The Singapore Framework Wui San Kwok IESBA Board
The Singapore Framework Wui San Kwok IESBA Board Member IESBA Meeting New York April 13 -15, 2015 Page 1 | Proprietary and Copyrighted Information
The Singapore Framework Agenda • Who issues ethical-related standards? • Standards setting approach • Key differences - IESBA Code • Learnings? • Looking forward – possible Singaporean approach Page 2 | Proprietary and Copyrighted Information
The Singapore Framework Context • Focus on Part B, financial statements audit • Parts A & C – the same from 1 July 15 Page 3 | Proprietary and Copyrighted Information
The Singapore Framework Who issues ethical-related standards (audits)? Authorities Audit regulator Member Body Exchange Financial services authority Page 4 | Proprietary and Copyrighted Information
The Singapore Framework Extent of impact on profession depends on types of audit Authorities Audit regulator Applicability All audits Exchange Listed entities Financial services authority Financial institutions Page 5 | Proprietary and Copyrighted Information
The Singapore Framework Primary authority Standards direct impact profession Authorities Audit regulator Notes • IFIAR member • Issues ethics code, including AML/CTF • Regulatory requirements Page 6 | Proprietary and Copyrighted Information
The Singapore Framework Secondary authorities Standards indirect & limited impact profession Authorities Exchange Notes • Pronouncements affect profession though audit Financial services entities. authority • Eg. Rotation, Guides to Audit Committees Page 7 | Proprietary and Copyrighted Information
The Singapore Framework Approach to standards setting - IESBA Code plus IESBA Code • Starting point Modifications • Requirements or guidance + • No less stringent • Eg. materiality thresholds, custody of assets Page 8 | Proprietary and Copyrighted Information
The Singapore Framework Ethics - Regulatory requirements for audits Audit Regulator • Parts A & B Member Body • Parts A, B & C • Audits + acts required by law • All members Parts A & B – equivalent in both pronouncements Page 9 | Proprietary and Copyrighted Information
The Singapore Framework Where is Singapore vis-à-vis IESBA Code? - New Code closer alignment • 1 July 2015 – IESBA Code (2014) • Modifications, but has become lesser • Reversals - certain bans for listed entities removed. Eg: – Internal audit – Contingent fees Page 10 | Proprietary and Copyrighted Information
The Singapore Framework New Code more closely mirrors IESBA Code now Page 11 | Proprietary and Copyrighted Information
The Singapore Framework Rotation - consistent with IESBA but modifications by other authorities Types of entities Listed entities Rotation • Partner – 5 x 2 Three “local” banks • Firm – 5 yrs • Temporarily suspended • Firm – 5 yrs Government bodies (eg. Statutory Boards) Limited application Page 12 | Proprietary and Copyrighted Information
The Singapore Framework Public Interest Entity (PIE) - Additional prescriptions • Effective 1 July 2015: – Entities in process of listing – Financial institutions (eg. banks, insurers, brokerdealers, asset managers, trustees, etc) – Large charities Page 13 | Proprietary and Copyrighted Information
The Singapore Framework Non-audit Services Fees (for PIE) - Communications with TCWG Annual non-audit services fees Annual audit fees ≥ 50% • Disclose to TCWG • Discuss safeguards Page 14 | Proprietary and Copyrighted Information
The Singapore Framework Communication – successor & existing auditors • Requirement in every case. • Ask if there are reasons for change new auditor should be aware of. • Existing auditors need to reply. Page 15 | Proprietary and Copyrighted Information
The Singapore Framework Learnings? • IESBA Code – currently viewed as proportionate international benchmark • Limited modifications needed due to Singapore situations • Felt some areas not addressed sufficiently – limited though Page 16 | Proprietary and Copyrighted Information
The Singapore Framework Learnings? Areas Rotation Non-audit Fees PIE Observations Unique Singapore reasons Insufficiently addressed AML/CTF Successor-existing auditor communication Insufficiently addressed NOCLAR will address Page 17 | Proprietary and Copyrighted Information
The Singapore Framework Learnings? • Part response to concerns on firm’s strategy and debate on audit-only firm • Accountants Act – control & management of public accountancy services by: – “Public accountants” – Ordinarily resident in Singapore Page 18 | Proprietary and Copyrighted Information
The Singapore Framework Standards setting approach - Singaporean way forward? • Move towards codification under Singapore ethics code • Better collaboration – Member body to play enhanced role? – Practitioner representation on board of audit regulator • Re-constititution of member body Ethics Committee – AML/CTF – Corporate Governance? Page 19 | Proprietary and Copyrighted Information
The Singapore Framework Reconstitution of member body Ethics Committee Members Special Observers • • • Audit regulator • Custodian “Chartered Accountants” Practitioners SMP Investor Legal Page 20 | Proprietary and Copyrighted Information
The Ethics Board www. ethicsboard. org
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