Accountants (Amendment) Bill

Order for Second Reading read.

4.15 pm

The Second Minister for Finance (Ms Indranee Rajah) (for the Deputy Prime Minister and Minister for Finance): Mr Deputy Speaker, I beg to move, "That the Bill be now read a Second time."

Sir, the Accountants (Amendment) Bill makes four key sets of amendments to the Accountants Act, as well as several related amendments. These amendments aim to enhance our audit regulatory regime and introduce measures for better compliance with professional requirements and standards for both Public Accountants (PAs) and Accounting Entities (AEs). These amendments will also align Singapore's regulatory practices with those in other jurisdictions with established audit regulatory regimes.

The Ministry of Finance (MOF) and the Accounting and Corporate Regulatory Authority (ACRA) sought views from the public on the draft Bill last year and have taken in the feedback where relevant and feasible. We thank the contributors for their inputs.

Let me now take Members through the four key sets of amendments.

The first key set of amendments is Quality Control (QC) Inspections.

Today, ACRA is empowered under the Accountants Act to review individual PAs' audit work for selected clients. I will refer to these as engagement inspections. For these engagement inspections, ACRA evaluates whether a PA has complied with the prescribed requirements when auditing financial statements during the audit process. The Public Accountants Oversight Committee (PAOC) adjudicates and decides on remedial actions and sanctions for PAs who fail the engagement inspections.

For AEs, ACRA has been conducting QC inspections on AEs that audit public interest entities such as listed companies. These QC inspections check if the AEs have the internal processes and procedures relating to leadership responsibilities for quality, independence, ethics, client acceptance, human resources, performance and monitoring. However, the QC inspections are currently not formalised under the Accountants Act. This means that when the QC lapses are found, ACRA is unable to mandate remediation or take actions against the AEs.

The first set of amendments therefore seeks to make QC inspections of AEs a statutory requirement under the Accountants Act. The proposed amendments will allow ACRA to conduct inspections on all AEs and compel AEs to remediate lapses uncovered during the QC inspections, including imposing sanctions where necessary. This will bring Singapore's regulatory regime in line with the practices of other audit regulators in the United States, the United Kingdom, Canada and Australia.

QC inspections are useful because they check for adequate internal processes and procedures within the AEs, which should be applied consistently across all engagements. This ensures that AEs deliver consistently high-quality audit. If an issue is identified, AEs can make across-the-board improvements that would benefit all engagements. Mandated QC inspections will complement the existing engagement inspections and make for a better regulatory regime for audit work. This amendment is provided for in clause 12 of the Bill.

The second key set of amendments is Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) Inspections.

I move on to this second key set of amendments, which aim to bring our regulatory regime into closer alignment with the international standards set by the Financial Action Task Force (FATF).

The FATF is an inter-governmental organisation that sets international standards to prevent global money laundering and terrorism financing. As a member of FATF, Singapore is required to meet the international standards set out by the task force. FATF requires PAs and AEs to be subject to effective systems for monitoring their compliance with requirements on the AML/CFT requirements; as well as effective sanctions for failure to comply with these requirements.

The second set of amendments give ACRA powers to conduct inspections for compliance with AML/CFT requirements and to impose sanctions on PAs and AEs if they fail to comply with these requirements.

For avoidance of doubt, let me clarify that AML/CFT inspections only apply to PAs and AEs that carry out FATF-designated activities, which are assessed to have higher money laundering and terrorism financing risks. Such designated activities include, among others, buying and selling of real estate; managing of client money, securities or other assets; organisation of contributions for the creation or management of companies; and buying and selling of business entities. AML/CFT inspections will not apply to PAs and AEs that perform solely audit services. This amendment is provided for in clause 12 of the Bill.

The third set of amendments seek to refine the assessment framework for ACRA's engagement inspections for individual PAs and extend this assessment framework to QC inspections for AEs.

The current assessment framework for engagement inspections is binary. You either pass or fail. If a PA fails the engagement inspection, ACRA may impose remedial actions and/or sanctions. However, the current framework does not cater for situations where a PA's work may not fail outright, but at the same time, some aspects of his/her work may not be up to mark and needs improvement.

