Singapore’s accounting rules squeezing smaller firms
When ACRA put forth new rules that require Singapore’s public accountants and accounting entities to adhere to a stricter code of conduct and ethics by February 2015, smaller firms began feeling that size does matter. Having fewer partners means being hardpressed to meet more stringent requirements to rotate partners and impose cooling off periods.Analysts believe this will raise the quality of, and confidence in, audits–but also increase costs and compliance challenges for firms.
Raising industry standards
The changes help bring Singapore rules one step closer to those set by the International Ethics Standard Board for Accountants code of ethics, says Ng Kian Hui, audit partner at BDO LLP.
ACRA set higher independence standards and extended them to all audit and review of all public interest entities, large charities and large institutions of public charter.
“This will likely enhance the overall public confidence in financial information whether they are audited or reviewed,” says Ng.
A new requirement to identify a Key Audit Partner (KAP) will ensure quality control and make key decisions and judgments on significant audit matters, says a BSL Group spokesperson, although it should also add more costs.
Complying with the new rules
Ng says new requirements meant to raise KAP safeguards such as implementing partner rotation and observing cooling off periods, may pose problems for relatively smaller audit firms due to having fewer partners. “Smaller firms will face more challenges due to their limited resources to put in place internal controls like closer monitoring of partner rotations,” concurs BSL Group.
Ng adds that while regulators introduce or finetune rules and regulation that govern financial reporting, other key stakeholders in the chain, such as management and prepares, still need to diligently discharge their responsibilities to truly raise public confidence in such financial information.
SBR’s list of top 25
PwC Singapore and EY toppled last year’s largest accounting firm KPMG based on total staff. Data compiled by Singapore Business Review based on company surveys show that as the two increased numbers in 2014, KPMG maintained its 2400 staff strength. PwC, previously second, boosted numbers by 9% to 2500. EY grew by 16% to 2436.
This year welcomes new entries UHY Lee Seng Chan & Co and Prudential PAC. The former was missed out in the previous lists but data provided by the firm placed it in the 17th spot both in 2013 and 2014.
Prudential PAC, ranked 25th, hired 6 more staff this year. Incorporated in March 2014, Prudential PAC formerly practiced under the the partnership firm Rama & Co for the past 28 years. All in all, Singapore’s 25 largest accounting firms employed 8% more this year to 12, 719.
RT LLP, ranked 16th, downsized its number by 42%. Ravi Arumugam, RT’s CEO & managing partner, explains that the downsizing is due to carving off sections of operations to facilitate the RT network plan, billed as the first ingaporeheadquartered Asian Network in accounting and business advisory services.
“We’ve reorganized our various service provisions into audit, non-audit, specialized services etc. This is to facilitate our expansion regionally,” says Arumugam.
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