Auditing and Assurance

NEW AND REVISED AUDITING AND ASSURANCE STANDARDS

In 2024, ISCA issued the updated SSA 700 (Revised) and SSA 260 (Revised). The updates were due to revisions to the ACRA Code of Professional Conduct and Ethics for Public Accountants and Accounting Entities, which require a firm to publicly disclose when it has applied the independence requirements for public interest entities.

NEW REPORT AND REVISIONS TO AGS 1

ISCA, with the support of the Auditing and Assurance Standards Committee (AASC) AGS 1 Sub-Committee, worked with the EDB to update the illustrative AUP Report in connection with an example of an EDB Tax Incentive Scheme. The additional procedures relate to checking of tax incentive conditions such as qualifying business expenditure, fixed asset investments and employment conditions.

ISSUANCE OF AUDIT BULLETINS

Audit Bulletins (ABs) are a category of publication issued under the purview of the AASC. They are informative and educational to highlight pertinent topical issues to the auditing profession. During the year, ISCA issued the following ABs:

• AB 4: Non-Consolidation of Subsidiaries – Considerations for the Auditor’s Report
  ACRA’s 2023 Audit Regulatory Report highlighted that where an audited parent entity does not present consolidated financial statements as required by FRS 110 Consolidated Financial Statements, the auditor needs to assess if this calls for a modification to the audit opinion. AB 4 was issued to highlight key considerations for the auditor when assessing the effects of non-consolidation of subsidiaries on the auditor’s report, including illustrative examples on the types of audit opinions that may be issued.
• AB 5: Reporting on Grants and Incentive Schemes – Considerations for Government Agencies
  To support government agencies in establishing reporting requirements for grants and incentive schemes, AB 5 was developed to raise awareness on the different frameworks available for reporting on grants and incentive schemes. AB 5 also includes frequently-asked questions by grantors and questions for grantors to consider in determining which framework to apply. Through AB 5, practitioners can also better understand grants reporting under the various frameworks.
• AB 6: Key Revisions to Group Audits – SSA 600 (Revised) SSA 600 (Revised)
  Special Considerations – Audits of Group Financial Statements (Including the Work of Component Auditors) reshapes how group audits are carried out, including a new risk-based approach and enhanced direction and supervision of component auditors. To support the implementation of the revised standard, ISCA issued AB 6 to raise awareness of the key changes and provide guidance to address implementation challenges, including applying the new risk-based approach in planning and performing a group audit engagement.
  

Financial Reporting

COLLABORATION WITH ACRA ON FINANCIAL REPORTING SURVEILLANCE PROGRAMME

ISCA is in its 10th year of collaboration with ACRA on its Financial Reporting Surveillance Programme (FRSP). The FRSP guides companies in meeting the requirements of the accounting standards, which provide investors with reliable and meaningful financial statements for decisionmaking. 

ISSUANCE OF FINANCIAL REPORTING BULLETINS (FRBs)

• FRB 3 (Revised April 2024) Classification of Liabilities as Current or Non-Current (Amendments to SFRS(I) 1-1)

FRB 3 (Revised), published on 30 October 2020, guides readers in understanding and applying the amendments to SFRS(I) 1-1 Presentation of Financial Statements issued in 2020 (“2020 amendments”) to certain common scenarios in Singapore such as long-term loans with callable clauses and term loans with rollover facilities.

FRB 3 (Revised April 2024) has been issued to incorporate the clarifications to the 2020 amendments for SFRS(I) 1-1, which together with the 2020 amendments, would be effective for annual reporting periods beginning on or after 1 January 2024 retrospectively.

One salient clarification is on the classification of liabilities with the right to defer settlement which are conditional on the compliance with specified conditions (or covenants). Only covenants which an entity must comply with on or before the end of the reporting period will affect a liability’s classification as current or non-current.

• FRB 9 (Revised June 2024) Accounting Implications of the Interest Rate Benchmark Reform in Singapore

The global shift away from interbank offered rates and corresponding move towards the adoption of alternative, nearly risk-free benchmark rates is commonly known as Interest Rate Benchmark Reform (IBOR Reform). In Singapore, Singapore Overnight Rate Average (SORA) will replace Swap Offer Rate (SOR) and Singapore Interbank Offered Rate (SIBOR) as the alternative interest rate benchmark by 2024. This will affect all existing Singapore dollar-denominated financial products referencing SOR or SIBOR in their contracts.

ISCA issued FRB 9 Accounting Implications of The Interest Rate Benchmark Reform in Singapore on 14 October 2021. It was subsequently revised on 21 February 2022 and 16 January 2023 in accordance with regulatory updates related to IBOR Reform. FRB 9 shares accounting considerations on specific matters 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. 

With the cessation of SIBOR at the end of 2024, FRB 9 (Revised June 2024) was updated with the transition approach and accounting considerations for SIBOR loans transitioning to SORA. SORA is the key interest rate benchmark that Singapore banks now use to price most floating-rate loans. All entities are urged to review and consider the accounting implications, if any, from the transition of their existing SIBOR loan portfolio if they have not done so

Certain entities may continue to have financial contracts which have not transitioned to SORA such as those referencing Fallback (SOR) and maturing before 31 December 2024. In such cases, entities may consider reviewing the applicability of the reliefs provided under SFRS(I) 9 Financial Instruments.

• FRB 11 Accounting of Carbon Credits: From the perspective of a buyer/holder

Since Singapore’s implementation of the carbon tax regime, entities are increasingly looking to using carbon credits to reduce carbon emissions and/or meet sustainability targets. Questions about the definition of carbon credits and the appropriate accounting treatment and reporting of carbon credits have emerged. 

