Definitions

Audit Engagements

A reasonable assurance engagement in which a public accountant expresses an opinion whether financial statements are prepared, in all material respects (or give a true and fair view or are presented fairly, in all material respects), in accordance with an applicable financial reporting framework.

Audit management role

Managing an audit engagement and includes performing any key audit function.

Audit principal (AP)

Please refer below for the requirements to be an AP.

Audit quality review role 

Any of following roles:

  1. assessing or reviewing the quality of an audit engagement performed for an accounting entity, ACRA or a professional accountancy body or organisation in Singapore;
  2. carrying out an audit inspection under a practice monitoring programme or another similar programme for the Authority, or a professional accountancy body or organisation in Singapore
Audit technical role The role of performing technical audit or accounting consultation by a person in an accounting entity who:
  1. holds at least a managerial position in the accounting entity;
  2. reports directly to a partner of an accounting firm or an equivalent person in any other accounting entity.
Engagement partner

A partner or other person in an accounting entity who is responsible for the engagement and its performance, and for the report that is issued on behalf of the accounting entity, and who, where required, has the appropriate authority from a professional, legal or regulatory body.

Engagement team

All personnel performing an engagement, including any experts contracted by the firm in connection with that engagement.

Foreign audit entity 

An entity which is established in a country outside Singapore and is licensed or registered in a country outside Singapore to audit financial statements.

Hot review order

An order imposed by PAOC on a public accountant under section 38(1)(a)(iii) of the Act requiring the public accountant to seek the services of another public accountant to review one or more audit engagements undertaken by the first mentioned public accountant before he/she may issue an audit opinion for these audit engagements as the engagement partner.

Public practice

Practice as a public accountant in the capacity of —

  1. a sole proprietor;
  2. a partner in an accounting firm;
  3. a director or a corporate practitioner in an accounting corporation; or
  4. a partner or a corporate practitioner in an accounting LLP.
Pupil A person who is to acquire qualifying audit experience under:
  1. the direct supervision of one or more audit principals; or
  2. in the case where  the qualifying audit experience is acquired by the applicant in an accounting entity, which has implemented its quality controls in accordance with the Singapore Standard of Quality Controls 1, and those quality controls have been reviewed by the Authority to the Authority’s satisfaction, the overall oversight, the overall oversight of an audit principal

for the purpose of being registered as a public accountant under the Act.

Qualifying audit experience (QAE)

Practical experience acquired in:

  1. carrying out an audit management role;
  2. carrying out an audit quality review role; or
  3. carrying out an audit technical role. 
Restriction order

 An order imposed by the PAOC on a public accountant under section 38(1)(a)(i) of the Act.

Singapore Standard on Quality Control 1 The standard issued by the Institute of Singapore Chartered Accountants (ISCA) that deals with an accounting entity’s responsibilities for its system of quality control for audits and reviews of financial statements, and other assurance and related services engagements.
Suspension order

An order imposed by the Public Accountants Oversight Committee (PAOC) on a public accountant under section 38(1)(b)(ii) of the Act.

Period of experience

Applicants must have gained 2,500 hours of QAE within 5 years before the application. To ensure that the audit management experience is gained at an appropriately senior level, the 2,500 hours of QAE will only count after an applicant has acquired some practical experience, as follows:

For an applicant who is a member of ISCA before he or she starts to acquire the QAE
QAE to be acquired only:

  1. After the applicant becomes a full member of ISCA or
  2. After the applicant has satisfied the practical experience requirements for qualifying as a Chartered Accountant of Singapore.

The professional accountancy experience requirements to qualify as a Chartered Accountant of Singapore, as set out in ISCA’s membership rules are either: a. 3 years of post-qualification experience; or b. 5 years of pre and post-qualification experience, of which one year should be post-qualification experience.