Over the years, ACRA has received feedback that such a binary pass-fail system is too blunt. A more granular indication of how well the PA or AE has complied with the requirements would provide more incentive for PAs and AEs to strive for a better assessment outcome.

The third amendment thus revises the assessment framework from a pass-fail regime to a tiered regime. The revised categories are: (a) satisfactory; (b) satisfactory but with findings; (c) partially satisfactory; and (d) not satisfactory.

The "satisfactory" outcome, whether with or without findings, gives due recognition to PAs and AEs who achieve good inspection results. This category will not be subject to sanctions or remedial actions.

For the "partially satisfactory" and "not satisfactory" outcomes, ACRA will impose specific remedial actions and/or sanctions on the PAs and AEs for the findings identified. The findings will indicate the areas of improvement that PAs and AEs should work on in preparation for their next assessment.

This amendment is provided for in clauses 11 and 12 of the Bill.

Let me now deal with the final set of amendments.

Currently, PAs are not required to share the engagement inspection findings on their audit engagement with the entities that they audit. There is public interest in maintaining trust in audited financial statements. If there are significant inspection findings on a PA's audit engagement, the audited entity should be informed. This will allow the audited entity to work with the PA to remediate findings, which may have implications for its audit and financial statements. It will also act as a powerful incentive to the PAs to remedy and improve their performance, and to the AEs to ensure high standards and internal quality control of the PAs they employ.

Under this amendment, the PAOC will be empowered to require a PA with a "not satisfactory" grading for that particular engagement-level inspection to disclose the inspection findings to the audited entity. If the PA fails to comply, the PAOC can share the inspection findings on the PAs' audit engagement with the audited entity directly.

ACRA will also ramp up its efforts to help audited entities interpret the inspection findings on PAs' audit engagements. If the PAs disclose the inspection findings on their audit engagements and the audited entities do not know what to do with the findings, we will not be able to raise audit quality. The two need to go together.

In short, this set of amendments aims to increase the transparency of inspection findings which will, in turn, promote trust and confidence in the audited financial statements. The amendments also enhance the ability of audited entities to evaluate the quality and effectiveness of their PAs.

The disclosure of inspection findings on the PAs' audit engagements to the audited entity is in line with the requirements in Canada, Australia and Malaysia.

Clause 11 of the Bill provide for this amendment.

Besides the four key sets of amendments, the Bill also provides for related amendments, such as the prescription of fees, laying out processes relating to appeals and meting out of orders, as well as empowering the PAOC to prescribe professional standards for PAs and AEs. Clause 23 of the Bill provides for consequential amendments to the Banking Act 1970 to align the terminologies used in both Acts.

In conclusion, Sir, the amendments in this Bill serve to enhance our audit regulatory regime and ensure that our audit and accounting professionals and firms comply with the high standards and ethical requirements. This in turn will strengthen Singapore's pro-business and trusted regulatory environment.

But beyond laws and regulations, I also call upon all PAs and AEs – who have the responsibility to the public to uncover questionable accounting practices and to bring to light potential deception or fraud – to uphold the highest professional standards and safeguard the integrity and independence of the audit process. This is crucial in engendering trust and confidence in the quality of audited financial statements and ultimately, in the PAs and AEs themselves. Mr Deputy Speaker, I beg to move.

Question proposed.

4.27 pm

Mr Don Wee (Chua Chu Kang): Mr Deputy Speaker, Sir, I declare that I am an elected Council Member of the Institute of Singapore Chartered Accountants (ISCA) but I do not have any commercial interest in any accounting entity.

I support this Bill which proposes to amend the Accountants Act to enhance the audit regulatory regime and introduce measures for better compliance with professional requirements and standards by both public accountants and accounting entities. This will help elevate the level of audit quality in Singapore and enhance Singapore's standing as a trusted business hub through better assurance of information available to investors and the public.

This Bill will undoubtedly impact public accountants; they are expected to implement robust policies and procedures under the new quality control standards and sanction orders will also be imposed for non-compliance.

These new quality control standards are a substantial development and change for the audit profession globally, as they include significant shifts in how firms manage quality. Firms would have to adjust their internal processes and systems to help firms effectively and efficiently implement the new standards. Based on my understanding, the Big Four audit firms have been preparing to implement the new Singapore Standards on Quality Management way before the standards become effective. The smaller firms with limited resources are likely to have lesser time, knowledge and most importantly, the resources to do so.

