Summary Of Responses To Public Feedback On Proposed New Regulations Under The SAC Act

SUMMARY OF RESPONSES TO PUBLIC FEEDBACK ON PROPOSED NEW REGULATIONS UNDER THE SAC ACT

 1. The Ministry of Finance (MOF) and the Singapore Accountancy Commission (SAC) conducted a public consultation on the proposed new regulations under the SAC Act from 30 May to 26 June 2016^[1].

2. The proposed new regulations set out the condition and types of accounting services that an entity should provide when applying to the SAC to use the professional designation “Chartered Accountant of Singapore” and initials “CA (Singapore)” after its name.

3. Six written responses were received and a  summary of responses to the key feedback received is at the Annex. MOF and SAC would like to thank all respondents for their feedback.

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^[1] SAC also conducted a dialogue session in June 2016. A copy of the public consultation documents is available at https://app.mof.gov.sg/Public-Consultation/Public-Consultation-Closed/2016/MOF-and-SAC-Invite-Public-Feedback-On-The-Proposed-Regulations-Under-The-SAC-Act

Annex

SUMMARY OF KEY FEEDBACK RECEIVED ON THE PROPOSED NEW REGULATIONS UNDER THE SAC ACT

 1. Expand the types of accounting services that an entity should provide

Feedback: The types of accounting services in the proposed regulation^[2] should be expanded to include other accounting services, such as business valuation, corporate secretarial services, forensic accounting, fund administration, fund management and sustainability reporting.

Our response: The types of accounting services in the proposed regulations are those that require the application of accounting knowledge. Business valuation, corporate secretarial services, fund administration and fund management are covered under “financial management services”. Similarly, forensic accounting and sustainability reporting are covered under “auditing and assurance services” and “financial accounting services” respectively. Thus, there is no need to expand the types of accounting services for now.

2. Exclude business valuation and financial management from the types of accounting services that an entity should provide

Feedback: Currently, business valuation and financial management can be provided by business valuers who may not be Chartered Accountants of Singapore. The proposed regulations may restrict the practice of business valuation and financial management to only Chartered Accountants of Singapore and compel business valuers who are not Chartered Accountants of Singapore to work with Chartered Accountants of Singapore in order to form an entity that uses the Chartered Accountant of Singapore designation.

Our response: The proposed regulation sets out the conditions and types of accounting services that an entity should provide when applying to the SAC to use the “Chartered Accountant of Singapore” designation after its name. It regulates the use of the designation by an entity and does not prohibit individuals who are not Chartered Accountants of Singapore from providing services relating to business valuation and financial management. Similarly, entities that do not use the “Chartered Accountant of Singapore” designation in their names can continue to provide services relating to business valuation and financial management.

3. Clarify whether the proposed regulation will hinder or discourage the formation of multi-disciplinary entities

Feedback: It is not clear whether the proposed regulation will hinder or discourage the formation of multi-disciplinary (professional services) entities.

Our response: An approved entity can provide services beyond those specified in the regulation.

4. Set a minimum threshold for each accounting service

Feedback: To apply to the SAC to use the “Chartered Accountant of Singapore” designation after its name, one of the primary objects of the entity is to provide such accounting services prescribed in the regulation. Besides specifying the types of accounting services, the regulation should also set a minimum threshold for each accounting service.

Our response: Instead of setting a minimum threshold which can be arbitrary, SAC will take into consideration an applicant’s justification on the accounting services that it provides, before allowing the entity to use the designation.

5. Clarify the rationale for allowing entities that are not accounting entities to apply to SAC to use the professional designation

Feedback: There should be clarity on the rationale for allowing entities that are not accounting entities to use the professional designation.

Our response. The SAC Act amendments to allow entities that are not accounting entities to use the professional designation are to promote the professional designation in the Singapore accountancy sector. The amendments are also consistent with other legislations that allow entities to use professional title in their names.

Safeguards will be put in place to protect the use of the professional designation by entities. Entities have to first apply to the SAC to use the professional designation. They must satisfy a set of criteria. This includes providing at least two of the prescribed accounting services and having no fewer than two-thirds of its partners/directors as chartered accountants.

6. Amend the condition on the composition of the entity

Feedback: The requirement for two-thirds of the partners to hold the Chartered Accountant of Singapore designation may restrict the growth of approved entities. The  threshold could be lowered to one-third.

Our response: The two-third threshold is specified in the SAC Act and not the proposed regulation. The threshold is similar to that in the Accountants Act, where two-thirds of the directors/partners of an accounting corporation, an accounting firm and an accounting LLP should be public accountants. MOF and SAC will monitor whether there is a need to adjust the threshold in the future.

7. Impose more conditions on the entity

Feedback: To protect the professional designation, more conditions (e.g. require professional indemnity insurance, certain levels of technical competencies, minimum headcount) should be imposed before an entity may apply to the SAC to use the professional designation and initials.

Our response. SAC will take a caliberated approach to ensure that the designation is sufficiently protected and yet not overly onerous. SAC will study whether there is a need for more conditions such as  the requirement for professional indeminity insurance.

8. Clarify whether SAC can revoke or suspend the use of the professional designation

Feedback: It is not clear whether SAC has the power to revoke or suspend the use of the professional designation if an approved entity subsequently fails to satisfy the conditions in the regulation. It will be useful to clarify how SAC will enforce compliance with the conditions on the use of professional designation by approved entities.

Our response: Under the SAC Act, if an approved entity subsequently fails to comply with any condition, SAC’s approval granted automatically ceases. SAC can take action against any entity that practises or holds itself out to be a Chartered Accountant of Singapore if it is not an accounting entity or an approved entity. The penalty is a fine not exceeding $5,000  (for first offence) or $10,000 (for second or subsequent offence). SAC will study if there is a need to introduce powers for it to revoke or suspend the use of the professional designation by approved entities.

^[2] In the proposed regulation, the types of accounting services that an entity should provide when applying to the SAC to use the professional designation “Chartered Accountant of Singapore” and initials “CA (Singapore)” after its name are: (a) auditing and assurance services; (b) financial accounting services; (c) financial management services; (d) internal audit services; (e) taxation; (f) management accounting services; and (g) insolvency and recovery.