The study covers an analysis of the EARs and annual reports of 180 entities listed on the Singapore Exchange, online surveys with over 240 audit committees and investors, and focus group discussions with over 30 audit committees and investors.
EARs have brought about insightful disclosures by auditors, particularly in the form of key audit matters (KAMs). They have also driven positive behavioural changes among various stakeholders in our financial reporting eco-system.
- Audit committees had more robust deliberation over KAMs
- Investors were using EARs to identify significant accounting and audit issues before reading the financial statements
- Audit partners were spending more time engaging audit committees
- Both audit committees and investors now have more confidence in audit quality.
Companies proactively enhanced their financial and non-financial disclosures in conjunction with the KAMs reported by the auditors.
- Management added more disclosures and in greater depth to the financial statements
- Audit committees were more forthcoming in their views on significant accounting matters
The communication of quality KAMs and corporate disclosures could reap significant benefits in enhancing auditor-director-management-investor relations.
For the EARs to act as a catalyst for greater transparency in our market and deeper engagements among stakeholders, all stakeholders must step up and do their part. Auditors, directors and management must continue to provide valuable insights and meaningful disclosures. Investors must leverage more on these insights and actively engage with auditors, directors and management. In the longer run, this will further boost market confidence and reinforce Singapore's reputation as a trusted place for business.