This Bill came at a time when there is a severe shortage of audit professionals in Singapore. While I believe members of the profession recognise the need for emphasis on quality, the challenges they face should be acknowledged. Therefore, I would like to raise the question of how the Government can help the profession, especially the small and medium-sized audit practices, that is, the SMPs. The support could come in the form of funding to help public accounting entities train their staff and/or employ consultants to help with the implementation of the new quality management standards.

Another area of support is manpower. I would like to touch on the new Employment Pass regulation, the Ministry of Manpower (MOM)'s Complementarity Assessment Framework (COMPASS), which comprises six criteria to assess eligibility for Employment Passes.

One of the criteria is the Shortage Occupation List, which considers talents in short supply on the local job market. Each job opening that corresponds to the Shortage Occupation List scores 20 points, which will count towards the total score that will determine eligibility for work pass.

I would like to request that audit professionals be considered for inclusion on the COMPASS Shortage Occupation List. Many SMPs face challenges in attracting and retaining local talent and foreign talent are needed to fill the gap in the local workforce.

I understand that occupations are considered for inclusion on the Shortage Occupation List based on their relevance to Singapore's economic priorities, the degree and nature of labour shortage and the sector's progress in developing the local pipeline in the medium term to address these shortages.

On that note, I believe public accountants and public accounting entities are of key relevance to Singapore's economic priorities. They play an important role in the growth and development of the Singapore economy as they act as an industry multiplier, providing professional services to businesses.

Next, there is an increasing power given to the oversight committee and it becomes critical on how the oversight committee members are being selected and appointed.

The new section 38E empowers the oversight committee to appoint any employee of the authority or any other individual who is suitably qualified as entity reviewers to carry out a review of quality control standards or AML/CFT requirements or both.

Given that the reviewer has an important role in performing the heavy lifting of the inspection, there should be minimal qualifying criteria for the selection of the reviewers. Can the Minister elaborate on the abovementioned points?

According to the Global Financial Services Index, Singapore has overtaken Hong Kong to become Asia's top financial centre and the third in the world after moving up three places recently. This creates many opportunities for the accounting firms, provided they have enough staff to support their growth.

I would like to request for the relevant sector lead to work closely with the industry and the accountancy bodies like the Institute of Singapore Chartered Accountants and CPA Australia's Singapore Division on this matter.

I hope the challenges of the public accountants and accounting firms are recognised and the Government can consider providing more support as the profession continues to uphold quality in financial reporting and audit as well as contribute to Singapore's position as a global financial centre and business hub.

Mr Deputy Speaker: Mr Yip Hong Weng.

4.33 pm

Mr Yip Hon Weng (Yio Chu Kang): Mr Deputy Speaker, Sir, I declare my interest in this Bill as a finance professional working in an investment firm.

I support the Bill as it enhances the audit framework. It also introduces measures for better compliance with professional requirements and standards for both public accountants (PAs) and accounting entities (AEs). Notwithstanding, I seek some clarifications on the proposed amendments.

Firstly, Mr Deputy Speaker, Sir, what is the estimated cost of compliance, given the new regulatory measures and increased inspections?

I agree with the risk-based approach to focus quality control inspections on AEs with higher risk and public interest clients. This would provide a balance between increased regulatory costs and meeting the objective of the said Bill. However, the burden on these higher-risk AEs in terms of financial costs and time would still be increased. These AEs will need to dedicate time and manpower towards compliance and prepare for the audits.

Would the Government provide subsidies as part of the easing-in period to help PAs and AEs to adapt to the changes? Likewise, would there be any form of compensation for the opportunity cost lost by these firms in preparing for the inspections?

Secondly, Mr Deputy Speaker, Sir, as we improve the framework for the accounting industry, investment in training of accounting talents is also necessary to raise the overall audit quality in Singapore. PAs and AEs would have to keep up with the new regulatory regimes. The best way to do so would be through professional upskilling.

Would the Ministry provide avenues for PAs and AEs to receive training so that they may meet the new requirements? Going upstream, are MOF and ACRA working with the Ministry of Education (MOE) and our Institutes of Higher Learning to ensure that the new compliance regimes are incorporated into the curricula of accounting diploma and degree programmes?

