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ASC allows more time to implement FRS 110

The Accounting Standards Council (ASC) announced on 31 August that it will allow stakeholders more time to implement FRS 110 Consolidated Financial Statements, FRS 111 Joint Arrangements, FRS 112 Disclosure of Interests in Other Entities, FRS 27 Separate Financial Statements and FRS 28 Investments in Associates and Joint Ventures. The mandatory effective date of the Relevant Standards is deferred for a year from annual periods beginning on or after 1 January 2013 to annual periods beginning on or after 1 January 2014. Earlier application is permitted. More details are available at http://www.asc.gov.sg

ACRA issues Audit Practice Bulletin No. 2of 2012: Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements (Part 2)

Part 2 of the series of Audit Practice Bulletins on Singapore Standard on Quality Control (SSQC) 1 Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements discusses ACRA’s inspection observations on the second and third element of SSQC 1 – Relevant Ethical Requirements and Acceptance and Continuance of Client Relationships and Specific Engagements respectively. The bulletin, issued in September, can be downloaded from http://www.acra.gov.sg

ACRA launches new Training Programme for Company Directors

ACRA’s new training programme for company directors was held in September. The Directors Proficiency Programme (DPP) saw company directors from small and medium enterprises being taught essential statutory requirements under the Companies Act and given e-filing guidance. Using case studies, participants in the workshop-style course  participated in interactive discussions through the sharing of best practices and common mistakes to avoid.  The programme was developed in partnership with the Institute of Certified Public Accountants of Singapore (ICPAS), the Singapore Institute of Directors (SID), and the Singapore Association of the Institute of Chartered Secretaries & Administrators (SAICSA).

The DPP is part of ACRA’s on-going efforts to promote a high level of corporate compliance in Singapore. More information is available at http://www.acra.gov.sg

MAS issues Consultation Paper on Amendments to the Insurance Act

The last major amendment of the Insurance Act (Cap 142) (“IA”) was in 2004. In this Consultation Paper, issued in September, MAS is proposing amendments to the IA to take into account regulatory and market developments since then, and to align where appropriate, the regulatory framework for insurance with that of other financial activities regulated by MAS.
This consultation paper sets out the legislative amendments to the IA that will give effect to the changes, as well as some other proposed changes not previously consulted on. MAS invites interested parties to forward their views and comments on the draft Insurance (Amendment) Bill by 22 October 2012. MAS expects these amendments to be finalised and to come into effect in the first half of 2013. More information is available at http://www.mas.gov.sg

Singapore and Vietnam Sign a Second Protocol to revise standing Agreement for the Avoidance of Double Taxation

Mr Tharman Shanmugaratnam, Deputy Prime Minister and Minister for Finance, and Mr Vuong Dinh Hue, Minister of Finance for Vietnam signed a Second Protocol in September to amend the existing Singapore-Vietnam Avoidance of Double Taxation Agreement (DTA). The amendments include, among others, revisions to the Permanent Establishment, Dividends, Interest and Capital Gains Articles. The revised DTA also includes the internationally agreed Standard for exchange of information. The changes are expected to enhance trade and investment flows and elevate the level of tax cooperation between Singapore and Vietnam. It will enter into force after ratification by both countries. The full text of the Protocol is available at http://www.iras.gov.sg

ACRA releases two Key Reports

The Accounting and Corporate Regulatory Authority (ACRA) held its annual flagship event, the Public Accountants Conference (PAC), on 16 August 2012. Over 800 audit staff and related stakeholders discussed and offered solutions to address key challenges confronting the accountancy profession; including the talent crunch, raising audit quality and boosting productivity.
 
The event saw the release of two key reports:

• Survey on Talent Attraction and Retention in Large Audit Firms
• ACRA’s Sixth Practice Monitoring Programme (PMP) Public Report.

The survey of audit staff is one of the most in depth surveys of audit staff ever undertaken in Singapore. Commissioned by ACRA and conducted by ACCA, nearly 1200 audit staff were asked what gives them job satisfaction and what will make them stay or go. The Sixth Practice Monitoring Programme (PMP) Public Report highlights key findings of ACRA’s audit inspections on audit firms and other activities to promote audit quality.
 
