Every company must have auditors, subject to certain company exemptions under Section 205B and 205C mentioned in the Companies Act. Company auditors must be a certified practicing accountant. Auditors who want to practice their professional must register with the Accounting and Corporate Regulatory Authority (ACRA) and the Institute of Certified Practicing Accounts of Singapore (ICPAS).
Unlike the internal auditors, where the job function is to satisfy that accounting information presented to management throughout the period is accurate and discloses material facts, the main duty of the company auditor is to make sure that all the company's accounts to be presented to the shareholders are in order and offer non-biased opinions on the accuracy of the company's accounts. Therefore, auditors basically are watchdogs for the shareholders since shareholders do not have the right to inspect the accounting records.
For this reason, the provisions of the Companies Act dealing with appointment and removal of auditors are designed to ensure that the auditors retain a measure of independence.
The Act is especially careful to provide that a change of auditors will be accompanied with some publicity, thereby preventing the possibility of quietly removing the auditors to cover up the misdeeds.
Qualification of Company Auditors
Section 10 (1) of CA requires a person to be a qualified public accountant in order to qualify as a company auditor, and should not be an employee, an officer or a partner in the company. Further to these, he cannot knowingly consent to be appointed as company auditor if he is indebted to the company or its subsidiaries in an amount exceeding S$2,500 or if he is the person responsible for the keeping of the register of shareholders and the debentures holders of the company.
The company auditors may either be an individual or...