Singapore's top regulatory body for public accountants yesterday issued an enhanced Code of Professional Conduct and Ethics.
The new code, which takes effect on Aug 1, provides better guidance for public accountants on how to evaluate independence and set safeguards.
To provide more transparency, public accountants are required to document their decisions on independence issues to show they have complied with the requirements.
Juthika Ramanathan, chief executive of the Accounting and Corporate Regulatory Authority (Acra), said the role of the profession in helping maintain a strong corporate governance regime in Singapore is especially crucial in the current challenging environment.
'The enhanced code will further help strengthen the profession's foundation to carry out its public interest role and ensure that public accountants pro-actively safeguard their independence and professionalism, both in fact and in the eyes of the public,' she said.
The enhanced code places greater expectations on public accountants to pro-actively identify and eliminate potential threats to their independence.
A general rule is that public accountants should not engage in any business, occupation or activity that might impair integrity or objectivity.
They should identify circumstances that could pose a conflict of interest or relationships that could bias or unduly influence professional judgment.
For instance, a public accountant, partner or employee of the accounting firm should avoid serving as an officer or director on the board of an assurance client. Nor should an accounting firm or accountant accept gifts or hospitality from an assurance client.
An accounting firm should not accept a contingent fee from an audit client that is a listed company, unless such remuneration is provided for by law.
Firms belonging to a network need to consider their independence from the audit clients of other network firms, as well as relationships between their assurance clients and other network firms.
The enhanced code is a result of a public consultation process in 2007 and 2008, and took into account the views of professional bodies, accounting firms and auditors.
It is also based on the Code of Ethics of the International Federation of Accountants (IFAC), a global benchmark for the international accounting profession.
The current IFAC code has rules that impose stricter independence requirements for audits of listed entities, especially with regard to non-assurance services, auditor rotation and fees.
Acra said application of the listed entities framework would not be extended to entities of public interest yet, though it is encouraged.
In response to public feedback on custody of client assets, the enhanced code allows auditors to hold money or other assets for non-audit clients only for restricted purposes - providing accounting-related, corporate secretarial and regulated financial services.
The Institute of Certified Public Accountants of Singapore (ICPAS) provides guidelines on how the code applies to accountants in business, who are responsible for the preparation and reporting of financial and other information.
