26 February 2019
In his closing speech delivered on 16 January 2019 at the ACRA-SID-SGX Audit Committee Seminar, Mr Tan Boon Gin, CEO of Singapore Exchange Regulation (SGX RegCo) addressed some initiatives the Singapore Exchange (“SGX”) is considering in the area of audits. Mr Tan shared that SGX will be consulting the market before implementing these proposals.
Appointment of second auditor
Mr Tan highlights that there may be instances where there is a need for SGX to intervene in the appointment of auditors for a company listed on the Singapore Exchange Securities Trading Limited (“SGX-ST”), in the interests of the market as a whole. Therefore, SGX has put forward a proposal to provide a new power to SGX to require a company listed on the SGX-ST to appoint a second auditor, in addition to the existing statutory auditor appointed by the shareholders of the company, but only in exceptional circumstances. This will complement SGX’s current power to require the appointment of a special auditor who will typically only look into a specific area. SGX will require the second auditor to jointly sign off on the year-end audit of the company together with the existing statutory auditor.
Appointment of Singapore-based auditor
SGX is also considering a proposal to require all companies listed on the SGX-ST to appoint either a Singapore-based auditor or, in the case of a company with significant overseas operations with a foreign auditor, to appoint a Singapore-based auditor to jointly sign off on the year-end audit conducted by the foreign auditor. The proposal aims to increase regulatory traction, access to working papers and accountability.
Raising business and real estate valuation standard
Mr Tan shared that SGX has undertaken the following efforts to raise the overall standard of business and real estate valuations, an area of concern among shareholders, particularly minority shareholders:
- SGX has entered into a Memorandum of Understanding with the Singapore Accountancy Commission and the Institute of Valuers and Appraisers of Singapore, to promote the integrity of business valuations involving companies listed on the SGX-ST; and
- SGX worked with the Singapore Institute of Surveyors and Valuers in 2018 to produce a guide on real estate valuation for real estate investment trusts (REITs) and initial public offerings (IPOs). SGX intends to incorporate the guide into the SGX-ST Listing Rules.