Singapore plans audit overhaul amid Noble Group probe


SINGAPORE • Singapore Exchange Ltd (SGX) plans to overhaul its accounting oversight as the country’s regulators face criticism of how they handled the collapse of commodity trader Noble Group Ltd.

SGX has proposed new powers to require that a listed company appoints a second auditor in “exceptional circumstances” and that they appoint Singapore-based auditor Tan Boon Gin — the CEO of the exchange’s regulatory arm, SGX RegCo — told an audit committee seminar this month.

Singapore’s regulators have come under fire for not doing enough amid the collapse of the once US$12 billion (RM49.32 billion) trading company, which recently completed a mammoth debt restructuring, though the SGX didn’t comment on whether the proposals are related to the trader.

The move comes as authorities continue with an investigation into Noble and its officers for possible breaches of the law.

Noble’s accounting has been in focus since early 2015, when a previously unknown group called Iceberg Research started criticising the company, saying it had inflated the value of long-term commodity contracts and carried billions of dollars in profits on its books that would eventually have to be written down.

SGX has defended its oversight, citing a clean bill of health by the company’s long-standing auditor, Ernst & Young LLP. In November, regulators including the exchange said they were investigating the company and its officers for “suspected false and misleading statements” and breaches of disclosure requirements.

They later expanded their investigation to include Ernst & Young. The tightened rules would “absolutely” have been prompted by Noble’s collapse, although the company is just one of several with questionable valuations and audits, said Mak Yuen Teen, associate professor of accounting specialising in corporate governance at National University of Singapore Business School.

“There’s also a question about accountability of valuers and auditors for their work,” he said. “Valuers are not subject to regulatory oversight in the same way as auditors and even where auditors are subject to regulatory oversight, enforcement actions are rare.”

Speaking about the steps, the exchange is taking to address a general “trust deficit” in business, Tan said it has met with the audit committees and external auditors of about 15 listed companies and highlighted to them areas of concern based on SGX RegCo’s review of the firms, according to a speech he gave on Jan 16.

The bourse has also signed an agreement with the Singapore Accountancy Commission for them to provide advice and support on matters related to business valuation, the exchange said in a separate statement yesterday. — Bloomberg