Mr Tan Boen Eng, President of the Institute of Certified Public
Accountants of Singapore,
Distinguished guests, Ladies and
Gentlemen,
I
am happy to join you here this evening at the Institute’s Annual Dinner.
2.
The Institute
of Certified Public Accountants of Singapore is today the only professional
body in Singapore that assesses the qualifications of our public accountants. Its mission is “to
develop, support and enhance the integrity, status and interests of the
accountancy profession in Singapore”. In
doing so, the Institute plays a pivotal role in improving Singapore’s overall corporate
landscape and helping make Singapore a great place for business.
Maintaining high integrity and quality in accounting standards
Maintaining
Integrity
3.
The
high-profile corporate failures in the US and elsewhere in recent years have
placed the accounting profession and industry under close scrutiny. In a disclosure-based regulatory regime, good
financial reporting through clear and reliable accounting standards and
policies are essential for the effective functioning of capital markets and the
productive allocation of economic resources.
Unsound accounting standards or practices may mislead investors and
threaten the credibility and quality of capital markets.
4.
Good
accounting standards must be applied with consistency, dedication and
discipline. The accounting profession
must have a strong sense of responsibility to investors, other corporate
stakeholders and the public at large, so that it maintains its independence of
judgement. ICPAS has a key role to play
in this, by upholding the integrity and independence of the accounting
profession. This is especially important
for a small country like Singapore, where credibility, integrity and trust in
our system of corporate governance is key to our
position as a leading business hub and to the continued growth of our economy.
5.
In
this regard, there have been calls from some quarters for Singapore to
legislate a “Whistle-blowing” Act.
Today, there are already measures in place to guard against corporate
fraud. For example, auditors are
required under the Companies Act to report directly to the Minister for Finance
should they discover a possible fraud or act of dishonesty by officers or
employees of a public company. The
Accounting and Regulatory Authority of Singapore (ACRA), the Monetary Authority
of Singapore and the Commercial Affairs Department also regularly get
complaints and tip-offs on possible fraud cases. These are seriously investigated.
6.
I am
glad to note that some Singapore companies are taking proactive steps to further
strengthen their corporate governance structures. A good example is Keppel Corporation, which should
be commended for establishing a “whistle-blowing” mechanism. While the Government encourages such
initiatives, whether to mandate such best practices in law has to be carefully
studied. The starting point is to ask
whether our current arrangements for investigating fraud are adequate. ACRA is
currently reviewing the need for whistle-blowing legislation in Singapore. Such legislation has been implemented in some
countries but the jury is still out on whether it has achieved the desired
benefits.
High
Accounting Standards
7.
As Singapore
seeks to attract and establish global businesses and investments, our
accounting standards have to be: (a) internationally recognised; and (b) responsive
and relevant to a rapidly changing business environment. To maintain our global competitiveness, we
must keep pace, or we will be left behind.
8.
Thus,
companies in Singapore are required to follow the Financial Reporting Standards
(FRSs), which are modelled closely after the
International Financial Reporting Standards (IFRS) and International Accounting
Standards (IAS). The Singapore FRSs are prescribed by the Council on Corporate Disclosure
and Governance (CCDG).
9.
ICPAS
has rendered invaluable support to the CCDG.
This includes the issuing of exposure drafts on new accounting proposals
and reviewing and making recommendations to the CCDG. The Institute has also helped to promote greater
public awareness and garnered feedback on proposals through public
consultations, surveys, seminars and dialogues.
Thus the CCDG and the Institute worked together on the public
consultation on ‘Accounting for Employee Stock Options’ last year and the recent
seminar on ‘Preliminary Views on Accounting Standards for Small and
Medium-sized Entities’.
10.
I
look forward to the Institute’s continued active involvement in promoting high
quality accounting standards for good financial reporting through close collaborations
with CCDG and other relevant agencies.
11.
Let me now touch on the broader issue of
corporate governance in Singapore and some of the recent changes and on-going
reviews.
Review of the Code of Corporate Governance
12.
The
Code of Corporate Governance came into effect in 2003 through the Singapore
Exchange as a non-mandatory best practices guide for listed companies.
13.
In
May this year, the CCDG, with the support of the Ministry of Finance, announced
its plans to review the Code of Corporate Governance. The review is intended to introduce
improvements to the Code, taking into account international developments and feedback
received since the inception of the Code. The CCDG intends to seek public views before
submitting its recommendations to the Ministry of Finance by the first half of
year 2005.
14.
It is
good that the CCDG is taking the initiative to keep up with international
developments in improving corporate governance practices. At the same time, we should be aware that
changes to the existing corporate governance framework could lead to additional
compliance costs for companies. Thus, we
should be careful not to introduce too many and too frequent changes, and seek
to strike a balance between introducing refinements and increasing the compliance
burden.
15.
A
reasonable approach would be to consider a fundamental review of the Code every
few years, while interim reviews could be done on a smaller scale to keep the
Code up to date, note new developments on corporate governance around the
world, and especially seek to remove or modify provisions which may be onerous
to businesses or unhelpful in the Singapore context. The Institute should actively provide its
views and feedback to the CCDG during the upcoming public consultation on the
Code.
Review of the Companies Act
16.
Another
on-going review is that of the Companies Act.
The Ministry of Finance recently initiated a public consultation
exercise to seek comments on the proposed Companies (Amendment) Bill. The changes proposed in the Bill include abolition
of the concept of par value and authorised share capital, liberalising the
giving of financial assistance to third parties in acquiring a company’s
shares, reforming the share buyback regime, and introduction of treasury shares. These would have significant impact on the
accounting treatment of shares in the capital maintenance regime.
17.
The
public consultation on the draft Bill ended on 20 September 2004. I would like to take this opportunity to thank
the Institute for providing valuable comments and insights through its active
participation in the consultation exercise.
18.
Moving
forward, the Institute must continue to keep pace with international best
practices and standards, and at the same time stay
anchored to its core values of integrity and independence. I congratulate ICPAS on its role in promoting
high professional and disclosure standards and good corporate governance practices. We should all work together to make Singapore
“Best for Business”.
19.
I
wish you an enjoyable evening of good food and company. Thank you.