Welcome Address by ISCA Chief Executive Officer Mr Lee Fook Chiew at the ISCA Practitioners Conference on 1 June 2018 at Fairmont Ballroom, Fairmont Singapore

ISCA President, Mr Kon Yin Tong

Distinguished Guests

Ladies and Gentlemen 

A very good morning to all of you and a warm welcome to the ISCA Practitioners Conference 2018. I am happy to see so many of you here at the Institute’s flagship event for public accountants and audit professionals. In fact, I am told that we have more than 400 delegates who have signed up for the Conference. Thank you for your support. 

The Practitioners Conference is the second instalment of ISCA’s Singapore Accountancy and Audit Convention Series and it focuses on the audit profession in Singapore. We are honoured to have as our Guest-of-Honour, Ms Indranee Rajah, Minister in the Prime Minister's Office, Second Minister for Law, Finance and Education, who will be joining us today. 

We are also pleased to have the Accounting and Corporate Regulatory Authority and the Singapore Accountancy Commission as our Strategic Partners for the Conference. Today, we have curated an exciting line-up of interesting topics delivered by expert speakers. We hope you will find the programme line-up beneficial and captivating. 

Steve Jobs once said “Be a yardstick of quality. Some people aren’t used to an environment where excellence is expected”.  Likewise, the audit profession must be a yardstick of quality and embrace excellence. Public expectations of auditors are high as auditors have a responsibility to serve the public interest. To meet these expectations, auditors must produce high-quality audit work at all times and this message must be ingrained in every audit professional. 

The theme of this year’s Conference, “Coming to the Fore - Inspiring Quality, Creating Value”, highlights the principles of quality and value, which are close to the hearts of everyone present.  High-quality audits enhance the credibility of financial statements. This in turn strengthens stakeholders’ trust and confidence in financial reporting, and support and reinforce the financial stability of economies. For Singapore to maintain its status as a reputable international financial centre, we cannot compromise on audit quality. The profession has made huge investments in improving audit quality, through training, technology and innovation, and is expected to continue to do so.

Value is equally important to the audit profession. To provide more than just a statutory audit, the profession is constantly searching for opportunities to deliver added value to clients, to improve the clients’ business operations, while maintaining auditor independence. 

With this in mind, I would like to touch on three key aspects of today’s Conference – Technical, Technology and Ethics:

(1)    On Technical: We will pay special attention to cryptocurrencies;

(2)    In the area of Technology: Our focus will be on leveraging technology to cope with the changing expectations in the audit landscape and to add value to stakeholders; and on

(3)    Ethics:  Auditors are expected to be “whiter than white”, whether it is in combating money laundering or fighting corruption.

Cryptocurrencies like bitcoin continue to be the talk of the town.  High returns make cryptocurrencies a tempting investment proposition. At the same time, their volatile nature cannot be taken lightly. Just a few days ago, 1 bitcoin was equivalent to about USD7,500. If you compare this to the price in December 2017 where it reached a record high of about USD17,000, investing in bitcoin is perhaps not for the faint-hearted.

Such has been the anxiety over the see-saw pricing of cryptocurrencies that discussions over regulating these digital currencies have gathered momentum.   Recently, Thailand has enacted strict regulations on cryptocurrency transactions and initial coin offerings, following the likes of China. 

For auditors, their concern would lie in the accounting and auditing of these cryptocurrencies. Unfortunately, there is not much guidance available in the market right now. Even the international accounting and auditing standard-setting bodies have been quite lukewarm in terms of coming forward to address the matter. This has posed a new challenge for the audit profession. To help us understand the issues surrounding this emerging topic, we are delighted to have two partners from Ernst & Young, Ms Seah Li Yun and Mr Adam Gerrard, who will lead us in identifying the relevant risks.     

On a related note, we have a presentation on cybersecurity risk by PwC Singapore later this morning. Yin Tong will share more about this important and relevant topic in his address. 

In the area of accounting standards, 2018 is a challenging year for the accountancy profession.  I am sure all of you are aware of the “triple-threat” accounting standards that will come into effect in 2018 and 2019, namely FRS 109 Financial Instruments, FRS 115 Revenue from Contracts with Customers and FRS 116 Leases. 

As auditors, your clients expect you to be experts in accounting and auditing and turn to you for help. Hence, it is of utmost importance that we know these new standards and changes well.  This applies not only to advising clients on the accounting aspects, but also to undertaking an audit on them. At last year’s ISCA Quality Assurance Seminar, Mr Ng Kian Hui from BDO LLP shared about FRS 115. This year, on the back of positive feedback on last year’s presentation, we are pleased to welcome Kian Hui back to share with us FRS 116 from the auditor’s perspective. 

Technology disruption is another hot topic. As companies adopt new technologies, boards of directors or management may expect the same of their auditors.  Hence, the audit profession must move in tandem with clients’ expectations. 

This afternoon, Xero and Ingenique Solutions will shed more light on how auditors can leverage technology. Xero will demonstrate the efficiencies made possible by technology that will benefit both you and your small business clients. Ingenique will touch on using technology to enhance processes for anti-money laundering and countering the financing of terrorism, which brings me to the third aspect – ethics. 

Anti-Money Laundering and Countering the Financing of Terrorism continue to feature high up on the ethical responsibilities of auditors. Right after this, ACRA will share key observations from their EP 200 inspections as we learn how the profession has performed in terms of developing and implementing proper internal policies, procedures and controls to keep criminals involved in money laundering and terrorist financing away. 

Singapore is widely recognised for its efficient and squeaky clean public service. In Transparency International’s Corruption Perceptions Index for 2017, Singapore ranked 6^th overall in terms of being the least corrupt nation. As auditors, you can play a critical role in detecting corrupt practices. More importantly, we must have the moral courage to report suspicious transactions.  

The Corrupt Practices Investigation Bureau (CPIB) will share more on the regulations relating to corruption, implications to auditors, and corruption prevention measures later today.     

Against this setting, I would like to share some of the initiatives of our ISCA Auditing and Assurance Standards Committee (or AASC). The AASC is committed to spearheading initiatives to enhance audit quality and create more value in audits. This includes development of reference materials to provide practical guidance to the audit profession. 

I would like to draw your attention to two publications recently produced by the AASC.  One is an FAQ relating to the implementation of the new and revised auditor reporting standards. The other FAQ covers the auditor’s report on financial statements prepared in accordance with Singapore Financial Reporting Standards (International). You can find these publications in your delegate pack. The AASC developed these publications based on feedback received from practitioners on the issues they have encountered. 

I hope you enjoy the programme we have lined up for you today. I wish you all a fruitful day and have a wonderful weekend ahead.  Thank you.