Board directors believe that communications from auditors can be enhanced
Directors affirmed the value of audit and are aware of the importance of differentiating auditors based on quality rather than price.
Online PR News – 02-August-2012 –Singapore Institute of Directors (SID) and the Association of Chartered Certified Accountants (ACCA) organised two high-level roundtable discussions in March and April 2012 to consolidate the views of Board Directors from various industries on the attributes, competencies, and deliverables expected from external auditors. The report, “Enhancing the Value of Audit – Board Directors’ Perspective,” was released today at a press conference organised by SID and ACCA.
The directors believed that the informative value of communications from auditors can be enhanced. Specifically, they would like to seek more subjective statements from the auditors including their assessments of the overall control environment and the ‘tone at the top.’ In terms of auditors’ communications to external stakeholders such as investors, it was felt that any extension will need to be implemented with corresponding education of users to prevent information being interpreted out of the proper context.
The directors at the roundtables viewed auditors not only as financial professionals but also specialists in other related areas and were keen to draw on their knowledge and skills if faced with future complexities of new businesses. In this context, some of the directors raised concerns about one of the proposals put up by the European Commissioner (EC) to distil the bigger audit firms into ‘pure audit’ outfits, arguing that such narrow-based firms may lack the multitude of skill sets needed to fully understand and address the issues associated with complex businesses today, and to conduct the audit in a comprehensive manner.
A few directors conceded that a key concern in Singapore is with how auditors are not able to allocate and spend sufficient time to fully comprehend audit issues and address them properly given the lower audit fees level. The directors clarified that boards are aware of the importance of differentiating auditors based on quality rather than price, and that they are not out to seek the lowest audit fees, but relevant experience, a good-fit and demonstrable values from the auditors.
Wilson Woo, President of ACCA Singapore branch said, “It is very important for the lines of communication between external auditors and the board be kept open and transparent. Both parties need to work closely together to ensure that information that is communicated to stakeholders is fully understood. Where there are areas for improvements, these should not be viewed as negative or alarming but seen as necessary recommendations to take in order to improve business practices and productivity.”
• Some directors at the roundtables sensed that auditors were not communicating freely due to liability concerns. In line with the discussion around expanding auditors’ roles and communications, the directors deliberated the need to review the auditors’ liability regime.
More details of the report “Enhancing the Value of Audit – Board Directors’ Perspective” can be found on the SID website and ACCA website at, http://www.singapore.accaglobal.com/about/public_affairs_old/releases/singapore/ and http://www.sid.org.sg/uploads/Enhancing_the_VOA-SID.pdf.
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