For an applicant who is not a member of ISCA before he or she starts to acquire his or her QAE

QAE to be acquired only after the applicant has acquired the practical experience which the PAOC determines to be equivalent to the practical experience requirements for qualifying as a Chartered Accountant of Singapore.   

The PAOC has determined the following to be the equivalent extent of professional accountancy experience:
a.     3 years of professional accountancy experience gained after obtaining an accountancy degree; or
b.     3 years of professional accountancy experience gained after passing the final examination in accountancy of a recognised professional examination; or
c.     5 years of professional accountancy experience gained before or after passing the final examination in accountancy of a recognised professional examination, of which at least one year must be gained after passing the final examination.

On (a) above, an applicant is required to provide a copy of the University certificate and official transcript and any other relevant information to show that the degree obtained can be considered as an accountancy degree.  The course syllabus of an accountancy degree would typically include modules such as accounting, auditing, taxation, corporate reporting and accounting information system.  The applicant needs to clarify why he/she is not required to complete any of the above modules in obtaining the accountancy degree.

For purposes of (b) and (c) above, the recognised professional examinations are as set out in paragraph 2 and 2A of the Second Schedule to the Accountants (Public Accountants) Rules.

Please refer to Practice Direction No. 2 of 2015: Professional Accountancy Experience Required Before Acquiring Qualifying Audit Experience for Registration as a Public Accountant (PDF, 363KB) for further details on the extent of practical experience required before an applicant can start counting their QAE. 

Nature of experience

QAE refers to practical experience gained in carrying out work in an audit management, audit quality review or audit technical role. In performing the audit management role, the applicants should have performed the KAF.   Applicants relying on experience in an audit quality review or audit technical role must have at least 1,250 hours of experience in performing the KAF.  KAF means the following functions performed in relation to an audit engagement: 

  1. planning functions, which are — 
    • reviewing and forming conclusions on acceptance and continuation of any client relationship concerning the audit engagement and whether the audit engagement complies with independence requirements, including those set out in the Fourth Schedule
    • developing the scope and objective of the audit engagement;
    • evaluating the client’s profile and risk and the implications for the audit engagement;
    • reviewing and approving the planned audit approach before the start of audit fieldwork; and
    • ensuring that staffing and resources are adequate, taking into account the required competencies and capabilities;
  2. leading functions, which are — 
    • directing and monitoring the progress of the audit engagement, to ensure its compliance with applicable professional standards and regulatory and legal requirements, and against timelines and budget;
    • supervising and mentoring other professional staff involved in the audit engagement;
    • communicating and consulting with the engagement partner and members of the engagement team about issues arising from the audit engagement which need to be resolved, and resolving audit issues; an
    • communicating with the client with respect to matters relating to or arising from the audit engagement; and
    • directing and monitoring the progress of the audit engagement, to ensure its compliance with applicable professional standards and regulatory and legal requirements, and against timelines and budget;
    • supervising and mentoring other professional staff involved in the audit engagement;
    • communicating and consulting with the engagement partner and members of the engagement team about issues arising from the audit engagement which need to be resolved, and resolving audit issues; an
    • communicating with the client with respect to matters relating to or arising from the audit engagement; and
  3. reporting functions, which are — 
    • reviewing any document relating to the audit engagement and reviewing the work done for the audit engagement to ensure that the procedures performed are adequate and in compliance with the applicable auditing standards
    • forming opinions based on sufficient audit evidence and in accordance with the applicable auditing standards;
    • communicating the audit findings to, and discussing such audit findings with, the client; and
    • preparing or supervising the preparation of audit reports and other documents relating to the audit engagement to be delivered to the client under the audit engagement.

Supervision of Experience

The 2,500 hours of QAE is be acquired by the applicant in relation to one or more audit engagements each under the direct supervision of an AP, who is also the engagement partner for the audit engagement.  At least 1,250 hours of the KAF must be performed under the direct supervision of (i) the same AP or (ii) one or more APs in the same accounting entity. 

