Directors in Singapore believe that the informative value of communications from auditors can be enhanced. That is the conclusion from two high-level roundtables that were carried out by ACCA and the Singapore Institute of Directors (SID), in a project which was supported by the Accounting and Corporate Regulatory Authority (ACRA).
The project is the third of a trilogy of reports on the value of audit commissioned by ACRA over the past two years, In 2010, the views of audit committee chairs were sought; in 2011 it was private investors and in 2012, it was the turn of board directors from various industries to give their opinions on the attributes, competencies, and deliverables expected from external auditors. The report, "Enhancing the Value of Audit - Board Directors' Perspective," was released on August 2 at a press conference organised by SID and ACCA.
Specifically, directors said they would like to see more subjective statements from the auditors including their assessments of the overall control environment and the ‘tone at the top.' In terms of auditors' communications to external stakeholders such as investors, it was, however, felt that any extension will need to be implemented with corresponding education of users to prevent information being interpreted out of the proper context.
Some directors conceded that a key concern in Singapore is that auditors are not able to allocate and spend sufficient time to fully comprehend audit issues and address them properly due to relatively low audit fee levels, by international standards. But directors said that boards are aware of the importance of differentiating auditors based on quality rather than price, and that they are not out to seek the lowest audit fees - instead relevant experience, a good-fit and demonstrable values from the auditors. ACCA would encourage companies not to drive down fees or to see audit as a compliance cost but to value what it can bring to business – but enhanced communications would be a suitable ‘quid pro quo’ from the audit profession to demonstrate that value.
Directors in Singapore also argued that mandatory rotation of auditors, which has been proposed in the US and by the EC to reinforce auditors' independence, would be costly and its effectiveness questionable. But they agreed that it was important to continuously evaluate the quality of auditors, with some suggesting instituting mandatory tendering process to regularly screen for auditors with the best ‘fit.'
More details of the report "Enhancing the Value of Audit - Board Directors' Perspective" can be found in the pdf avaliable below.