How Does Singapore's New Tightened Rules on Auditors and Property Valuers Affect Businesses?
Recently, it was announced that Singapore Exchange Ltd. is making new strict rules and regulations for auditors and property valuers who are registered with the Singapore Exchange (SGX). The primary reason behind such change is the growing number of accounting and audit scandals in Singapore.
According to these tightened rules, almost every registered company will have to hire a local auditor approved by ACRA. The auditor must be hired for the company’s accounting year starting on or after January 2022. In other words, the new rules will ensure that the primary-listed organizations now fall under the oversight of Singapore’s regulatory body.
1. Second Auditor
In order to curb the accounting issues and malpractices, SGX has also announced that the companies might also be asked to hire a second auditor if there are any discrepancies in the financial statements of the company. If the companies are already using the services of accounting firms in Singapore, they can continue to do so, as long as such firms are approved by ACRA.
2. Background of New Rules
As stated above, this major shift in the auditing rules has been made after the rise of small and large-scale scandals that have affected the corporate sector of Singapore to a great extent. Many well-known organizations have been affected by corruption scandals and accounting malpractices. For instance, in 2018, Hyflux Ltd went bankrupt because it owed a massive amount of money to the investors.
The studies have indicated that there is a lot of room for accounting processes to improve in Singapore. As a result, the higher authorities are also taking steps to raise the accounting standards.
Better accounting and auditing practices mean that investors and stakeholders will have more trust and confidence to invest in different projects.
However, it is important to note that it is still unclear whether tightening the rules will be able to prevent further scandals.
Authorities like ACRA and SGX are hoping that by making stricter rules, the audit firms in Singapore will perform their work with maximum efficiency to improve reporting standards.
4. Property Valuation
The companies registered in Singapore are also facing scrutiny for property valuation. The new rules indicate that the property valuers must have a working experience of at least five years in the industry.
Moreover, the valuers must be registered members of the Singapore Institute of Surveyors and Valuers. International valuation standards are also expected to be implemented more strictly now to ensure proper valuation of the international properties.
A significant number of businesses have criticized these strict rules because they make it difficult for companies to operate freely and smoothly.
However, experts and officials are defending such rules by claiming that tightening the rules will make the services of audit and accounting firms in Singapore more efficient and reliable.
5. Impact of Foreign Companies
Experts predict that the new rules regarding auditors and property valuers will mainly affect the foreign companies that have most of their business assets in international territories but have a primary listing in Singapore.
As a result, it will become more important for these companies to hire audit firms in Singapore to comply with the local rules and regulations and also have a global reach.
However, the regulators are also facing heavy criticism that such changes are being made after an extensive series of accounting scandals that have been going on for a few years now. The authorities are still investigating the Noble Group for financial malpractices.
In a Nutshell
Such factors have definitely created a lot of ambiguity for auditors, property valuers, and especially businesses. It is difficult to say whether these new tightened rules will have a negative or positive impact on the business because it is still too soon to predict the market situation once these rules are fully implemented.
By setting these new standards, the primary goal of the SGX is to bring consistency in the auditing and property valuation processes. The majority of the businesses are quite happy with the new eligibility criteria of business valuers because there have been many complaints about questionable valuations being performed by valuers who do not have the experience to deal with such factors.
Experts believe that such new rules might only be the start of raising the accounting standards in Singapore. Companies can expect more changes in the future. It is also important for accounting and audit firms in Singapore to keep up with the evolving rules and provide efficient and reliable services to businesses. For more information, feel free to get in touch with us.