Thirdly, Mr Deputy Speaker, Sir, we have to stay abreast with the trend of companies moving into the realm of cryptocurrency and even Non-fungible tokens (NFTs) in recent years. It is important that we do a meticulous audit of such companies or companies that may have invested in these new monetary realms. It is important to note that cryptocurrencies have been used to launder money.

As cryptocurrencies and NFTs are emerging technologies and complex, they may be poorly understood. This would present challenges in navigating through the accounts to ensure that all relevant transactions are properly accounted for. Building on my earlier point, can we leverage on training programmes supported by the Government to inculcate the necessary skills in our accounting and auditing professionals?

Fourthly, Mr Deputy Speaker, Sir, will there be a designated timeframe for remediation of lapses before sanctions are imposed? If adequate remediation efforts are not met within the time limit for AEs and PAs which are deemed to be "Need Improvement" or "Unsatisfactory", is there a clear escalation mechanism in place for non-remediation and sanctions?

To ensure audit firms deliver consistently high audit quality, I agree with having stringent deterrent measures and penalties. Be that as it may, this should not be at the expense of impacting the long-term attractiveness of the profession. Having a clear remediation framework would reduce uncertainty and anxiety, especially for those who are just entering the profession and veterans who are wary about the new regulations.

Mr Deputy Speaker, Sir, my last point is on encouraging innovation. This is especially so with the launch of the Jobs Transformation Roadmap for In-house Finance and Accounting Functions and Accounting Practices at the beginning of this year.

The constant call for innovation and transformation is highly relevant as accounting is a profession with roles that may soon be automated.

I am heartened that ACRA, as a regulator, continues to maintain a close watch on emerging developments and risks and stands ready to intervene or make the necessary adjustments. The financial landscape for existing regulated activities has changed and continues to change rapidly, requiring a constant relook at the rules.

Take, for example, some of the key emerging technologies that are disrupting the sector, namely, AI and analytics, intelligent automation, blockchain, cybersecurity and cloud computing. Many of these could boost auditing quality, allowing the collection and analysis of broader industry datasets which may previously be less accessible. Conversely, some of these technologies, being less established or in the hands of someone less technologically-inclined, may give rise to problems in audit quality.

Even as we tighten the framework to promote quality auditing, how can we also grant leeway to facilitate the experimentation of new innovations and productivity measures amongst AEs, yet safeguard compliance?

In conclusion, Mr Deputy Speaker, Sir, I profess that I am not an accountant by training. My expertise lies in financial engineering and econometrics. I am speaking on this Bill for a few key reasons.

Singapore is an established international financial centre, but competition for this global position is rife. We always want to project ourselves further, to be a leading global financial centre. This means that we must stay abreast with global developments and consistently work on areas that can be improved upon. This is in line with the Financial Service Industry Transformation Map 2025 just launched a few weeks ago to guide our ambitions in the financial sector.

The financial services industry is interlinked with every other industry. It supports the growth of other sectors. What happens in it has systemic implications across the economy.

Accounting is more than a mere reflection of financial information. Accounting underpins the financial sector. Its outcomes move market participants and thereby influences our decision-making.

This Bill will ensure that the information received by investors is transparent and is of high quality.

I also hope that more of our Singaporean students, especially those listening in, will be attracted to accounting as a profession. This is amidst our hunt for local talent to keep Singapore running, knowing the critical role that they will play.

Having good local talent, coupled with a strong legislative framework buttressed by this Bill, will, in turn, translate into more efficient and secure investment decisions. This also equates to higher returns and greater investor confidence, thereby entrenching Singapore's position as a global financial centre. I support the Bill.

Mr Deputy Speaker: Mr Louis Ng.

4.41 pm

Mr Louis Ng Kok Kwang (Nee Soon): Sir, this Bill will strengthen the audit regulatory regime and the complaint and disciplinary process for public accountants and accounting entities. I have three areas of clarification.

My first clarification has to do with the refusal to undergo practice monitoring programme and review by public accountants and accounting entities. I have two questions.

