What To Consider?
What To Consider?
Well-organised and accurate financial reports are key to smooth and effective business operations. Small businesses can use simple bookkeeping software to keep finances under control. But for a large or expanding business, keeping track of finances and flawlessly completing all the tax prep will not be a piece of cake. Engaging a reliable outside accounting service will take a significant burden off your shoulders and allow you to focus on your real priority – running your business. In the beginning you might feel overwhelmed by the large number of Singapore audit firms and find it difficult to find the right firm for your business.
Here is a quick guide that will help you make the best choice among the top audit firms in Singapore and ensure maximum collaboration efficiency.
Who can act as an auditor for a company in Singapore?
Under the Singapore Accountants Act, only persons registered as public accountants may provide public accountancy services.
A registered public accountant is responsible for the audit opinion of the audited financial statement. This includes ensuring that the audit is conducted in accordance with the Singapore Standards on Auditing (SSA) and related requirements.
Being a financial hub, Singapore is fully aware of the critical roles the public accountancy profession plays in safeguarding public interest by ensuring the integrity of companies’ financial reporting. Knowing well that users of financial statements largely rely on the professional opinions expressed by public accountants, the Singapore government has taken a number of measures to ensure the country remains one of the world’s top global investment environments:
- It is mandatory for all public accountants in Singapore to be registered with the Accounting and Corporate Regulatory Authority (“ACRA”), a regulatory body under the Ministry of Finance. In view of this requirement only a public accountant can be appointed as an auditor of a company in Singapore.
- Periodic reviews, known as the Practice Monitoring Programme (“PMP”), are conducted by ACRA on public accountants. Under the PMP, ACRA inspects audit works performed by public accountants to ensure that they are in compliance with SSA, Singapore Companies Act and other relevant requirements.
What are public accounting services?
Public accounting means any engagement that results in the issuance of an attestation report in accordance with professional standards. Public accounting serves small businesses, SME’s, legal firms, non-profit organisations, religious organisations, and many other industries. Public accounting services include audit assurance, review of historical financial statements and related services.
Who can be a Public Accountant?
A public accountant is any person who provides public accountancy services, i.e. the audit and reporting on financial statements and is registered in accordance with the Accountants Act (Chapter 2) as a public accountant.
Any person looking to be registered as a Public Accountant must meet the following criteria:
- Be over the age of 21 years; and
- Satisfy the prescribed requirements relating to:
- Practical experience;
- Membership in any professional accountancy body or organization;
- Proficiency in local laws; and
- Continuing Professional Education (CPE).
These are service providers who are not required by Law to register with ACRA as they provide non-audit services. These services normally include accounting, preparation of financial statements, bookkeeping, tax compliance, company registration, etc.
Filing Agent: Regardless of whether a firm or person falls under public accountant or non-public accountant category, they will be required to be registered as a qualified / registered filing agent with ACRA as long as they provide company registration and corporate secretarial services.
Usually, Non-Public Accountants are either:
- Accountants with relevant degrees or professional qualification with working experience and registered as a member of ISCA or similar bodies; or
- Hold an accountancy diploma or similar qualification with working experience and generally are not registered as a member of any professional body.
The above distinctions set Public Accountants apart from Non-Public Accountants and the awareness of this distinction is important when engaging their services.
Choosing an Audit Firm – factors to consider
Appointment of an Audit Firm (Auditor) might be;
- Required by law;
- Required by minority interest (shareholders);
- Voluntarily by the entity.
This crucial appointment of an independent Public Accountant is very different from the appointment of company directors, company secretary and other offices. The later represents the management of the company whereas the latter’s sole responsibility is to audit management assertions of the company financial statements and report the findings through an Audit opinion/report directly to the shareholders of the Company.
Initial appointment – of the Company Auditor is done by the board of directors.
Subsequent re-appointment is done during the annual general meeting of the Company.
Finding a Public Accountant in Singapore
Here are some tips for finding a Public Accountant:
1. Referral may be the best option.
Ask around your contacts for recommendations: i.e. family members, friends, business owners, financial advisors, attorneys, trade associations etc. It can be particularly helpful to ask a person in similar industry as yours and who have engaged Public Accountant services before.
2. Online search
3. Company secretary
You can ask for recommendations from your company’s secretarial agents who assisted you in registering your business. They usually work with a panel of audit firms, they will probably recommend to their clients, upon request.
Assessing the Audit Firm
A good start will be to make appointment with the selected audit firm(s) at their premises. This allows you to know their location, office presentation, idea on the staff strength, as well as their accommodating behaviour etc. Knowing all these details will give you an idea on whether you will be comfortable working with such firm.
Meeting the Public Accountant
Some useful questions you can ask during your assessment process:
- How long you have been in this field, your qualifications, experience;
- How many audit partners does the Firm have?
- How many employees and their average years of experience?
- Types of clients/industries that the Firm provides services to.
- Do you have client acceptance policies and procedures?
- Will I have access to audit partner handling my audit and senior managing partner?
- If you are familiar with accounting basics, you can consider testing the technical knowledge by asking about Revenue Recognition policies or what work they do to detect errors or fraud.
- Whether they understand the industry/legal framework in which you operate?
- Do they demonstrate technical competence, understand relevant Financial Reporting Standards and relevant Auditing Standards?
- The pricing of services and terms of payment.
- Whether the firm adopts policies of issuing letter of recommendation / weakness after audit completion.
- Will they adhere to deadlines / timetable for the completion of audit?
- How do they collect information/documentation from the management / accountant before the commencement of audit?
- Will they support the management team with consultation on key accounting policies and assumptions, and provide constructive comments when the management exercises professional judgement?
How audit fees are usually determined?
Professional fees charged by Public Accountants are usually determined based on the charge out rates of respective staffs, taking into account the following;
- The skill and knowledge required for the type of work involved;
- The level of training and experience of the person necessarily engaged in the work;
- The time necessarily occupied by each person engaged in the work; and
- The degree of audit risk, responsibility and urgency that the work entails.
Generally, computation is based on working hours (multiplied by their respective charge-out-rates) spent by the audit team on the assignment, which may include audit assistants/seniors/supervisor/manager/partner/consultants based on the complexity of the audit.
On a final note: Points to consider when choosing an audit firm/public accountant
- Ask yourself, if the shortlisted audit firm will be able to fulfil your requirements?
- Do they understand your company/industry and if you can trust and want to work with them?
- Wouldn’t it be easier to hire an audit firm / audit team that is already familiar with all the ins and outs of your industry?
- If a public accountant underestimates the value of your business or fails to have a clear understanding of your business environment; is it advisable to engage them?
Get in touch with us for more insight into audit assurance.