Audit firms can raise their quality of work, says Acra.

Audit firms can raise their quality of work, says Acra.

AUDIT firms could do better in crunching the numbers when they run the rule over listed companies, said the country's accountancy watchdog yesterday.

It noted that improvements could be found in certain areas, particularly to raise audit quality and the consistency in the way audits are executed.

The call for higher standards from the Accounting and Corporate Regulatory Authority (Acra) was prompted by the findings of a global survey on audit inspections released earlier this month.

It found that public company audits globally are lacking in areas relating to fair value measurements, internal control testing and revenue recognition. The main deficiencies for key institutions like banks and insurers were related to auditing allowances for loan losses and impairments, internal control testing and valuing investments and securities.

The study by the International Forum of Independent Audit Regulators (IFIAR) comprises key findings of significant audit firms and its own inspections of 948 company audits of listed public interest entities, systemically important financial institutions. 

It also looked at the overall quality control systems in place in the audit firms.

Acra said the findings in the global survey correspond with those from its own audit inspections under the Practice Monitoring Programme (PMP).

But it also noted that "key steps have been taken to raise the quality of audits" in recent years.

These included improving the PMP, which is now a more risk-focused programme, as well as raising the practical experience requirements for people applying to be public accountants.

"Singapore has maintained a consistently high quality of audit, although some of the deficiencies observed by IFIAR's survey do feature in our own inspection finding," said Acra chief executive Kenneth Yap.

"Nevertheless, audit quality is constantly a work-in-progress and we will continue to take all necessary steps to further raise the quality of audit."

He added that one upcoming initiative is to have audit firms share their audit quality indicators as a gauge to assess improvements in audit quality among firms.

The Straits Times / Money                        Published on Tuesday, 17 March 2015

By Jacqueline Woo                                   tsjwoo@sph.com.sg