In August 2014, a revised Guidebook for Audit Committees in Singapore (Guidebook) was issued by the Monetary Authority of Singapore (MAS), the Accounting and Corporate Regulatory Authority (ACRA) and the Singapore Exchange (SGX).
This second edition of the Guidebook developed by the Audit Committee Guidance Committee (ACGC) (first edition in October 2008), takes into account numerous industry developments, as well as revisions made to the Code of Corporate Governance in May 2012.
A key objective of the Guidebook is to provide practical guidance and recommendations of best practices to audit committee (AC) members and help them better understand their roles and responsibilities. The Guidebook also addresses key areas of concern to the AC such as risk management and internal controls.
The Guidebook comprises 6 sections:
- AC Composition: This section provides guidance to current and prospective AC members on the assessment of independence and suitability for membership in the AC.
- AC Agenda: This section sets out the scope of the AC, including its oversight responsibility over interested person transactions and whistle-blowing policy.
- Risk Management and Internal Controls: This section outlines the common risk governance structures and frameworks that can be put in place to ensure the adequacy and effectiveness of the company’s risk management and internal control systems.
- Internal Audit: This section discusses the considerations to be taken into account in establishing an internal audit function. It also covers the common issues relating to AC’s oversight over the internal audit function.
- Financial Reporting: This section highlights the role of the AC in the integrity of the company’s financial statements. It also highlights factors indicative of weaknesses in the financial reporting process.
- External Audit: This section describes the role of external auditors and the factors that the AC should consider when evaluating the independence of external auditors.
Each section sets out the relevant regulatory requirements and guidelines, a discussion of best practices with reference to practical situations, and the text of the relevant regulatory requirements and guidelines.
The Guidebook is available online on the websites of MAS, ACRA and SGX: