Around the globe: Singapore

Internal Auditor, Oct, 2003 by Laval Wong, Alfred Shee

AT A GLANCE

GDP $105 billion

GDP PER CAPITA $24,000

CURRENCY Singapore dollar

ANNUAL INFLATION -0.4%

LAND AREA 682.7 sq km

POPULATION 4,608,595

LABOR FORCE 2.19 million

INDUSTRIES electronics, chemicals, financial services, oil drilling equipment, petroleum refining, rubber processing and rubber products, processed food and beverages, ship repair, entrepot trade, biotechnology

LANGUAGES Chinese, Malay, Tamil, English

SOURCE: THE WORLD FACTBOOK 2003

THE INTERNAL AUDIT profession was born in Singapore during the 1950s when multinational enterprises were instructed by their head offices to set up internal audit functions to audit Singapore operations. At the time, there were fewer than 50 practitioners in the country.

Growth of the profession subsequently was driven by the government's push for industrialization in the late 1960s. During this period, many foreign companies that required internal auditing set up operations in Singapore. Local companies and banks began to follow suit and established their own internal audit functions.

Nearly a decade later, on Sept. 23, 1976, the internal audit profession was formally established in the nation when the Registrar of Societies in Singapore issued a Certificate of Registration, enabling IIA-Singapore to initiate its activities. By then, the number of internal audit professionals working in the country had jumped to approximately 200.

ACROSS INDUSTRIES

Today, an estimated 1,500 internal auditors work in Singapore. Based on an industry breakdown of IIA-Singapore's 935 members, it's estimated that 1 percent of the nation's internal auditors work in the manufacturing industry, 17 percent work for the government, 36 percent work in finance and banking, and 46 percent serve private organizations such as transport companies, hotels, and educational institutions.

MANDATED AUDIT

The Singapore Companies Act Chapter 50, which governs the operation of companies, requires audit committees to review "the scope and results of internal audit procedures." That requirement seems to imply that publicly listed companies must have an audit function, though the law does not include a specific statement to that effect.

Likewise, the Singapore Code of Corporate Governance, issued in March 2001, highlights the importance of internal auditing by recommending that:

* Companies establish an independent audit function.

* Internal auditing reports functionally to the chairman of the audit committee.

* Internal auditors follow The IIA's International Standards for the Professional Practice of Internal Auditing.

* The audit committee ensures the audit function is adequately resourced and has appropriate standing within the company.

TOP PRIORITY

Although corporate governance, risk management, U.S. Sarbanes-Oxley Act compliance, business continuity planning, and implementation of the International Accounting Standards Board's International Financial Reporting Standards are all of great concern to the nation's internal auditors, the most significant challenge they face is the need to gain greater recognition for the profession.

To address this challenge, IIA-Singapore has devised a strategic plan to help practitioners exchange ideas and expertise, develop professional skills, and elevate the profession's status. The plan involves holding roundtable discussions among auditors, organizing educational programs, promoting certified internal auditor certification, and educating management and the audit committee about the value of internal auditing.

PROGRESSIVE GROWTH

In recent years, internal auditing in Singapore has grown at a fast pace and is rapidly catching up with development of the profession in the rest of the world. However, there is still much work to be done to increase the profession's profile. The government's continual push to improve Singapore's regulatory environment by strengthening disclosure and accountability standards has set the right tone for progressive growth of the internal audit profession.

LAVAL WONG, FCA, CCSA, CFE, president of IIA-Singapore, and ALFRED SHEE, CPA, FCA, FCIS, past president of IIA-Singapore, contributed to this article.