Re-audit for companies with serious breaches
Acra announces new approach to raise reporting standards and protect investors
Listed companies that have committed serious reporting breaches may have to restate their financial statements, under new rules that may lead to warnings, fines or even criminal charges against errant directors.
This new approach announced yesterday by the Accounting and Corporate Regulatory Authority (Acra) aims to raise reporting standards and better protect investors.
On April 1, a "restatement first" approach will kick in.
This will involve two possible courses of action.
Firms that commit lesser breaches will be asked to restate some comparative figures in its following year's financial statement. But those with serious breaches will be required to not only restate but also re-audit and refile the past financial statements.
If companies do not comply, Acra will apply to the courts to compel them to do so.
Acra has previously ordered company directors to issue restatements, but the new approach will shift this first-level accountability to companies.
"And only if companies fail to do so, will we hold the directors accountable. Sanction could be levied through the issuance of warnings, composition fines or even prosecution for the egregious cases," Acra chief executive Kenneth Yap said, adding that Acra will also issue press releases highlighting the breaches and action taken.
The new approach is a key feature of revisions to the Financial Reporting Surveillance Programme, an initiative where Acra selectively reviews financial reports of listed companies to ensure compliance and reporting standards.
Acra's new rules, unveiled at the annual Audit Committee Seminar, were met with some reservation.
Keppel Corporation audit committee chairman Danny Teoh said: "To me, restatement is a super serious thing.
"If you were in the United States and restated your quarterlies, you would probably have an avalanche of lawsuits directed at the company. It's something to be taken very seriously when decisions are made about restatements."
Mr Yap responded that the decision-making process will be as rigorous as before, backed by the views of experts and an independent review panel.
More than 500 audit committee members and senior management figures from listed companies attended the seminar held at the Marina Mandarin hotel.
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