Singapore moves closer to raising auditors' ethics standards

Code amendments enter public feedback phase.

The Ethics Sub-Committee (EC) of the Public Accountants Oversight Committee (PAOC) is seeking public feedback on proposed amendments to the Code of Professional Conduct and Ethics for Public Accountants and Accounting Entities (Singapore Code), which sets out the ethical and independence standards for auditors. The public consultation exercise will run from 29 November 2013 to 10 January 2014.

In considering the proposed amendments, the EC, which comprises senior members of the accountancy profession and stakeholder representatives, also assessed whether the Singapore Provisions remain relevant in light of the International Ethics Standards Board for Accountants (IESBA) revisions and developments within Singapore.

Some of the key proposed amendments include extending higher independence standards to public interest entities (PIEs) in line with the Revised IESBA Code. Higher independence standards currently apply to audits and reviews of listed entities as a higher degree of public confidence in the financial information of these entities is crucial. The Revised IESBA Code extends the higher independence standards to all audits and reviews of PIEs. The consultation paper seeks views on whether the requirements should apply to the audits and reviews of entities such as listed entities, financial institutions, large charities and large Institutions of a Public Character. This is in recognition of the fact that these entities are expected to meet a higher benchmark in corporate governance and financial reporting.

The EC is also proposing to adopt, in place of the present Singapore Provisions, the Revised IESBA Code’s thresholds that address the independence threats related to the level of audit fees an auditor receives from an audit client. The Singapore Provisions were originally included because the 2006 IESBA Code did not set such clear thresholds.

The present Singapore Code was issued in 2009 and is prescribed in the subsidiary legislation of the Accountants Act. It is based on the Code of Ethics issued in 2006 by the IESBA of the International Federation of Accountants (IFAC) (2006 IESBA Code). The Singapore Code also includes Singapore Provisions, which supplement the 2006 IESBA Code with additional guidance or requirements for public accountants in Singapore.

In 2009, IESBA issued a revised version of the IESBA Code (Revised IESBA Code). This was followed by IESBA issuing strengthened or new provisions to the code in four areas this year. The proposed amendments to the Singapore Code takes into account the recent revisions made to the IESBA Code. This will ensure that ACRA’s regulatory framework for auditing in Singapore is kept in line with internationally recognised benchmarks. It will also further strengthen the standard of professional ethics and auditor independence in Singapore. Some audit firms in Singapore as part of their own quality controls, have already taken steps to ensure they comply with the Revised IESBA Code.