Changes to the Accountants Act are being proposed to improve the regulator’s monitoring and audit quality

Qinthara Fasya | 15 October 2021

The proposed amendments are set out in the draft Accountants (Amendment) Bill 2021 (“AA Bill 2021”).

Photo by Swapnil Bapat on Unsplash

The Accounting and Corporate Regulatory Authority (“ACRA”) and the Ministry of Finance (“MOF”) invites accounting professionals and entities, business and investment entities, and members of the public to comment on proposed the much-anticipated modifications to the Accountants Act. The proposed changes are outlined in the Accountants (Amendment) Bill 2021 (“AA Bill 2021”).

The draft AA Bill 2021 is available for public consultation from 14 October to 13 November 2021.

Singapore’s reputation as a trustworthy business destination is bolstered by the availability of reputable and accurate financial data. To do this, ACRA evaluates the relevance of its regulatory framework (outlined in the Accountants Act) on a regular basis in order to enhance audit quality and market trust in the accuracy of audited financial data.

The proposed changes to the Accountants Act aim to improve audit quality by ensuring that information provided to investors and the general public is accurate. Key modifications to the audit regulatory system are included in the bill, as well as steps to improve public accountants’ and accounting companies’ compliance with professional norms and standards. These changes also bring Singapore’s regulatory processes in line with those of jurisdictions that have enacted independent auditing regulations.

Summary of Key Amendments to the AA Bill 2021:

  • specify ACRA’s powers to conduct inspections on compliance with quality control standards by AEs (“QC inspections”);
  • specify ACRA’s powers to conduct inspections on compliance with Anti-Money Laundering / Countering the Financing of Terrorism requirements by AEs and PAs (“AML/CFT inspections”);
  • replace the current “pass” / “fail” grading system for the Practice Monitoring Programme with a new 3-tier assessment framework (i.e. “Satisfactory”, “Needs Improvement”, and “Not Satisfactory”) and specify the sanctions for engagement-level inspections that may be imposed under the 3-tier assessment framework. The new assessment framework will extend to QC inspections of AEs as well;
  • allow ACRA to mandate remediation of lapses and impose sanctions on AEs and/or PAs (as the case may be) for lapses discovered during QC and AML/CFT inspections;
  • allow ACRA to impose other orders (e.g. remedial actions) on suspended PAs and AEs, and specify that PAs and AEs may be suspended for up to two years if they refuse to undergo ACRA’s regulatory inspections without reasonable excuse;
  • allow ACRA to require PAs to disclose their inspection outcome and findings to their audited entities in situations where PAs have obtained a “Not Satisfactory” grading on their inspection;
  • align the maximum quantum of financial penalties that could be imposed on AEs under disciplinary proceedings and QC inspections; and
  • empower the Public Accountants Oversight Committee to prescribe (by order in the Gazette) professional standards and code of professional conduct and ethics to be applied by PAs and AEs.

The consultation documents are available on MOF’s website (www.mof.gov.sg), ACRA’s website (www.acra.gov.sg), and the REACH consultation portal. Accounting professionals and entities, business and investment entities, and members of the public can access the consultation documents on MOF’s website (www.mof.gov.sg), ACRA’s website (www.acra.gov.sg), and the REACH consultation portal (www.reach.gov.sg).

Those who wish to provide your feedback can send your comments via email to “MOF_Public_Consultation@mof.gov.sg” by indicating “Public Consultation on Accountants (Amendment) Bill 2021” in the subject line.

A summary of the comments received, as well as answers, will be published by MOF and ACRA. The responders’ identities will not be revealed in the summary, and every comment received may not be addressed or acknowledged separately.