ACRA sTrengthens Code of Professional Conduct and Ethics for Public Accountants and Accounting Entities

Singapore, 10 November 2014 – From 1 February 2015, the Code of Professional Conduct and Ethics (the Code) for public accountants and accounting entities will be strengthened further. As a profession that serves the public interest, it is crucial that public accountants remain a profession with integrity and independence, and serve as a valued and trusted source of information and advice. In this era of economic volatility and a rapidly evolving corporate landscape, the Code is a vital set of guiding principles for public accountants to rely on and enable them to make the right decisions when faced with conflicting choices between economic interests and ethical considerations. 

2          The current Code is largely based on the International Ethics Standards Board for Accountants (IESBA)’s 2006 Code of Ethics with some modifications and additional provisions for Singapore public accountants (SG provisions). It also specifies the setting up of safeguards to help public accountants avoid situations that could result in ethical dilemmas.

3          The review of the Code was carried out by the Accounting and Corporate Regulatory Authority (ACRA)’s Public Accountants Oversight Committee with the support of the Ethics Sub-Committee (EC). The proposed amendments to the current Code take into account revisions made to the IESBA Code up to September 2013. In November 2013, ACRA invited members of the public to give feedback on the proposed amendments and the feedback received was generally positive. A summary of the feedback received and ACRA’s responses can be found in Annex A. The proposed amendments have been accepted by the Ministry of Finance.

Key Amendments to the Code

4.         The revised Code is built on the same principles as the previous Code and continues to require public accountants to ensure professional independence in key areas. The key amendments include:

(a)   Extending higher independence standards to all audits and reviews of public interest entities (PIEs), large charities and large institutions of a public character as opposed to only audits of listed and public companies currently. This is in recognition of the need for a high degree of public confidence in the financial information of such entities.

(b)   Under the revised Code, review engagements will be subject to the same independence requirements as audit engagements.  Although the level of assurance obtained under both types of engagement differs, both audit and review engagements[1] involve the public accountant expressing a conclusion on historical financial information. It is also recognised that in many review engagements, the public accountant expresses a conclusion on a complete set of financial statements.  

(c)   Removal of certain SG provisions to align with international benchmarks or where the new provisions from the latest version of IESBA’s Code have provided clearer or sufficient guidance compared to the IESBA’s 2006 Code of Ethics. SG provisions to be removed include prohibiting the provision of internal audit and certain information technology systems services to listed and public company audit clients and contingent fee arrangements for services to such entities. In place of the present SG Provisions, ACRA will adopt the IESBA Code’s thresholds that address the independence risk related to the level of audit fees an auditor receives from an audit client[2]. However, as an additional safeguard, the SG provision which addresses the issue of relative fee size between audit and non-audit services has been retained for the time being[3]. ACRA will review IESBA’s requirements when its project in this area is completed.

(d)   New requirements to further safeguard the independence of auditors. These include the identification of a Key Audit Partner (KAP), who would make key decisions or judgments on significant matters with respect to the audit.  Additional requirements will be placed on KAPs such as partner rotation, cooling off period before joining a PIE audit client in certain positions and prohibiting a KAP from being evaluated on or compensated based on that partner’s success in selling non-assurance services to the partner’s audit or review clients.

5.         The revised Code also introduces several new requirements and contains enhanced application guidance in certain areas.  More details can be found in Annex B.

6.         ACRA would like to thank members of the public and the industry partners who have taken the time to provide their feedback. 

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Attachments:

Annex A: Summary of key feedback received and ACRA’s responses to the feedback

Annex B: Details of key amendments to the Code

 

For media enquiries, please contact:

 

Kate Hia

Asst Director, Corporate Communications

DID: 6325 3787

Email: kate_hia@acra.gov.sg

 

About ACRA

 

The Accounting and Corporate Regulatory Authority (ACRA) is the national regulator of business entities and public accountants in Singapore. ACRA also plays the role of a facilitator for the development of business entities and the public accountancy profession.

 

The mission of ACRA is to provide a responsive and trusted regulatory environment for businesses and public accountants.  As at 31 October 2014, 457,751 business entities and 1,021 public accountants practising in public accounting firms, accounting limited liability partnerships and accounting corporations are registered with ACRA.

 

About the Public Accountants Oversight Committee (PAOC)

 

The PAOC was established under the Accountants Act and promotes audit quality and protects the public interest through functions such as the registering of public accountants, the determining of standards and other professional requirements, as well as the administering of the Practice Monitoring Programme (PMP), complaints and disciplinary procedures. 

 

About the Ethics Sub-Committee

 

The Ethics Sub-Committee is established by the PAOC with a mandate to, amongst others, review the existing Code of Professional Conduct and Ethics to ensure that it remains relevant in promoting the standards of the profession of public accountancy in Singapore.

 

The current committee comprises the following members:

 

·         Mr Quek See Tiat (Chairman of the EC), Chairman, Building and Construction Authority

·         Mr Gerard Ee, President, Institute of Singapore Chartered Accountants; Immediate Past Chairman, SIM Governing Council & Public Transport Council

·         Mr Winston Ngan, Head of Financial Services, Ernst & Young LLP

·         Mr Sajjad Akhtar, Managing Partner, PKF-CAP LLP, Chairman of PKF International Limited and member of PAOC

·         Mr Lim Ah Doo, Independent Director, Sembcorp Marine Ltd

·         Mr Thio Shen Yi SC, Joint Managing Director, TSMP Law Corporation

 

For more information, please visit www.acra.gov.sg