Firstly, under the new sections 38A and 38K, public accountants and accounting entities may be suspended for up to two years if they refuse without a reasonable excuse to undergo a practice monitoring programme or a review respectively. Can the Minister provide examples to explain what constitutes a reasonable excuse under these sections?

Secondly, section 38K(6) lists the scenarios where a public entity is deemed to refuse to undergo a review. These include refusing to allow a practice reviewer to inspect documents or refusing entry to premises. These actions are clearly made by individuals who act on their own accord, possibly in defiance of their accounting entity's instructions. Can the Minister clarify what the Oversight Committee or the Courts should consider in determining whether acts of refusal by individuals are attributable to an accounting entity?

My second clarification has to do with the practice review of a public accountant set out in sections 37 and 38. Based on the report of a practice reviewer, the Practice Monitoring Sub-committee provides recommendations and the Oversight Committee makes orders. Neither authority seems to have the remit to conduct further investigations.

Can the Minister share whether and how the Sub-committee and the Committee can conduct further investigations so they can make a more informed decision? Is there any opportunity for a public accountant to present their side of the story to the Sub-committee or Committee before an order is served? After all, once an order is served, it could be 30 or more days before the General Division of the High Court responds to the public accountant's appeal. Even if successfully appealed, an order may still have serious professional consequences for the public accountant. So, it is important to ensure the right decision is made the first time.

My third clarification has to do with appeals against the orders of the Oversight Committee. Various sections of the Bill provide a public accountant or accounting entity who is aggrieved by an order of the Oversight Committee to appeal to the General Division of the High Court.

To ensure that there is meaningful access to review by the Court, can the Minister share if the Oversight Committee will, as a matter of course, provide a written decision on the basis for its orders? This will enable the public accountant or accounting entity in question to consider whether any appeal is necessary. This is important, given that the costs involved in pursuing an appeal at the High Court can be significant.

Additionally, during the public consultation on the Bill, feedback was provided to MOF and ACRA to redact sensitive information in the inspection report presented to the Oversight Committee to ensure that commercially-sensitive firm-level information remains confidential.

While MOF and ACRA noted the feedback, the position taken was that the Oversight Committee will require a full and complete set of information to make considered decisions. However, MOF and ACRA also acknowledged confidentiality concerns and stated that they intend to appoint only retired public accountants on the Oversight Committee to ensure that sensitive information remains confidential.

Maintaining confidentiality over sensitive information may be a consideration against accounting entities seeking recourse to the High Court. Once an appeal is filed, sensitive documents reviewed by the Oversight Committee may now become part of the public record.

Accounting entities can apply to the Court for sensitive information to be redacted. To provide greater assurance to accounting entities, can the Minister share if MOF and ACRA will generally consent to the redaction of confidential information if such an application is made by the accounting entities to the Court? If not, for what reasons will MOF and ACARA reject such requests?

Sir, notwithstanding these clarifications, I stand in support of the Bill.

Mr Deputy Speaker: Minister Indranee Rajah.

4.45 pm

Ms Indranee Rajah: Mr Deputy Speaker, I would like to thank Mr Don Wee, Mr Louis Ng and Mr Yip Hon Weng for their support of the Bill and their comments and suggestions. Members have raised questions around the three themes of: one, compliance in terms of cost and support for capability building; two, the appointment and powers accorded to the Public Accountants Oversight Committee (PAOC); and three, manpower-related matters within the accountancy sector.

Let me address them in turn.

First, compliance. Mr Don Wee and Mr Yip Hon Weng asked how the Government can help the profession, especially the Small- and Medium-sized audit Practices (SMPs) with the training and implementation of the new regulatory regime. Mr Yip also raised the issue of cost of compliance.

To be clear, the Quality Control (QC) standards that the Accounting Entities (AE) need to comply with are not new. All AEs would thus have to maintain a system of QC to ensure compliance with professional standards and the relevant regulatory requirements. As I mentioned, for AEs that audit public interest entities (PIEs) such as listed companies, ACRA has already been conducting QC inspections on them. If AEs have been duly complying with the requirements and putting in place the necessary QC, ACRA's QC inspections should just serve as a check to ensure that the QC and systems put in place by the AEs are indeed adequate.

