Singapore, 11 June 2008...The Audit Committee Guidance Committee (ACGC) today released the findings of a survey of audit committee (AC) members of listed companies.  The ACGC commissioned the Singapore Management University (SMU) School of Accountancy to survey AC members on the practical difficulties and challenges that they face in discharging their duties, as well as the areas in which they would welcome practical guidance.  The survey was conducted from March to April this year.

2. AC members were polled on eight functional areas relating to AC duties: internal controls, financial reporting, internal audit, external audit, compliance with law and regulations, risk management, interested person transactions and fraud.  They were asked about the level of emphasis given by their ACs to these areas, the effectiveness of their ACs in reviewing these areas, the need for practical guidance on these areas and the adequacy of information from management in support of their ACs work in these areas. The key findings of the survey are as follows:

(a) Respondents indicated that their ACs gave the highest emphasis to Compliance with Law and Regulations, Financial Reporting and External Audit.  Risk Management received the lowest emphasis.

(b) Respondents also rated their ACs as most effective in Compliance with Law and Regulations, Interested Person Transactions and Financial Reporting, and least effective in Risk Management, Internal Controls and Fraud.

(c) Respondents identified Risk Management, Fraud and Internal Controls as areas where they would most like to have practical guidance.

(d) Respondents indicated that they would prefer practical guidance in the form of checklists of critical issues and best practice guides.

(e) Generally, respondents felt that they have been given adequate information from management to function effectively.  However, they indicated that they received the least adequate information in areas where their ACs were least effective, such as Risk Management, Internal Controls and Fraud. 

(f) Respondents also indicated that more training was needed in technical areas such as Risk Management, Accounting Standards and Taxation.

3. The survey, conducted by Associate Professor Leong Kwong Sin, Practice Associate Professor Themin Suwardy and Associate Professor Pang Yang Hoong, also sought respondents’ feedback more generally on the main challenges that they face as AC members. The key issues highlighted include challenges related to the internal governance of companies, particularly in the case of family-owned companies; the need to keep abreast with developments and changes in laws and regulations; and the need to upgrade their knowledge in the areas of accounting and finance.

4. ACs are generally able to fulfil key requirements in their scope of work.  Given the rapid changes in the business environment, and in audit and financial legislature, the survey is timely to highlight specific challenges that ACs face and allow the ACGC to develop clear practical guidelines for ACs. The survey findings will also enable companies to better understand and support the work of their ACs, in turn, raising the level of corporate governance of listed companies in Singapore.  SMU School of Accountancy is pleased to have supported the industry and the ACGC in this endeavour, said SMU Associate Professor Leong Kwong Sin.

5. Apart from commissioning this survey, the ACGC also conducted dialogue sessions with stakeholder groups such as the Singapore Business Federation, the Association of Small and Medium Enterprises, the Singapore Institute of Directors and the Institute of Certified Public Accountants of Singapore from February to April to gather their feedback. 

6. Mr Bobby Chin, the Chairman of the ACGC said: "We are encouraged by the good response from AC members to the survey as well as their strong interest in the practical guide for ACs. The feedback we have received from the survey and dialogue sessions helped confirm the areas of concern where more guidance is needed. It also showed that many AC members are keen to upgrade their knowledge.  This augurs well for the improvement of corporate governance practices of listed companies in Singapore. The ACGC will look closely into these findings as we move into the next phase of our work in drafting the practical guidance for ACs."

7. The executive summary of the survey findings is available here (123.4 KB).

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Notes to Editor:

The industry-led Audit Committee Guidance Committee was established on 15 January 2008 by the Monetary Authority of Singapore (MAS), the Accounting and Corporate Regulatory Authority and the Singapore Exchange Limited (SGX) to develop practical guidance for audit committees of listed companies. This is a key initiative announced by MAS and SGX in June 2007 to strengthen corporate governance practices of listed companies in Singapore.