CHAPTER 3: KEEPING THE PROFESSION IN THE KNOW
In today’s dynamic and complex world, the accountancy profession must proactively adapt to the changing landscape to remain relevant. The Institute is leading the conversation to help our members understand the future, explore ways to embrace change, and thrive in a constantly evolving world.
In 2022, ISCA established a research network to direct the accountancy profession’s research and development efforts. Working with universities and corporations, the Institute aims to produce outcomes aligned with the needs of the accountancy profession and businesses.
The Institute is also supporting members with the timely dissemination of relevant information and guidance on climate-related issues, audit and assurance, financial reporting and ethics.
RESEARCH NETWORK
ISCA established the Research Network, a think tank, to help drive research and development (R&D) in the accountancy sector. The Research Network supports outcomes that will address business and industry needs.
The Research Network was established in June 2022 with members from five autonomous universities in Singapore – NUS, NTU, SIT, SMU, and SUSS. The Research Network also comprises strategic partners who have expressed interest in research collaborations. They include BlackLine, Deloitte, EY, KPMG, PwC and Xero.
To support the Research Network’s objective, ISCA has set aside a research fund to undertake and support the best R&D initiatives. Periodically, ISCA will call for proposals to crowdsource the best R&D ideas.
STUDY ON SUSTAINABILITY’S IMPACT ON JOBS AND SKILLS
ISCA, together with Ernst & Young Advisory Pte. Ltd (EY), SMU and SAC, launched a joint study into sustainability and its impact on jobs and skills. The study involved in-depth interviews with C-Suite leaders across 10 business sectors.
The research report, titled Sustainability – Jobs and Skills for the Accountancy Profession, was launched in August at PAIB Conference 2022. Key findings in the report included an emerging C-Suite position, Chief Finance & Sustainability Officer (CFSO), to oversee the integration of finance and sustainability into business strategy. With their financial expertise, accountancy and finance professionals are in an advantageous position to helm the emerging role of the CFSO.
The study found that more than half of the Chief Sustainability Officers report to the CFO, and this trend would continue with the burgeoning demand for sustainability skills for preparers, assurance service providers and internal auditors.
REFRESHED IS CHARTERED ACCOUNTANT JOURNAL
STATE OF THE SINGAPORE ACCOUNTING INDUSTRY REPORT
Guidance On Climate-Related Issues
BULLETIN ON ADDRESSING CLIMATE-RELATED RISKS IN FINANCIAL STATEMENTS AND AUDITS
Formed by ISCA’s Auditing and Assurance Standards Committee (AASC) and Financial Reporting Committee (FRC) in 2022, the AASC-FRC ESG working group supports the profession in dealing with ESG implications relating to financial reporting and auditing in Singapore.
The working group issued Technical Bulletin 1: Addressing Climate-Related Risks in Financial Statements and Audits of such Financial Statements to highlight financial reporting and auditing implications arising from climate-related considerations. In addition, the bulletin includes an illustrative example of how climate-related risks could affect the application of the principles of financial reporting and auditing standards.
CLIMATE DISCLOSURE GUIDE
In April 2022, with the support of SGX, ISCA issued the ISCA Climate Disclosure Guide - Taking First Steps Towards Climate-related Disclosures. The guide helps Singapore-listed companies to meet SGX’s new requirements for climate reporting and other organisations to voluntarily adopt the Task Force on Climate-Related Financial Disclosures (TCFD) Recommendations.
The guide introduced TCFD Recommendations and provided practical considerations for implementing the TCFD Recommendations. The guide also features case studies of advanced adopters in Singapore and disclosure examples.
Guidance On Auditing And Assurance
SAP 2 (REVISED 2022) AUDITORS AND PUBLIC OFFERING DOCUMENTS
Statement of Auditing Practice (SAP) 2 provides guidance on the reporting auditor’s roles and responsibilities when engaged as a professional in a public offering exercise and general principles governing engagements relating to public offering documents. It includes a section on what reporting auditors should comment on in private reports on profit forecast (whereby the profit forecast is not prepared for inclusion in the prospectus) and also states that the engagement should be carried out in accordance with SSRS 4400 Engagements to Perform Agreed-Upon Procedures Regarding Financial Information and SAP 2.
As SSRS 4400 has been superseded by SSRS 4400 (Revised) Agreed-Upon Procedures Engagements, SAP 2 has been updated to align to SSRS 4400 (Revised).
