Company directors will get additional help in assessing the quality of audit firms under a new initiative that will begin in January.
The Audit Quality Indicators Disclosure Framework, as the initiative is called, will involve the big four audit firms, Deloitte, EY, KPMG and PwC, it was announced yesterday. These companies undertake audit work for most of the listed companies here.
"The Big Four share a very strong reputation. The only distinguishing factor left, really, is the price and the apparent skills of the team you see before you, and it is viewed that that's not enough for the audit committee to make the right choice," said Mr Kenneth Yap, chief executive of the Accounting and Corporate Regulatory Authority (Acra) at yesterday's CPA Congress.
The disclosure framework, which will be the first of its kind in Asia, will see the big four firms providing data for eight indicators to help audit committees make a more informed choice in awarding tenders.
These indicators include time spent by senior audit team members involved in the audit, relevant experience of the team, the training hours invested in the firm's partners and staff, and the track record of the firm's ability to consistently execute quality audits.
Acra said the new framework, which is voluntary, will raise the quality of audits on financial statements and increase transparency, and urged all other audit firms to come on board.
Industry players said the move will provide a way to measure and compare the quality of audit firms but it is not the "be all and end all".
Said Deloitte chief executive Philip Yuen: "It is not a singular decision point; it adds further insights and data to a decision process. There could be other things that you need to look at to make the ultimate decision."
Acra's Mr Yap agreed: "It is not going to be a silver bullet. We also hope that companies don't just look slavishly at this list of indicators and decide just on that."
Acra, the Singapore Exchange and the Singapore Institute of Directors (SID) will issue a joint letter to all listed companies to encourage them to have audit firms submit their audit quality indicators.
Mr Yap added that the Monetary Authority of Singapore supports the move and will encourage banks to consider these indicators "in their appointment and reappointment of auditors".
SID chairman Willie Cheng, who also chairs the audit committee of United Overseas Bank and Far East Hospitality Trust, said: "It is useful on an ongoing basis, each year when you sit down with auditors and ask who are you putting on the project and how you are going to conduct the work this year."
Acra will publish a guide to help firms prepare their audit quality indicator data. It will also conduct "sample checks" to ensure that this data is reliable.
Another initiative announced at the Congress yesterday was a new partnership between NTUC U Associate Programme and CPA Australia to offer training for professionals, managers and executives (PMEs), covering areas of leadership, financial, business and risk management.
The Finance Operations Development Programme, which starts next year, aims to train over 700 PMEs in the first year.
This article was first published on October 15, 2015.
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