|The Board should ensure that the members of the AC are appropriately qualified to discharge their responsibilities. At least two members, including the AC Chairman, should have recent and relevant accounting or related financial management expertise or experience, as the Board interprets such qualification in its business judgement.|
This Guideline describes the competencies required of AC members.
The Board relies on the AC to ensure the integrity of the financial statements and assurance on the processes that contribute to them. It is important that its members are suitably qualified for this task, especially in today’s changing and complex business and accounting environments.
This Guideline requires that:
- All AC members are appropriately qualified.
- At least two of them, including the AC Chairman, should have recent and relevant expertise and experience in accounting and/or finance.
- The Board should apply its business judgement in determining the appropriate accounting and finance qualifications.
That said, the responsibility of financial reporting rests with all directors. While it is important that the AC has members who are appropriately competent in accounting and finance, all directors should be financially literate.
As a reminder of this, ACRA issued a practice direction in 2014 to emphasise the duties of directors in relation to financial reporting. Furthermore, under its Financial Reporting Surveillance Programme, formal enquiry letters concerning possible non-compliances with prescribed accounting standards may be sent to the Board requesting for an explanation, supporting documents and other records as necessary.
B. SGX Disclosure Guide
C. Related Rules and Regulations
D. CG Guides
- AC Guide 1.6: Selection of AC Members [AC Composition].
- AC Guide 6.7: Financial Reporting Surveillance Programme (FRSP) [Financial Reporting].
E. Related Articles
- “Audit committees must now work even harder” by Gerard Tan. (66KB)
- “Disclosures and audit committees are key in turbulent times” by Wayne Kolins, Ben Neuhausen & Rosemary Schlank. (369KB)
- “Eight habits of highly effective audit committees” by John F. Morrow and Joan Pastor. (2.3MB)
- “Audit committees' duties and concerns” by SID. (1.2MB)