A Tale Of Two Firms: Insights From ICPAS’ Yeoh Ooon Jin From PAC 2012
The Accounting and Corporate Regulatory Authority of Singapore (ACRA) has recently concluded its annual flagship event, the Public Accountants Conference (PAC) 2012. One of the speakers in this event, Mr. Yeoh Oon Jin, Chairman of the Institute of Certified Public Accountants Singapore (ICPAS), talked about the challenges met by current auditing standards.
Mr. Yeoh Oon Jin demonstrated the differences between two firms-one that tackles issues and concerns the wrong way, and one that responds positively to yield excellent results. He called the two firms Scrooge & Associates and iAudit Firm.
He demonstrated these differences during his presentation, in which he encapsulated the opposite responses to illustrate how opposite they are. When it comes to audit strategy and audit plan, for instance, Mr. Yeoh Oon Jin said this is how Scrooge & Associates would put it: “If it ain’t broken, don’t fix it. So let’s just follow what we did last year and update if need to.” On the other hand, this is what iAudit firm has to say: “Our strategy and plan must take into account the client’s developments so that our work is relevant and our audit plan is tailored to address current issues. So, let us update everyone on the team of our knowledge of the client business objectives and establish a risk-focused audit approach.”
On substantive analytical procedures, meanwhile, which was identified as among the considerations in the gathering and execution stage of a quality audit, these is how Scrooge and Associates would put it: “We can ask management for the reasons of the fluctuations of balances and transactions of current year from prior year and document accordingly.” The iAudit firm, meanwhile, would use the four-step substantive analytics process. The first step would be to develop an independent expectation, then define a significant difference and threshold, compute the difference, and then investigate significant differences and draw conclusions.
To conclude, the ICPAS enumerated these strategies to overcome similar challenges: train staff adequately, assess impacts early on, monitor compliance, and incorporate new standards to existing methodologies.