SEC says audits for listed companies improving
In a sign of improving transparency and professionalism, Thailand’s Securities and Exchange Commission, the regulator for the Kingdom’s capital markets, said last week that the quality of work done by auditing firms for listed companies has improved significantly, helping create a stronger eco-system for financial reporting.
“Ultimately, our goal is to develop an ecosystem that can upgrade accounting standards of listed firms in the long term,” said Prakid Punyashthiti, senior assistant secretary-general at the Securities and Exchange Commission (SEC).
Thailand has made great advances in transparency, auditing and financial reporting in the private sector over the past two decades. The Asian economic crisis of 1997 in particular was a motivating factor to improve financial transparency, as many Thai listed companies sought financial assistance from banks and other institutions as well as new investors, and a lack of transparency and weak auditing systems wereseen as handicaps.
Prakid said that from 2013-15 the SEC’s Independent Audit Inspection Activities Reports found significant progress in the quality control of audit firms and the audit work quality of listed companies. The overall results showed continued improvement in the work of all 25 audit firms and individual approved auditors.
Last year, the SEC called on auditing firms to conduct, submit and publish their own transparency reports to promote detailed disclosures of their legal structure, governance and the quality controls employed in audit practice. The SEC has reviewed those reports as part of its monitoring process of audit firms.
Rapee Sucharitakul, the SEC Secretary-General said at the time that, “transparency reports will be an important mechanism in enhancing reliability of financial reports and thus generating benefits to the private sector and enhancing transparency in accounting professions. Listed companies can use the report for choosing audit firms that suit to their businesses while the report will help in promoting the quality of work of audit firms.”
The steadily improving quality of financial reporting and transparency led to the European Union allowing listed Thai firms to raise money in the continent’s capital markets using audits by Thailand-based auditing firms and not having to be re-audited by EU-based firms. Most of the world’s leading auditing firms, such as PricewaterhouseCoopers and KPMG, have Thailand offices.
Prakid noted that not every auditing firm in Thailand is meeting the new higher standards, but that those firms account for audits on about 10 percent of listed companies. He urged listed firms to choose auditors based on their quality track record as opposed to price.
“In the long run, a reliable quality control system will support auditors and their teams in providing high-quality work. This means audit committees would be able to do their job more efficiently as well,” Prakid said.