The two reports can be downloaded from http://www.acra.gov.sg

ACRA issues Audit Practice Bulletin No. 1 of 2012: Quality Control for Firms that Perform Audits and Reviews of Financial Statements, and Other Assurance and Related Services Engagements (Part 1)

Singapore Standard on Quality Control (SSQC) 1 Quality Control for Firms that Perform Audits and Reviews of Financial Statements and Other Assurance and Related Services Engagements establishes basic principles and essential procedures and provides guidance regarding a firm’s responsibilities for its system of quality control.

Under the proposed regime where additional conditions are imposed on firms that audit or review public interest entities (PIE), one of the proposed pre-conditions in assessing a firm’s capacity and preparedness to conduct a PIE engagement is the demonstrated compliance with SSQC 1.  In this regard, ACRA has planned a series of Audit Practice Bulletins (APBs) to provide useful information to aid firms in the implementation of the system of quality control in each of the six overlapping SSQC 1 elements.  Each APB will discuss some of the observations based on ACRA’s inspection of firms which audit PIEs and also highlight areas for improvement in line with best practices.

This APB, issued in August, discusses the first element of SSQC 1 - Leadership Responsibilities for Quality within the Firm or ‘tone at the top’ which is regarded as the most important element of a strong quality control system within a firm and a key driver of audit quality.

The bulletin can be downloaded from http://www.acra.gov.sg

ACRA launches New Product

ACRA launched a new business information product in August known as the Corporate Compliance and Financial Profile (CCFP). This is an all-in-one electronic report that provides at a quick glance, the financial and business health of a company. Professional firms can use the CCFP for a quick reference check on a business partner, client or company, find out compliance records of the clients and/or partners and develop a competitive analysis on businesses they are interested in. The key features of the CCFP are:

• Business Profile
• Compliance Rating Status
• Financial Profile (based on up to 3 years of comparative data)
• Financial Ratios
• Audit and Directors’ Opinion

For more information, please visit http://www.acra.gov.sg

MAS issues Consultation Paper on Legislative Changes relating to requirements on Key Executive Persons and Directors for Insurers

Under the Insurance Act (Cap 142) (IA), insurers are required to seek prior approval from the Monetary Authority of Singapore (MAS) before appointing the directors of the board and key executive persons, namely the principal officer (PO), the Appointed Actuary (AA) and the Certifying Actuary (CA). The roles, responsibilities and approval process for the appointment of POs and directors are set out in MAS Notice 106, while those for actuaries are prescribed in the Insurance (Actuaries) Regulations 2004 (Actuaries Regulations).

MAS has reviewed the provisions relating to the appointment of directors and key executive persons in the IA, and set out the proposed changes to the IA in this consultation paper. This consultation paper also sets out the proposals to prescribe the roles and responsibilities of all key executive persons in a new set of regulations, to repeal the Actuaries Regulations, and to revise MAS Notice 106 to make it applicable to the appointment of directors of the board and all key executive persons.

The consultation period ended on 14 September 2012.

More details are available at http://www.mas.gov.sg

MAS Implements Enhanced Regulatory Regime for Fund Management Companies

The Monetary Authority of Singapore (MAS) has announced that the implementation of an enhanced regulatory regime for fund management companies (FMCs) with effect from August 2012.  Amendments have been made to the Securities and Futures (Licensing and Conduct of Business) Regulations, Securities and Futures (Financial and Margin Requirements) Regulations and Financial Advisers Regulations.

Under the enhanced regulatory regime, all FMCs will have to meet enhanced business conduct and capital requirements. These include rules requiring independent custody and valuation of investor assets, as well as requirements for FMCs to undergo independent annual audits by external auditors and having an adequate risk management framework commensurate with the type and size of investments managed by the FMCs. A new category of Registered Fund Management Companies (RFMC) will replace the current Exempt Fund Manager (EFM) regime. RFMCs may serve up to 30 Qualified Investors and manage up to S$250 million in assets under management.  All other FMCs will have to apply for a license.

