Speech by Mr Lawrence Wong, Deputy Prime Minister and Minister for Finance at the ACRA Merger Commemoration on 27 Jun 2023

Speech by Mr Lawrence Wong, Deputy Prime Minister and Minister for Finance at the ACRA Merger Commemoration on 27 Jun 2023.

27 Jun 2023

Chairman and Chief Executive of ACRA,

Permanent Secretaries and Board Members,  

Distinguished Guests,

Ladies and Gentlemen,

1. I am happy to join you this morning to commemorate with everyone a key milestone and a new chapter in ACRA’s history – the official opening of your office here and, importantly, the marking of the merger of ACRA with the Singapore Accountancy Commission and Accounting Standards Council. 

2. ACRA is indeed a relatively small statutory board in the Government. If you compare to big statutory boards like Housing and Development Board and Central Provident Fund Board, ACRA only has about 200 staff, as Khiaw Hong said just now. But every single ACRA officer can be proud to be part of a long and illustrious history. Because ACRA’s roots can be traced all the way back to the 1800s, when a business registry was first established in Singapore to help regulate the growing number of trading companies here. In fact, if you look at the heritage gallery later on, you will find that in the 1850s, a Limited Liability Act was established in Singapore. Subsequently, in 1923, the Registry of Company was set up here in Singapore. These roots go further than most Government statutory boards. So, ACRA is small, but has played a very important role throughout Singapore’s history. 

3. Over the decades, as our economy grew and evolved, so has ACRA. Today, you play a crucial role in Singapore’s growth by ensuring a transparent and conducive regulatory environment with strong corporate governance – one which is broadly trusted by investors, and also responsive to evolving business needs. 

4. A key enabler of this environment has been an effective and professional accountancy sector.  We had three entities overseeing this work:

a. the Accounting Standards Council, which used to set the accounting standards used by companies; 

b. the Singapore Accountancy Commission, which was responsible for developing the sector; 

c. And of course, ACRA, which also regulated public accountants; 

d. All three were merged into one single entity under ACRA in Apr this year (1 Apr 2023).

5. Collectively, your efforts have enabled businesses to flourish and investors to make more informed decisions. More than that, they have helped to strengthen Singapore’s position as a financial and business hub of choice, a trusted and reliable business centre.

a. So today, I would like to acknowledge the contributions and efforts of all of you here – the boards, management and staff of all three entities, past and present, as well as our many stakeholders and partners.

b. Thank you very much for all your contributions to our economy and to Singapore!

Future of Accountancy 

6. Since we have many accountants in this room today, let me also take this opportunity to say a few words on the accounting profession, and why it matters so much. 

7. In some ways, accounting is unique among the professions. It does not advocate, heal or counsel; nor does its primary obligation centre solely around those who retain its services. 

8. In particular, public accountants and auditors have the important responsibility to ensure that financial statements are presented in conformity with accounting principles and the applicable rules.  So in fact, accountants, and especially auditors, have a duty not only to your clients but more importantly to investors and to the public.  The auditor must remain independent of management and sceptical of management’s assertions, and in some instances, may need to issue a qualified or adverse audit opinion, or resign from the engagement. These are not easy tasks, especially in light of the many pressures faced by the profession.

9. But it is absolutely crucial to uphold the public interest.  For without high-quality audits, investors get hurt, businesses collapse, and people can lose their jobs.  We have seen this happen, time and again in many countries throughout history, where firms report impressive financial results, even after being audited by a public accounting firm, and the results turned out to be erroneous, or in some cases, even fraudulent.  This is something we must continue to work hard to prevent from happening in Singapore, because it can easily undermine public trust and confidence.

10. At the same time, the accounting profession is continuing to evolve:  

a. You have to adapt to changing and more complex tax and regulatory environments. 

b. You also have the potential to make greater use of technology in your audit methodologies, e.g. by employing automated processes to identify unusual transactions or inconsistencies. This also means expanding the skillsets of the profession into areas like statistics and data analytics.
 
c. You have to respond to the growing demand for accounting services in new and emerging areas. One example is in sustainability. Because as more companies adopt green business strategies, accountants will need to know the latest sustainability reporting standards and understand how sustainability can affect financial performance.  They will also need to go beyond overseeing an organisation’s finances, capital and assets, to exercising stewardship over the disclosure of sustainability-related information. 

11. All this means that the practice of accounting will continue to evolve over the next decade and beyond. There will be new and exciting job opportunities for those who are able to adapt and acquire new skills. But there will also be existing job roles which may become less relevant, especially those that involve repetitive tasks that can be automated. 