QAE Acquired in Entities with Singapore Standard of Quality Control (SSQC) 1 Quality Controls  Which Have Been Reviewed to ACRA’s Satisfaction

In cases where:

  1. the applicant acquires his or her QAE in an accounting entity which has implemented quality controls in accordance with the SSQC 1 and those quality controls have been reviewed by ACRA to ACRA’s satisfaction; and
  2. an AP in that accounting entity has overall oversight of the applicant’s acquisition of QAE, 
    1. the applicant may acquire the QAE in relation to one or more audit engagements each under the direct supervision of a public accountant in that accounting entity, who need not be an AP, but who is the engagement partner for the audit engagement; and 
    2. at least 1,250 hours of the QAE in performing KAF are to be acquired: 
      1. under the direct supervision of the same public accountant (who need not be an AP); or 
      2. under the direct supervision of one or more public accountants (who need not be APs) in the same accounting entity. 

Location of Experience

Up to 1,250 hours of the requisite QAE may comprise foreign QAE.  Foreign QAE must satisfy the following conditions:

  1. the foreign QAE is acquired by the applicant in the course of auditing any financial statements in an foreign audit entity;
  2. the country in which the foreign audit entity is registered or licensed adheres to auditing standards that the PAOC considers to be equivalent to the standards applicable in Singapore; and
  3. the PAOC is satisfied with the quality of the foreign QAE having regard to one or more of the following factors: 
    1. whether the foreign audit entity has implemented, or has taken steps to implement, quality controls in accordance with standards which the PAOC considers are equivalent to the standards applicable in Singapore (including SSQC 1);
    2. whether the foreign audit entity has been subject to any audit inspection carried out by or on behalf of the regulator of the audit profession in the country of its registration or licensing, and whether the regulator is satisfied with the findings of such audit inspection;
    3. whether the PAOC is of the opinion that the foreign audit entity is of good standing in the country of its registration or licensing;
    4. whether the foreign QAE would meet the criterion of the practical experience required for qualifying the applicant as an auditor in the country in which the applicant has acquired the QAE
  4. the foreign QAE is acquired in a 5-year period immediately preceding the date of the application 

 

The PAOC may disallow any foreign QAE acquired by the applicant to constitute any part of the requisite QAE if: 

  1. any complaint relating to any professional or occupational misconduct has been made against the applicant with any professional body in any country;
  2. disciplinary proceedings relating to any profession or occupation have been commenced against the applicant in any country; or
  3. the applicant has been the subject of disciplinary action relating to any profession or occupation in any country. 

Declaration by Applicant and AP

An applicant must provide the following declarations to the PAOC:

  1. a declaration by the applicant that the applicant –  
    1. has acquired the requisite QAE, and
    2. in acquiring the QAE, has independently and competently: 
      1. performed the KAF; and
      2. if applicable, carried out the audit quality review role or audit technical role, or both as the case may be; and  
  2. a declaration by the AP or, in the case where the applicant was directly supervised by more than one AP, each of those APs, stating — 
    1. the number of hours of QAE acquired by the applicant under the direct supervision of the AP; and
    2. whether, in acquiring the QAE, the applicant has independently and competently: 
      1. performed the KAF; and
      2. if applicable, carried out the audit quality review role or audit technical role, or both as the case may be,  to the satisfaction of the AP.

QAE Acquired in Entities with SSQC 1 Quality Controls Which Have Been Reviewed to ACRA's Satisfaction

Where the whole or any part of the QAE of an applicant comprise experience acquired by the applicant under the direct supervision of one or more public accountants in an accounting entity which has implemented its quality controls in accordance with SSQC 1, and those quality controls have been reviewed by ACRA to the ACRA’s satisfaction, the applicant must obtain a declaration by the AP providing the overall oversight of the applicant’s acquisition of QAE stating —

  1. the number of hours of QAE acquired by the applicant under the direct supervision of the public accountant or public accountants, as the case may be; and
  2. whether, in acquiring the QAE, the applicant has independently and competently: 
    1. performed the KAF; and
    2. if applicable, carried out the audit quality review role or audit technical role, or both as the case may be, to the satisfaction of the audit principal.

