A public accountant will pass the practice review if he or she has complied with the SSA and other relevant requirements.  If a public accountant has failed to comply with the SSA and other requirements, the PAOC may order the public accountant to undertake remedial actions, or it may impose sanctions, depending on the severity of non-compliance.

The main purpose of most PAOC orders is to require public accountant improve their audit work in line with the SSA and other requirements. If the PAOC believes that it is not in the interest of the public or the public accounting profession for the public accountant to continue to practice, the PAOC may refuse to renew the public accountant’s registration, or suspend or cancel the public accountant’s registration.

Examples of PMP Orders

A PAOC order resulting from a PMP inspection may include the following orders:

Revisit

If the PAOC finds that a public accountant has failed to comply with the Singapore Standards on Auditing (“SSA”) and other requirements, but considers the public accountant  to be able to adequately practise,  it will order that:

  • ACRA will review the public accountant again (usually in about 18 months)
  • The public accountant must have at least 3 of his or her audit engagements reviewed by a suitably qualified person (“Peer Reviewer”) who can mentor and advise the public accountant accordingly. This review may occur either before or after the audit has been completed and signed.

This order usually applies when a public accountant fails the review for the first time (under ACRA’s PMP) and the findings are not severe.

Hot Review

If the PAOC finds major instances of non-compliance with the SSA and other requirements and determines that the public accountant needs to improve under the supervision of a suitably qualified person, the PAOC will order the public accountant to have a certain number of audit engagements reviewed by another public accountant (“Hot Reviewer”) before he or she signs the audit reports.  This order usually applies to public accountants who fail their practice review for the second time or when the initial practice review findings are severe.

Restriction and Hot Review

If the PAOC finds more severe non-compliance with the SSA and other requirements than a "Fail with Hot Review" case and considers that there is a need to protect the public interest, then in addition to ordering a hot review, the PAOC will restrict the public accountant from:

  • auditing and reporting on financial statements of
    1. any public company1 that is not dormant2
    2. any private company3 that is not dormant and not an exempt private company ("EPC"); and
    3. any EPC that is not dormant and has annual revenue of more than $10 million; or
  • auditing and reporting on financial statements of all public interest entities4;or
  • auditing and reporting on financial statements of specific industries.

A fail with restriction and hot review order usually applies to public accountants who have failed their practice reviews for the third time or when the non-compliance is very severe.

1 As defined in section 4(1) of the Companies Act, Cap.50
2 As defined in section 205B(2) of the Companies Act, Cap. 50
3 As defined in section 4(1) of the Companies Act, Cap.50
4 The phrase “public interest entities” as used here has the same meaning as defined in the Code of professional Conduct and Ethics for Public Accountants and Accounting Entities at the Fourth Schedule of the Accountants (Public Accountants) Rules.

Suspension

If the PAOC finds serious and/or repetitive instances of non-compliance, and the PAOC determines that it is contrary to the interest of the public or the public accounting profession for the public accountant to continue in practice, the PAOC may suspend the public accountant.

The suspension will not exceed two years. While the public accountant remains suspended, he or she shall deemed not to be registered as a public accountant but immediately upon the expiry of his or her period of suspension, his or her rights and privileges as a public accountant shall forthwith be revived, provided that he or she fulfils certain requirements such as Continuing Professional Education. Such suspensions are publicly reported.

Cancellation

Cancellation of registration happens when the PAOC finds non-compliance with the SSA and other requirements to be extremely serious and/or repetitive, and when the PAOC’s opinion is that it is contrary to the interest of the public or the public accounting profession for the public accountant to continue in practice. Such cancellations are publicly reported.
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