The Role of ACRA in Regulating Auditors and Ensuring Financial Reporting Standards

Singapore has built a reputation as one of the most trusted and well-regulated financial hubs in the world. A significant reason behind this confidence is the country’s strong governance and regulatory framework in financial reporting and auditing. At the heart of this system is the Accounting and Corporate Regulatory Authority (ACRA), which plays a critical role in regulating auditors and upholding high financial reporting standards.

In this article, we explore the functions of ACRA, how it regulates audits in Singapore, the standards auditors must follow, and how these mechanisms ensure transparency and confidence in the financial system. For businesses, audit professionals, and investors, understanding ACRA’s role is vital to navigating the corporate landscape in Singapore.

What is ACRA?

ACRA stands for the Accounting and Corporate Regulatory Authority. It is the national regulator of business entities, public accountants, and corporate service providers in Singapore. ACRA was formed in 2004 by the merger of the Registry of Companies and Businesses (RCB) and the Public Accountants Board (PAB).

Its core responsibilities include:

• Registering business entities and public accountants

• Regulating auditors and ensuring audit quality

• Enforcing compliance with accounting and auditing standards

• Promoting good corporate governance and financial transparency

By overseeing these areas, ACRA ensures that Singapore’s business environment remains credible and internationally competitive.

The Role of ACRA in Regulating Auditors in Singapore

Auditors in Singapore play a key role in providing independent assurance on the financial statements of companies. ACRA oversees the public accountancy profession to ensure that only qualified individuals and firms are permitted to carry out statutory audits.

Here’s how ACRA manages the regulation of auditors in Singapore:

1. Registration of Public Accountants

To perform statutory audits in Singapore, an individual must be registered as a public accountant with ACRA. The registration process includes:

• Academic and professional qualifications (e.g., completion of an accounting degree and professional qualifications like CA Singapore)

• Practical audit experience

• Passing the Public Practice Examination

ACRA evaluates the competence and integrity of applicants before granting registration. This ensures that only individuals with the necessary skills and ethics can serve as auditors in Singapore.

2. Licensing of Audit Firms

In addition to individual registration, audit firms must also be registered with ACRA. Firms are evaluated based on their structure, professional standards, quality controls, and compliance history. This framework ensures that firms carrying out audits in Singapore are held to high professional standards.

3. Practice Monitoring Programme (PMP)

One of the most impactful initiatives by ACRA is its Practice Monitoring Programme. Under PMP, ACRA conducts regular inspections of public accountants and audit firms to assess audit quality. The inspections focus on:

• Compliance with auditing standards in Singapore

• Adequacy of audit documentation

• Risk assessment and audit planning

• Evaluation of internal controls and financial disclosures

Firms found to have deficiencies are subject to further reviews, corrective action plans, or even sanctions, depending on the severity of the lapses. This program plays a key role in maintaining trust in the integrity of financial statements.

4. Disciplinary Actions and Sanctions

Where misconduct or gross negligence is discovered, ACRA has the authority to take disciplinary actions. This can include:

• Suspension or cancellation of registration

• Monetary penalties

• Public censure

Such enforcement ensures accountability and deters malpractice in the auditing profession.

Also Read: Duties of Resident Directors in Singapore

Financial Reporting Standards and Auditing Standards in Singapore

To support transparency and comparability in financial statements, ACRA ensures adherence to internationally aligned standards. Singapore’s financial reporting and auditing framework is aligned with global norms, but also tailored to local business conditions.

Financial Reporting Standards (FRS)

Singapore companies are required to prepare financial statements per Singapore Financial Reporting Standards (SFRS), which are closely aligned with International Financial Reporting Standards (IFRS). These standards are intended to:

• Provide relevant financial information to investors and stakeholders

• Ensure comparability across industries and jurisdictions

• Promote transparency in corporate disclosures

ACRA actively promotes compliance with FRS through enforcement and education initiatives. Companies that fail to comply may be subject to investigations and penalties.

Auditing Standards Singapore

Auditing standards in Singapore are based on the Singapore Standards on Auditing (SSA), which are adapted from the International Standards on Auditing (ISA). These standards govern how auditors should:

• Plan and perform audits

• Evaluate evidence

• Assess risk and materiality

• Communicate findings

ACRA mandates that all audits in Singapore comply with these standards to ensure consistency and reliability in audit outcomes. Auditors are also required to maintain professional skepticism and exercise judgment throughout the audit process.

Promoting Audit Quality and Public Confidence

ACRA doesn’t merely regulate auditors—it also proactively promotes audit quality through industry outreach, guidance, and partnerships. Some key initiatives include:

• Annual Public Reports: ACRA publishes annual reports on audit quality findings and trends, which highlight areas for improvement.

• Guidelines and Practice Notes: These resources help auditors interpret and apply auditing standards effectively.

• Stakeholder Engagement: ACRA collaborates with professional bodies like the Institute of Singapore Chartered Accountants and international regulators to harmonize best practices.

By fostering a culture of quality and integrity, ACRA reinforces public trust in the audit process and the financial system as a whole.

Also Read: Documents Required in Private Limited Company Formation in Singapore

The Importance of ACRA’s Oversight for Businesses and Investors

For businesses, complying with ACRA’s regulations ensures legal standing and reputational integrity. Companies that maintain accurate financial records and undergo independent audits signal transparency to investors and stakeholders.

For investors, confidence in the quality of audits and the accuracy of financial reporting reduces investment risks. It allows better-informed decisions and enhances Singapore’s attractiveness as a global investment destination.

For auditors, adherence to auditing standards in Singapore and regulatory oversight from ACRA offers professional credibility and promotes continuous improvement.

FAQs

1. Who is required to be audited in Singapore?
In Singapore, all companies—except those classified as small companies under the Companies Act—are required to have their financial statements audited. A small company meets at least two of the following three criteria: total revenue of less than SGD 10 million, total assets of less than SGD 10 million, and fewer than 50 employees.

2. How does ACRA monitor the quality of audits?
ACRA monitors audit quality through its Practice Monitoring Programme (PMP). Under this program, public accountants and audit firms are selected for review. ACRA evaluates whether the audits were conducted per the auditing standards Singapore mandates and identifies any deficiencies or areas for improvement.

3. What happens if an auditor fails to comply with ACRA’s standards?
If an auditor is found to be in breach of standards or ethical requirements, ACRA can impose sanctions such as reprimands, fines, suspension, or cancellation of registration. In serious cases, the matter may also be referred to other authorities for legal action.

Conclusion

ACRA plays an essential role in maintaining the integrity, transparency, and credibility of Singapore’s financial and corporate landscape. By regulating auditors, enforcing compliance with financial reporting and auditing standards, and promoting audit quality, ACRA helps ensure that audits in Singapore are conducted professionally and reliably.

For auditors in Singapore, aligning with ACRA’s expectations is critical for maintaining licensure and professional integrity. For businesses, compliance with ACRA’s standards safeguards corporate reputation and ensures long-term success. And for investors, the regulator’s role is a key factor in maintaining confidence in the market.

As Singapore continues to grow as a global business hub, ACRA's efforts to uphold strong regulatory standards will remain vital in supporting a trusted and resilient financial ecosystem.