Also, based on the nature and circumstances of the AE and the engagements performed by the AE, some of the requirements set out in our QC standards may not be applicable to certain smaller AEs. For example, larger AEs with international networks would need to look into policies relating to network resources requirements, but SMPs with no international network would not have to meet such requirements.

To Mr Yip Hon Weng's question on how the Government would help AEs manage cost of compliance, ACRA's QC inspections will take a risk-based approach to avoid unnecessary inspection and compliance burden. There will be a greater focus on inspecting AEs that audit higher risk PIE clients. AEs that audit lower-risk non-PIEs will be inspected less frequently. In addition, AEs that performed well in their previous inspections will be subjected to less frequent inspections compared to AEs with more issues identified during inspections. Such a risk-tiered approach is meant to keep the compliance burden manageable.

To ensure cost of compliance remains reasonable, ACRA will be setting fee caps for inspections of AEs in the non-PIE segment. The fee caps will be calibrated to ensure that they will be manageable for SMPs.

The Government will also help the profession, especially SMPs, with capability building to meet the new regulatory regime.

ACRA is already working closely with the Institute of Singapore Chartered Accountants (ISCA), which is the national professional accountancy body, on various initiatives to support the profession. ISCA has organised webinars and workshops on how AEs can implement the QC standards effectively. In addition, ISCA has provided tips and examples to guide SMPs on the implementation of the QC standards.

Mr Yip also asked if MOF works with MOE and the Institutes of Higher Learning to update the accounting curriculum. The Singapore Accountancy Commission (SAC), works with IHLs to ensure that the curriculum is up to date and aligned with the Skills Framework for Accountancy. This ensures that accountancy graduates are equipped with the right skills based on the prevailing standards. However, as accounting or auditing standards are regularly updated, continuing professional education for accountancy professionals to ensure their relevance is also important. ACRA works with ISCA to ensure this.

Mr Yip also asked whether time will be given to PAs and AEs to remediate lapses uncovered during inspections before sanctions are imposed. Further, he asked about the escalation process for non-remediation of lapses found during inspections. I will take them together.

When ACRA imposes a remedial order on the PA and AE on lapses found during its inspections, time will be given to the PA and the AE to complete the remediation. The remedial actions may include completion of training programmes and/or subjecting certain audit engagements to further reviews before finalising the audit reports. If areas of non-compliance are not too severe, orders imposed on the PAs and AEs will primarily be remedial in nature. However, for very severe and recurring non-compliances, sanctions may be necessary to protect public interest and send a strong deterrent message in addition to the remedial orders. There are existing processes and an escalation framework for the PAOC to manage non-compliances with its orders. This will continue to be the case.

I will now move on to the second set of questions, raised by Mr Don Wee and Mr Louis Ng, relating to the PAOC.

Mr Wee asked how the PAOC members are appointed. ACRA, with the Minister for Finance's approval, appoints the PAOC members. There is a rigorous appointment process to ensure that the PAOC comprises experienced professionals from the public service, the business community and the audit profession.

To safeguard the objectivity and independence of the PAOC, majority of the PAOC, including the Chairman, will comprise members who are non-audit practitioners. The PAOC members will also recuse themselves if there is a conflict of interest. This is to ensure that decisions taken are impartial and can withstand scrutiny.

Mr Wee also asked about the minimal qualifying criteria in the appointment of the entity reviewer by the PAOC. Entity reviewers are similarly subject to a robust appointment process. They will need to possess the necessary professional qualifications and relevant work experience, at the very least, at a managerial level, in audits or in handling quality control aspects in an AE.

To ensure that the entity reviewers stay updated on the developments of the professional standards and practices, they will also be required to undergo training and continuing professional education regularly.

Mr Ng raised several questions about the powers and processes of PAOC and its subcommittee. First, Mr Ng asked, what would constitute a reasonable excuse for refusing to undergo practice monitoring programme or a review. This depends on the facts, applying the perspective of a reasonable person in the PAs' or AEs' shoes at the relevant time. One example of a reasonable excuse is where the PA had been certified to be medically unwell.

Second, Mr Ng asked what the PAOC or the Court would consider in determining whether acts of refusal of individuals are attributable to an AE. Our intent is to ensure that all PAs and AEs corporate with the practice and entity reviewers when they are selected for inspection and to allow ACRA to take regulatory actions against the AE. This is particularly so if there is evidence to suggest that the PA's refusal was done with the consent or connivance or was attributable to any neglect on the part of the AE as provided for under the proposed section 38(K)(2)(b).

