Singapore Exchange launches tougher audit rules for listed firms

Out-Law News | 18 Jan 2021 | 10:00 am | 1 min. read

All primary listed firms on the Singapore Exchange will have to appoint a local auditor approved by the Accounting and Corporate Regulatory Authority (ACRA), under new rules for listed firms. The changes will take effect from 12 February.

The Singapore Exchange Regulation (SGX RegCo) consulted about the changes in 2019. According to an announcement this week, secondary listed firms from developed markets may continue to appoint auditors from their home jurisdictions, SGX RegCo will assess the requirement on a case-by-case basis for all other secondary listings.

SGX RegCo may require firms to appoint a second auditor in special cases, such as when it believes that there may be a general misstatement in the financial statements that is not supported by the opinion of the existing auditor and that cannot be resolved by the special auditor.

Other existing regulatory tools available in relation to listed firms include conducting public inquiries and issuing compliance notices to deal with concerns about financial reports. SGX RegCo may direct the appointment of a second auditor if the market has not received enough assurance on the areas of concern after using these tools.

Mark Tan of Pinsent Masons MPillay, the Singapore joint law venture between MPillay and Pinsent Masons, the law firm behind Out-Law, said: “The tougher audit rules requirement recently introduced by the SGX appear to be trying the address the issue of whether the current applicable audit standards are sufficient to protect investors, and to further improve investor confidence in audits.”

“This is an issue that has likely come about in part due to the sudden collapse of certain high-profile entities in the last few years. In many cases, the problems underlying their collapse were only flagged at a late stage, despite there having been ongoing audits. The implementation of these rule enhancements is therefore likely to result not only in increased audit accountability, but will also increase the SGX’s powers and ability to intervene and investigate when problems arise,” he said.

SGX RegCo also made some changes to qualifications required of property valuers and standards for property valuation reporting.