More details are available at http://www.mas.gov.sg

MAS asks for independent review of SIBOR

The Monetary Authority of Singapore (MAS) has directed banks to look into their processes regarding the setting of the benchmark interbank borrowing rates. It has also asked for an independent review to be done. This follows investigations launched in the US and UK into the attempted rigging of the London Interbank Offered Rate (LIBOR) by banks. The probe will focus on two prominent rates in Singapore, the Singapore Interbank Offered Rate (SIBOR) and the Swap Offer Rate (SOR). More details will be available at http://www.mas.gov.sg

Singapore CFO Institute and ACCA jointly issue Report

A report, The Value of the Modern CFO – Board Directors’ Perspective, was jointly issued by the Singapore CFO Institute and ACCA in June at CFO Connect, a networking event organised by the Singapore CFO Institute. The report was based on a discussion at a roundtable of Board Directors on the attributes, competencies, specific actions and deliverables expected from the modern day CFO. The report can be downloaded from http://www.acra.gov.sg

MAS Announces Changes to the Qualifying Full Bank Programme

The Monetary Authority of Singapore (MAS) announced changes in June to its Qualifying Full Bank (QFB) programme to encourage foreign banks to deepen their roots in Singapore in a way that strengthens Singapore’s financial stability. MAS will require existing QFBs that are important to the domestic market to locally incorporate their retail operations.

In determining whether a QFB will be required to locally incorporate its retail operations, MAS will review factors such as the QFB’s market share of domestic deposits. MAS will consult QFBs on the criteria for requiring local incorporation. For QFBs that operate as local subsidiaries, a very small number may become significantly rooted in Singapore over time. MAS will consider granting such QFBs an additional 25 places of business, of which up to 10 may be branches. This will be part of an overall package negotiated with these QFBs’ home countries which are free trade agreement (FTA) partners with Singapore. These QFBs will be able to operate up to 50 places of business in Singapore.

More details are available at http://www.mas.gov.sg

Memorandum of Understanding between the MAS and the Bank of Thailand

The Monetary Authority of Singapore (MAS) and the Bank of Thailand (BOT) signed a Memorandum of Understanding (MoU) in June to establish a reciprocal cross-border collateral arrangement. The arrangement will help maintain financial stability in both countries. Under this arrangement, eligible financial institutions operating in Singapore may obtain Singapore Dollar (SGD) liquidity from MAS by pledging Thai Baht (THB) or Thai government and central bank securities with MAS. Similarly, eligible financial institutions operating in Thailand may obtain THB liquidity from BOT by pledging SGD or Singapore government and central bank securities. More details are available at http://www.mas.gov.sg

MAS issues Consultation Papers
 
The Monetary Authority of Singapore (MAS) released a consultation paper in June on the review of the Risk-Based Capital (RBC) framework for insurance business. The RBC framework was first introduced in Singapore in 2004. It adopts a risk-focused approach to assessing capital adequacy and seeks to reflect the relevant risks that insurance companies face. MAS is reviewing the framework, given evolving market practices in the insurance industry and in international accounting and regulatory standards.  The review aims to improve the comprehensiveness of the risk coverage and risk sensitivity of the framework, and is not expected to result in a significant overhaul to the current framework.

The consultation paper seeks feedback on the additional risks to be included, the methodology to better calibrate the risks covered, as well as the implementation schedule.

It is available on the MAS website (www.mas.gov.sg) and comments should reach MAS by 25 August 2012. Interested parties may email their comments to rbc2con@mas.gov.sg.

The Monetary Authority of Singapore (MAS) also released another two consultation papers on Technology Risk Management (TRM) in June. The first paper is a set of enhanced guidelines on technology risk management and the adoption of sound security practices.  The second paper is a Notice on Technology Risk Management which sets out the legal requirements for financial institutions.   
 
MAS is proposing to issue a Notice on Technology Risk Management to define and enforce a set of mandatory IT requirements for the financial industry.  The Notice stipulates requirements for a high level of robustness and integrity of critical IT infrastructure and systems. It also specifies the requirement for financial institutions to implement IT controls to protect customer information from unauthorised access or disclosure.
 
The consultation ended on 16 July 2012.  More details are available at http://www.mas.gov.sg
 

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