For example, if the evidence clearly establishes that an AE has told an individual to simply ignore the review, there is no reason not to attribute the PA's refusal to the AE. Ultimately, this is a question of fact. The PAOC will carefully consider the full facts of each case, in deciding whether to attribute the acts of refusal by an individual practitioner to the AE

Third, Mr Ng asked about the powers of and how the Practice Monitoring Subcommittee (PMSC) and the PAOC can conduct further investigations so that they can make a more informed decision. The PMSC and the PAOC can and do from time to time make inquiries or seek clarifications from the PAs or practice reviewers, if necessary, to help them make an informed decision.

Fourth, Mr Ng asked whether the PA can present his or her side of the case before an order is served. PAs are given the opportunity to make written representations to the PMSC and the PAOC before any decision is made. In addition, where the PAOC is of the view that the matter requires an oral hearing such as when complex issues are involved, a hearing before the PAOC would be arranged.

Fifth, Mr Ng questioned if the PAOC will as a matter of course provide a written decision on the basis for its orders. Today, as a matter of practice, the PAOC already informs the PAs and AEs in writing on the findings raised. The PAOC may in certain cases, provide a more detailed written explanation, for example, where the matter is complex, or the issues raised therein require clarification and elaboration.

Finally, Mr Ng asked if MOF and ACRA will generally consent to the redaction of confidential information, if such an application is made by the AE to the Court and if not, what are the reasons for rejection? This will be reviewed on a case-by-case basis, as we will need to weigh all the relevant factors such as the nature of information concerned.

I will now move on to the last set of questions relating to manpower, training and productivity.

Indeed, as Mr Don Wee and Mr Yip Hon Weng highlighted, accountants and auditors play a critical role in growing Singapore as a business hub. As our economy grows, so too, will demand for accounting services, both in terms of volume and scope – beyond financial reporting and assurance to also cover sustainability reporting, IT audits, business advisory and more.

It is therefore critical that our accounting and audit professionals continually upgrade their knowledge and skills, and stay abreast of emerging areas like sustainability and digital assets, as highlighted by Mr Yip. To encourage our PAs to upskill, we currently require all PAs to maintain at least 120 continuing professional education hours over a rolling three-year period.

From 1 January 2023, ACRA will also include Information Technology as a core expertise area that PAs would need to obtain a minimum number of training hours in. This ensures that audit professionals upskill their digital competencies and adopt technology and innovation in their audits. PAs can look to the professional accountancy bodies for training and workshops on new and emerging topics.

As Mr Yip highlighted, we are also encouraging our AEs to innovate and harness automation technology to raise productivity. There are several schemes to support AEs to do so, such as the Productivity Solutions Grant.

On the issue of foreign manpower. I note Mr Wee's request for audit professionals to be included in MOM's COMPASS Shortage Occupation List (SOL). The SOL awards bonus points under the COMPASS for employment, pass for Employment Pass (EP) applications, filling occupations requiring highly specialised skills that are in shortage in our local workforce. The SOL is designed for niche and highly skilled occupations required by the economy where EP holders are required because there are not enough Singaporeans who can do the job, even though wages in the sector are high, particularly in frontier industries. MOM will place occupations on the list judiciously, through a comprehensive review of evidence.

At the same time, I also encourage firms in the audit industry to do their part to attract local graduates and mid-career professionals to ensure a sustainable pipeline of manpower in the long term.

Mr Deputy Speaker, in conclusion, the proposed amendments to the Accountants Act seek to enhance audit quality and standards in the industry and are a move in the right direction. The changes ensure that our PAs and AEs continuously improve their high standards and are necessary to ensure the continued integrity of our financial system. This is key to Singapore maintaining our reputation of being a trusted global business and finance hub. Mr Deputy Speaker, I beg to move.

Question proposed.

Question put, and agreed to.

Bill accordingly read a Second time and committed to a Committee of the whole House.

The House immediately resolved itself into a Committee on the Bill. – [Ms Indranee Rajah].

Bill considered in Committee; reported without amendment; read a Third time and passed.