The Singaporean regulator, Accounting and Corporate Regulatory Authority (ACRA), has adopted a two phase approach for the implementation of Singapore’s new companies act.
The new act brings over 200 legislative amendments to the former act. The regulatory authority said 40% of those will be implemented by 1 July 2015 and the rest of the legislative amendments are expected to come into effect in the first quarter of 2016, with the exact date still to be confirmed.
Amongst the amendments that will come into effect by July this year is the introduction of small company audit exemptions. Under the act a private company will be exempted from doing an audit if it meets at least two of the three following criteria: total annual revenue of not more than S$10m (US$7.2m); total assets of not more than S$10m; and the number of employees not exceeding 50.
Talking to International Accounting Bulletin (IAB) for the magazine’s first country survey on Singapore, RSM Chio Lim chief executive Chio Kian Huat said that the change won’t impact the bigger firms. "Our target clients are above the S$10m threshold so we won’t be impacted," he said.
Baker Tilly TFW managing partner Sim Guan Seng said his firm had prepared for the change and moved away from the lower end of the market. He believes the audit market will continue to be competitive, but that at the same time the number of players in the market might reduce in the future because of the increasing regulatory pressure placed on small and medium practices.
This is a thought shared by BDO Singapore managing partner Frankie Chia who said the audit exemption could have a knock-on effect on the transaction market.
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"With the rising thresholds I foresee that the smaller practices may either change their operations from audit to more accounting services," he said. "Or some might eventually be acquired by the larger entities."
But when it comes to the impact of the new law on his firm’s audit service lines, Chia, like other firm leaders of the mid-tier, is adamant it won’t change much.
"We don’t compete with the smaller practitioners, but rather with the Big Four," he says.