A shockingly large number of companies here think that the main responsibility for producing a set of financial statements lies with their external auditors rather than themselves.
This was one of the key findings in a report issued yesterday by the Accounting and Corporate Regulatory Authority and the Association of Chartered Certified Accountants (ACCA).
The report, Strengthening the Financial Reporting Value Chain in Singapore, was the result of a survey which covered preparers from a range of companies and industries, as well as a focus group discussion that took place after the survey and was attended by preparers, external auditors and board directors.
More than 530 people responded to the survey, which took place over three weeks in May and June.
About half of them agreed with descriptions of their responsibilities that deflected such responsibilities to the auditors.
The focus group discussion showed that some members of company management are not fully engaged in financial reporting because they see it as a compliance exercise, and many rely on their auditors to drive the process as a result.
Minister of State for Finance and Transport Josephine Teo, speaking at the Public Accountants Conference yesterday, said of the findings: "Not surprisingly, this lack of awareness is more prevalent among small and medium companies, but quite a number among larger companies seem to be unaware as well. These survey findings suggest that poor preparation stems from the lack of ownership of the quality of financial reporting by the companies involved."
The report also showed that frequent changes and the increased complexity of Financial Reporting Standards were posing a major challenge to some financial statement preparers. The standards also made financial statements insufficiently relevant to businesses.
The report said that companies and preparers need to firmly take ownership over their financial statements and re-balance the relationship between companies and their auditors. Taking ownership will alleviate common complaints about today's financial reporting such as complexity, over-reporting and boilerplate statements, it said.
Chiew Chun Wee, head of Policy, Asia Pacific, ACCA, said: "The survey and focus group gave a clear message about the benefits of employing qualified accountants, and the need for companies to see the finance team not as a compliance team but as a communication team that bridges the gap between the company and its investors.
"For this bridge to have integrity and facilitate clear communication, companies need to give the finance team sufficient training, resources and authority to deal with today's complex environment."
Mrs Teo added: "These are low-hanging fruits and not terribly difficult. Furthermore, there are schemes offered by agencies like Spring (Singapore) and IDA (Infocomm Development Authority of Singapore) to reduce the cost of implementing these measures for improvements."