12. ACRA will play an important role to help the accountancy sector respond to these changes.  This is why we have brought together our regulation, standards setting, and sector development work and placed them all under ACRA. This will enable the Government to better harness the synergies across these different functions, and shorten the feedback loop between our regulatory and sector development work. And it is also going to be very important for the emerging areas that we are dealing with.

a. Take sustainability reporting as an example.  

b. ACRA has set up a Sustainability Reporting Office to study the introduction of regulations to speed up the adoption of sustainability reporting. 

c. But for this to work well, we will also need to develop new standards for sustainability disclosures and, importantly, ensure that accounting professionals can be equipped with the right skills and capabilities to meet these standards. 

d. ACRA will have to ensure all this can be done in a more deliberate and coordinated manner.

13. Of course, transforming the accountancy sector will depend on more than just ACRA alone – it will require the collective effort of everyone here today, all our stakeholders and partners.

14. We will need the close partnership of our professional bodies and industry associations, to update your members of the latest trends and the impetus to transform, as well as support their professional learning. We will need our education institutions to do their part, to provide meaningful industry-oriented training courses for professionals. 

15. Many of you have been strong partners of ACRA, the Singapore Accountancy Commission and the Accounting Standards Council over the years, and I hope even after bringing these different functions under the revamped ACRA, you can continue to give ACRA your fullest support.

16. There is one area which can really benefit from your collective insights: even as demand for accountants continue to rise in Singapore, in line with the growing needs of our evolving economy, there are shortages emerging in the pipeline of young accountants. Over the past five years, the intake of accounting degree courses at our Autonomous Universities have fallen by more than 10%.  The proportion of these graduates that go on to work as accountants or auditors have also been trending downwards. So it is not only the intake that is coming down, but we are also seeing less of those who graduate with an accounting degree practice as accountants or auditors. These are indeed worrying trends. 

17. We are all trying to understand why this is happening. One reason that some have cited is the perception of the accounting profession amongst young people: they think that accounting work is boring, monotonous and repetitive. This is not from me, I am citing what young people themselves had said to us in their focus group discussions. They also say the work is long and the pay is too low.  It is unfortunate that there are such perceptions. Some of it may be true – long hours; pay could be higher perhaps, when you compare to other professions. And indeed there may be some mundane tasks involved in any audit.  But as I mentioned earlier, there are exciting new opportunities and challenges in accountancy.  The work of accountants and auditors remains of utmost importance in maintaining a high level of public trust and confidence.  Accountancy is also a valuable skillset – it is after all the language of business, and those trained in this field will have many opportunities to progress further, be it as accounting professionals or specialist, or even as a financial controller or CFO of a company, venture capitalist, regulatory, standard setter, or pretty much anything in the corporate world will benefit from having such accounting skillsets. 

18. We will need the combined efforts of the accountancy sector to address these concerns, and to shift the prevailing attitudes and mindsets about accountancy.  That is why we have set up an Accountancy Workforce Review Committee co-chaired by former Singapore Accountancy Commission Chairman Chaly Mah and 2nd Permanent Secretary of the Ministry of Finance Lai Wei Lin to look into these issues.  The Committee, comprising key industry players and members of the academia, are working to develop ways to enhance the attractiveness of the accounting profession, with the support of ACRA and MOF. So please spread the word. We are looking for ideas, we are looking for feedback, suggestions, ways in which we can stop this downward trend and enhance the attractiveness of the profession. We hope we can make changes before these trends start to worsen. I am sure if we put our collective minds together, we can continue to ensure a steady pipeline of talent to the sector and keep the profession strong, vibrant and ready for the future.

Conclusion

19. The fast-changing accountancy sector will bring new and exciting opportunities for the profession and for Singaporeans. There is much we can do together to help our companies and workers adapt to these changes. That is what the merger we are marking today aims to achieve. With a revamped ACRA, I am sure we can move faster and do more for the accountancy profession. But please do not misunderstand, having all these entities come together under ACRA does not mean the Government does everything now. In fact, on the contrary, what will be even more important are strong partnerships – between Government agencies, ACRA professional bodies, industry associations, companies and education institutions. Even as we merge these functions under ACRA, we need to redouble our efforts to strengthen our partnerships across the sector. So as ACRA begins a new chapter in its history, I wish ACRA and all its partners the very best in this journey ahead. Together, I am confident we can continue to nurture and build an accountancy sector that enables Singapore’s continued success as a reliable and trusted business and financial hub. Thank you very much.