The declaration forms to be signed off the applicant and the AP(s) are available at the following links:

Please also refer to the following illustrative example on how the declaration form for an AP (PDF, 384KB) should be completed.

Requirements on the AP

An AP is any of the following persons who:

  • direct supervises; or
  • in the case where the QAE is acquired by the applicant in an accounting entity, which has implemented its quality controls in accordance with the Singapore Standard of Quality Controls 1, and those quality controls have been reviewed by the Authority to the Authority’s satisfaction, undertakes the overall oversight of one or more pupils. 
  1. A public accountant who satisfies the conditions set out below: 
    1. Have at least 5 years’ experience in public practice; and
    2. Must not be subject to any of the following orders: 
      1. an order prohibiting the public accountant from being an AP;
      2. a hot review order, unless the PAOC  gives its consent upon the public accountant (seeking to continue to be an audit principal) making an application;
      3. a restriction order; or
      4. a suspension order.
  2. A person referred to below: 
    1. the Commissioner of Inland Revenue, or any senior officer designated by the Commissioner and who fulfils the specified criteria; 
    2. the Accountant-General, or any senior officer designated by the Accountant-General and who fulfils the specified criteria; 
    3. the Auditor-General, or any senior officer designated by the Auditor-General and who fulfils the specified criteria;
    4. the Registrar of Public Accountants, or any senior officer designated by the Registrar and who fulfils the specified criteria;
    5. the Registrar of Companies, or any senior officer designated by the Registrar and who fulfils the specified criteria
    6. the Chief Executive of any professional accountancy body or organisation in Singapore, or any senior officer of any professional accountancy body or organisation in Singapore designated by its Chief Executive and who fulfils the specified criteria 
    Note: A public accountant who was an Approved Principal under the Public Accountants (Accountants) Rules (“Rules”) as in force immediately before 1 February 2015 and is not subject to any of the orders in (a)(ii) above is also an AP for the purposes of the Rules until he or she ceases to be an AP due to circumstances referred to under ‘Cessation as an AP’ below.

A public accountant can only be an AP for no more than 4 pupils at any time during the period when the QAE is acquired by his or her pupil(s).  This requirement does not apply if the public accountant is an AP for pupils in an accounting entity which has implemented quality controls in accordance with the SSQC 1 and those quality controls have been reviewed by ACRA to ACRA’s satisfaction.   A pupil must not be a parent, sibling, spouse, child or adopted child of the AP.

AP with a Hot Review Order

In cases where a public accountant is subjected to a hot review order and wishes to continue acting as an AP for his or her pupil or pupils, he or she must apply in writing to the PAOC for consent to do so.   Please refer to Practice Direction No. 1 of 2015: Application by a Public Accountant who is subjected to a hot review order to continue to be an Audit Principal (PDF, 108KB) on how the application can be made.

Cessation as an AP

A public accountant will cease to be an AP when:

  1. He or she is subjected to anyone of the following orders: 
    1. an order not to act as an AP;
    2. a restriction order; or
    3. a suspension order
  2. He or she is subjected to a hot review order and does not apply to the PAOC for consent to continue to act as an AP for his or her pupils within 30 days after the effective date of the PAOC’s order of the hot review.
  3. He or she is subjected to a hot review order and had applied to the PAOC for consent but is rejected.  In such a case, the cessation date is taken as the date upon being informed upon receipt of the PAOC’s decision.

The public accountant must immediately inform his or her pupils once he or she has ceased to be an AP.     In such cases, the QAE acquired by the applicant under the AP prior to the cessation will be taken into account for the purpose of determining whether the pupil has satisfied the QAE requirements. 

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