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SINGAPORE: The Accounting and Corporate Regulatory Authority (ACRA) of Singapore has highlighted some areas for auditors to scrutinise in the current economic environment.
These include potential fraud cases and auditing cash balances held by companies.
The regulator said on Monday in an audit practice bulletin that the current market conditions will bring about greater uncertainties and audit risks.
With the recession hitting companies, financial reporting has become even more challenging.
The professional auditing body ICPAS has started helping its members deal with issues such as valuing of financial instruments and assessing going concerns.
Juthika Ramanathan, Chief Executive of the ACRA, said: "ACRA has issued this audit practice bulletin to reinforce these efforts and also to remind auditors of the importance of being vigilant and rigorous to preserve investor confidence while the economic pressures persist."
Among the challenges, auditors agree with the regulator that the risk of fraudulent reporting has grown, as companies face pressure to meet market expectations.
Yeoh Oon Jin, Partner, PricewaterhouseCoopers, said: "Likelihood of fraud taking place is probably higher. So, as a result, I think auditors need to certainly be more mindful that such situations could arise more readily in a market like this."
ACRA said public accountants should be more careful when auditing cash balances of companies because such assets could be subject to misappropriation. It said auditors should also watch companies' cashflow, which may affect their ability to survive as going concerns.
How companies value their financial instruments and impairment of assets should also be scrutinised. Auditors agree that clarity in these areas will be good for investors.
Shariq Barmaky, Partner, Deloitte Singapore, said: "Disclosures have never been more important, and you will see when the financial statements of the public companies come out for the December year-end, in particular on judgements, estimates, going concern."
KPMG said the ACRA audit practice bulletin is a timely reminder of the crucial role that auditors play in ensuring the availability of reliable financial information for capital markets.
- CNA/yb
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