AUDIT BULLETINS
Audit Bulletin 1: Revised SSRS 4400, Agreed-Upon Procedures Engagement summarises the key changes arising from SSRS 4400 (Revised). As the demand for agreed-upon procedures (AUP) engagements continue to grow, particularly in relation to the need for increased accountability around fundings and grants, this bulletin serves as a reference point for both practitioners and users of AUP reports.
Audit Bulletin 2: Bank Confirmations Through Digital Platforms highlights key considerations for the auditor when relying on bank confirmations which are initiated or obtained through digital platforms, where the entity’s management initiates and submits the bank confirmation request directly to the bank.
Audit Bulletin 3: Implementation of Quality Management Standards contains frequently asked questions to assist firms in the implementation of the quality management standards.
AGS 11 (REVISED 2022) COMFORT LETTERS AND DUE DILIGENCE MEETINGS
The engagement to provide a comfort letter in respect of the integrity of certain information disclosed in the investment circular, or to comment on changes in selected financial statement items subsequent to the latest period reported on in the reporting auditors’ report, must be carried out in accordance with SSRS 4400 and Audit Guidance Statement (AGS) 11 Comfort Letters and Due Diligence Meetings. Arising from the issuance of SSRS 4400 (Revised), AGS 11 was reviewed, and amendments were made to AGS 11 to enhance its clarity.
AUDITING AND ASSURANCE STANDARDS AND GUIDANCE
In 2022, ISCA issued new and revised Auditing and Assurance Standards:
- Conforming and consequential amendments to Other Singapore Standards1 as a result of the new and revised quality management standards
- Updated auditing and assurance pronouncements arising from revised legislation titles
In 2022, ISCA and the AASC AGS 1 Sub-Committee worked with the EDB and EnterpriseSG to develop and align the following illustrative reports to the requirements of SSRS 4400 (Revised):
- Appendix 5A: AUP Report in connection with an example of an EDB Grant Scheme
- Appendix 5B: AUP Report in connection with an example of an EDB Tax Incentive Scheme
- Appendix 5C: AUP Report in connection with the ESG Global Trader Programme
To support the profession in the implementation of the auditing standards, ISCA has issued the updated ISCA Audit Manuals.
1 Other Singapore Standards include: Singapore Standards on Assurance Engagements, Singapore Standards on Review Engagements, Singapore Standards on Related Services
Guidance On Financial Reporting
FINANCIAL REPORTING GUIDANCE 4
SGX had introduced a new regulatory framework for listing Special Purpose Acquisition Companies (SPACs) on its mainboard to give companies an alternative listing avenue.
Cognisant that the accounting of a SPAC transaction could be more complex than for a traditional initial public offering, ISCA issued Financial Reporting Guidance (FRG) 4 in November 2022 to provide guidance on key accounting considerations for SPACs under the SGX SPAC Listing Framework.
FINANCIAL REPORTING BULLETIN 9
Financial Reporting Bulletin (FRB) 9 Accounting Implications Of The Interest Rate Benchmark Reform In Singapore was issued in October 2021 to assist entities in their understanding of the accounting for financial instruments and hedge accounting affected by the replacement of interest rate benchmarks within these contracts.
In February 2022, FRB 9 was enhanced and updated as follows:
- Additional background information on Fallback Rate (Swap Offer Rate)
- New accounting consideration for the assessment of benchmark interest rates based on Singapore Overnight Rate Average compounded in advance meeting solely payments of principal and interest (SPPI) criterion
- New accounting considerations on the use of Fallback Rate (Swap Offer Rate) in financial contracts and hedge accounting
Guidance On Ethics
ETHICS PRONOUNCEMENT 100
ISCA revised its Ethics Pronouncement (EP) 100 Code of Professional Conduct and Ethics on 7 September 2022 to adopt four IESBA’s final pronouncements:
- Revisions to the Code Addressing the Objectivity of an Engagement Quality Reviewer and Other Appropriate Reviewers
- Revisions to the Fee-related Provisions of the Code
- Revisions to the Non-Assurance Services Provisions of the Code
- Quality Management-related Conforming Amendments to the Code
EP 100 (revised on 7 September 2022) also replaces extant paragraph SG410.4A with revised paragraph SG410.27A, applicable to audit firms with audit clients that are listed entities. In addition, it introduced a new term, “audit-related services”, in the Glossary.
EP 100 (revised on 7 September 2022) took effect from 15 December 2022.
ISCA also issued EP 100 Implementation Guidance 5 Frequently Asked Questions on Provision of Non-Audit Services to Listed Entities in October 2022 to assist professional accountants in public practice in fulfilling the requirements of revised paragraph SG410.27A of EP 100 (revised 7 September 2022).