape.

6. In 2008, recognising its potential for further growth, MOF convened the Committee to Develop the Accountancy Sector, or CDAS for short, to undertake a holistic review of the sector. Members of the business community, audit firms and professional accountancy bodies were extensively consulted as part of this review. In its final report submitted in 2010, CDAS unveiled an exciting vision of Singapore as a leading global accountancy hub.

Proposed SAC Bill

Establishment of the SAC

7. One of the key recommendations in the CDAS report was to set up the SAC, to lead the transformation.  Significantly, the establishment of the SAC will put the accountancy profession on a similar footing as the legal, medical, architectural and engineering professions in Singapore which are championed by their respective statutory bodies⁵.

8. One important consideration in the set-up of the SAC is how it would interact with the professional bodies.  In advanced jurisdictions such as the UK and Australia, the professional bodies actively seek to uplift the standing of the sector and quality of their members, which is also the case in Singapore.  Given the merits of a private-public partnership approach, the SAC will not be set up as a membership body. Instead, it will act as an umbrella body pulling together the resources and coordinating the efforts of relevant stakeholders such as the regulators, professional bodies and audit firms.

9. The establishment of the SAC is set out in Part I to VI of the SAC Bill.

Chartered Accountants of Singapore

10. As part of its review, CDAS also noted that many leading markets such as Australia, Hong Kong, the United Kingdom and the United States have their own distinct accountancy professional qualifications which are recognised for their rigour and international portability. Although we already have high-quality accountancy training in our universities, CDAS recommended that it was critical for Singapore to develop our own high-quality and rigorous post-university Singapore Qualification Programme, or Singapore QP for short, if we aspired to be a leading accountancy hub.

11. A candidate who successfully completes the Singapore QP will be eligible to register himself as a Chartered Accountant of Singapore (“Chartered Accountant”). The introduction of the Singapore QP and the Chartered Accountant designation provides an opportunity to build up the international stature of our accountancy professionals and will open up significant new opportunities for them.

12. The use of the Chartered Accountant designation will be protected under the SAC Act to ensure that we uphold its quality and international standing. The relevant provisions are set out in Part VII of the Bill.

(i) Designated Entity

13.  In line with the partnership approach I outlined earlier, we will appoint the Institute of Certified Public Accountants of Singapore, or ICPAS for short, as a Designated Entity to oversee the registration of a Chartered Accountant on behalf of the SAC.  ICPAS has a long and established history in our accountancy sector. It is also the largest professional body in Singapore with about 25,000 members.

14. In addition to completing the Singapore QP, we will require a Chartered Accountant to also be a member of the Designated Entity and to satisfy the professional conduct expected of a Chartered Accountant before registering him.

15. Therefore, as a Designated Entity, ICPAS has the important responsibility of ensuring that Chartered Accountants meet the highest standards of integrity, professional ethics and competence expected of them. ICPAS will be required to take necessary disciplinary actions against its member if he has contravened any code of conduct, standards or ethics.

16. The success of the Singapore QP hinges on the international recognition and standing of the Chartered Accountant designation. ICPAS therefore has a very critical role to play, working with the SAC.

(ii) Transitional Arrangements

17. As we take bold steps to transform the accountancy sector, particularly with the introduction of a new professional designation, we ought to recognise the concerns of stakeholders who will be impacted by the changes, and to manage the transition carefully.

18. Let me share with members our intentions for two particular groups of stakeholders. The first group comprises existing ICPAS members who are designated as Certified Public Accountants (CPA) of Singapore. We fully recognise that many of our CPAs are respected professionals with years of industry experience.  Therefore, the transitional arrangements should continue to allow them to enjoy their current standing. The second group are students who are either registered to commence or are currently in the midst of taking accountancy degrees at our local universities. These students had chosen the accountancy course based on their knowledge of the current accountancy sector landscape and should not be disadvantaged by the forthcoming changes.

19. A special committee to address transitional arrangements was formed by the Pro-Tem SAC in September last year and has been in intense discussion since then.  The details of the transitional arrangements will be released when deliberations are complete. To allow sufficient time for the finalisation and smooth implementation of the transitional arrangements, the Bill provides that the Minister can within a period of two years, prescribe provisions such as the registration of existing CPA Singapore holders as Chartered Accountants.

20. Our aim is to ensure clarity and provide sufficient time for affected persons to make the transition to the Chartered Accountant designation. We are actively engaging key industry players and professional bodies, as well as faculty members and accountancy students of the local universities on their views.

Conclusion

21. The establishment of the SAC, the introduction of the Singapore QP and Chartered Accountant designation herald a new chapter for the accountancy sector.

22. I would like to take this opportunity to thank the Pro-Tem SAC, chaired by Mr Michael Lim, which has been working tirelessly over the last two years to put in place the building blocks for the SAC and the Singapore QP. Professional bodies, in particular ICPAS, have also demonstrated strong commitment and support which are much appreciated. When it is formally established, SAC will continue the work of the Pro-tem SAC and strengthen collaboration with professional bodies. Its immediate priorities will be to ensure that the Singapore QP gets off to a good start and that adequate transitional arrangements are put in place.

23. In conclusion, I should highlight that the setting up of the SAC is an important milestone in the transformation of our accountancy sector, but the road ahead is still quite long.  We will need to work hard and stay focused to ensure the rigour of the Singapore QP and build up the professional standing of our Chartered Accountants.  Only then can we secure Mutual Recognition Agreements for our accountants with other international jurisdictions which is crucial to their international mobility. While ambitious, I believe that we can achieve this goal together if we have the support of all stakeholders.

24. Mr Speaker, Sir, I beg to move.

Footnotes
¹Source: Department of Statistics. 
²Source: Singapore Medical Association Annual Report (2012)
³Source: Singapore Academy of Law Annual Report (2012)
⁴Source: The Institute of Certified Public Accountants of Singapore (2001) “Young Accountants Career Intentions”
⁵The respective statutory bodies are the Supreme Court, the Singapore Medical Council, the Board of Architects and the Professional Engineers Board.