ISCA issued FRB 11 to aid entities in understanding carbon credits, and the key considerations that the entity should have in selecting the most appropriate accounting standard under SFRS(I) to apply for voluntary purchases of carbon credits.

Ethics

NEW AND REVISED ETHICS CODE

ISCA revised its Ethics Pronouncement 100 “Code of Professional Conduct and Ethics” (EP 100) in August 2024 to adopt two IESBA final pronouncements, “Revisions to the Definitions of Listed Entity and Public Interest Entity in the Code” and “Technology-related Revisions to the Code”. Effective 15 December 2024, the Singapore definition of “public interest entity” (PIE) in the Glossary of EP 100 was revised to clarify on the entities that would be considered as PIEs locally. 

REVISED IMPLEMENTATION GUIDANCE

EP 100 Implementation Guidance 4 “Clarification on Financial Institutions Considered as Public Interest Entities” (EP 100 IG 4) was first issued on 14 October 2020 to clarify the scope of entities that falls within the definition of a financial institution (FI) in EP 100. 

ISCA issued EP 100 IG 4 (Revised 2024) “Clarification on Public Interest Entities in Singapore” to clarify on entities that would fall within the scope of the revised SG PIE definition in the Glossary of EP 100 (revised on 8 August 2024). 

ETHICS AWARENESS SERIES

ISCA published an online course in May 2024 to share on the proposed International Ethics Standards for Sustainability Assurance (including International Independence Standards) (IESSA).

Specialised Industries

ISCA X IAI: NEW INSURANCE CONTRACTS STANDARD WEBINAR

ISCA’s Insurance Committee (INS) organised a live webinar with IAI in June 2024, in support of the implementation of International Financial Reporting Standards (IFRS) 17 Insurance Contracts standards. 

Sustainability Reporting

ISCA aims to equip members and industry professionals with practical knowledge and insights on sustainability reporting and careers. 

We held a workshop Scope 3 GHG Emissions: Accounting and Operational Carbon Neutrality, part of a series designed to share actionable insights on climate-related topics. Speakers from Schneider Electric, Ms Wei Linyun, Vice President, Sustainability and Business Development, and Mr Alister James Stewart, Principal at Schneider Electric’s Sustainability Business, shared suitable approaches, methodologies, and tools for managing Scope 3 emissions, before joining a panel discussion about operational carbon neutrality with Mr Srikkanth Ramachandran from PwC Singapore and Mr Jeremy Phua from Deloitte, who also serves as Deputy Chairman of ISCA SCCC’s Sustainability Excellence Sub-Committee. 

ISCA provided comment letters to the following Consultation Papers (CP), Exposure Drafts (ED) and Stakeholder Questionnaire (SQ) issued by international standard-setters such as the IASB, IAASB, IESBA and ISSB as well as those issued by local regulators. 

International Auditing and Assurance Standards Board (IAASB)

• ED: Proposed International Standard on Auditing (ISA) 240 (Revised) The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements and Proposed Conforming and Consequential Amendments to Other ISAs
• ED: Proposed Narrow Scope Amendments to International Standards as a Result of the Revisions to the Definitions of Listed Entity and Public Interest Entity in the IESBA Code

International Accounting Standards Board (IASB) 

• ED: Financial Instruments with Characteristics of Equity – Proposed amendments to IAS 32, IFRS 7 and IAS 1
• ED: Business Combinations – Disclosures, Goodwill and Impairment (Proposed amendments to IFRS 3 and IAS 36)
• ED: Contracts for Renewable Electricity (Proposed amendments to IFRS 9 and IFRS 7)
• ED: Amendments to IFRS 19 Subsidiaries without Public Accountability: Disclosures
• ED: Climate-related and Other Uncertainties in the Financial Statements (Proposed illustrative examples) 

International Ethics Standards Board for Accountants (IESBA)

• ED: Using the Work of an External Expert
• ED: Proposed International Ethics Standards for Sustainability Assurance (including International Independence Standards) (IESSA) and Other Revisions to the Code Relating to Sustainability Assurance and Reporting 

Monetary Authority of Singapore (MAS) 

• CP: Proposed amendments to requirements for preparation of financial statements and reports under the Code on Collective Investment Scheme

Singapore Exchange (SGX)

• CP: Sustainability Reporting: Enhancing Consistency and Comparability
  

The SMP community is an integral part of the ISCA family. Our tailored initiatives aim to help SMPs embrace the future with confidence. 

SMP CENTRE OF EXCELLENCE

ISCA helps drive quality, digitalisation, upskilling, and internationalisation of SMPs via the SMP Centre of Excellence. The centre provides a range of services and resources for audit practices, focused on the key areas: quality, digital, practice management, and skills.

Raising Audit Quality

in maintaining high-quality standards via the Quality Assurance Review Programme and the new Voluntary Compliance Programme (VCP). The VCP aims to encourage and support audit firms’ compliance with the quality management standards. Through this certification programme, firms which pass the review can increase their competitive advantage and build trust with clients and stakeholders.

Enabling Digital Transformation Through New QM Dashboard And Tech Fairs

To help firms manage their quality management system all in one place and automate workflows to aid efficiency, we launched the ISCA-Skybots Quality Management (QM) Dashboard in collaboration with Skybots Singapore, which garnered a lot of interest. We also provided trainings to support firms in the implementation, especially on the monitoring aspects of the quality management system.

ISCA’s Career Growth Centre supports members and aspiring accountants in their professional development journey. To date, the centre has held over 30 consultation sessions, providing jobseekers with practical tips from resume writing to interviewing skills, as well as connecting them with close to 50 job-matching opportunities. 

We also partnered with organisations such as Michael Page and NTUC’s e2i to share resources and knowledge.