Singapore’s audit ecosystem is widely recognised for its regulatory maturity and high governance standards. Since the introduction of the Audit Quality Indicators (AQI) Disclosure Framework in 2015, Audit Committees, regulators, and audit firms have routinely used AQIs to support auditor selection, oversight, and quality assessment.
The Accounting and Corporate Regulatory Authority’s (ACRA) 2025 publication, Driving Audit Quality: Designing Next-Generation Audit Quality Indicators, represents a meaningful evolution of that framework. Rather than incremental refinement, the review reframes how audit quality should be evaluated–placing greater emphasis on professional judgement, behavioural drivers, and system-level effectiveness, supported by empirical evidence.
For a mature market such as Singapore, the shift is not about introducing AQIs, but about how they are interpreted, contextualised, and operationalised.
Why AQIs Were Revisited After Ten Years
ACRA’s review is grounded in a substantial evidence base. It draws on data from more than 500 audit engagements across 16 audit firms with listed-company portfolios in Singapore. These engagements were reviewed between 2020 and 2024 through firms’ internal quality reviews and ACRA’s Practice Monitoring Programme.
Importantly, the objective was not to assess compliance with AQI disclosures. Instead, ACRA examined whether specific engagement-level and firm-level metrics are meaningfully associated with audit review outcomes.
The findings support a central conclusion: certain AQIs function as leading indicators of audit quality, rather than merely descriptive statistics. This evidence-led approach underpins the introduction of new indicators and refinements to existing ones, reflecting evolving audit risks, stakeholder expectations, and international regulatory developments.
What the Metrics Reveal About Audit Quality
Planning and Partner Involvement Matter–Quantifiably
ACRA’s analysis reinforces the importance of early-stage audit judgement and senior oversight.
- Audit engagements that allocated at least 20% of total engagement hours to planning recorded an “Unsatisfactory” outcome rate of 3%.
- Where planning accounted for less than 20% of total hours, the unsatisfactory rate rose sharply to 19%, making adverse outcomes 6.3 times more likely.
A similar pattern emerges for partner involvement:
- Engagements where the engagement partner contributed 10% or more of total hours recorded unsatisfactory outcomes in 6% of cases.
- This increased to 14% when partner involvement fell below 10%, representing a 2.3-fold increase in risk.
These findings empirically validate a long-understood principle in Singapore’s audit environment: audit quality is driven not by total effort alone, but by how time and expertise are deployed.
Technology Adoption as a Differentiator
The review also quantifies the impact of technology on audit outcomes.
Engagements that incorporated audit technologies–such as data analytics, automation, or artificial intelligence–recorded an unsatisfactory outcome rate of 10%, compared with 23% for engagements that did not. In practical terms, the absence of technology was associated with a 2.3 times higher likelihood of an adverse review outcome.
In a jurisdiction characterised by complex business structures and high transaction volumes, technology usage emerges as a proxy for audit execution maturity, shifting the discussion from innovation narratives to demonstrable audit effectiveness.
Experience and Tenure: A Balance to Be Managed
ACRA’s findings also illustrate that audit quality risk does not move linearly with experience.
- Engagement partners with less than two years of tenure recorded unsatisfactory outcomes in 14% of cases.
- Partners with more than five years of tenure recorded a slightly higher rate of 16%.
- The lowest unsatisfactory rate–8%–was observed among partners with two to five years of tenure.
This underscores the need to balance client familiarity with professional scepticism, a particularly relevant consideration in Singapore’s relatively stable auditor–client relationships.
The Strategic Significance of the New AQIs
Building on these insights, ACRA introduced three new firm-level AQIs–use of technology, culture survey, and restatements–and refined the existing audit hours indicator to better capture the timing and distribution of effort.
Collectively, these indicators shift attention from individual engagements to the System of Quality Management (SoQM) that underpins them.
- Use of technology now measures the breadth and consistency of adoption across audit areas, rather than isolated tools or pilot initiatives.
- Culture surveys capture staff perceptions of ethical behaviour, leadership commitment to quality, and resource sufficiency–recognising culture as a critical determinant of judgement under pressure.
- Restatements introduce a clearer outcome-oriented perspective, while emphasising the importance of qualitative context when interpreting results.
Implications for Audit Committees in Singapore
ACRA’s January 2025 survey indicates that 83% of audit committee members are aware of the AQI Disclosure Framework, and 69% use AQIs in auditor appointment or reappointment decisions. However, only around 50% reported using AQIs during audit planning or completion discussions.
The next-generation AQIs support a more proactive governance approach, including:
- Engaging auditors on AQIs early in the audit cycle
- Requesting explanations for trends, outliers, and year-on-year movements
- Assessing consistency between firm-level indicators and engagement-level execution
Used this way, AQIs become a governance dialogue tool, rather than a retrospective scorecard.
Singapore in an International Context
Singapore’s AQI framework remains broadly aligned with those adopted by audit oversight bodies in jurisdictions such as the UK, Switzerland, Malaysia, and South Africa. This reinforces the global convergence toward more holistic, outcomes-focused audit quality assessment.
For Singapore, such alignment strengthens its position as a jurisdiction where audit quality is not only rigorously regulated, but substantively examined and continuously improved.
Concluding Observation
ACRA’s 2025 review signals a clear shift–from measuring audit inputs to interpreting audit outcomes and the systems that produce them. The expanded evidence base, combined with new indicators addressing technology, culture, and restatements, reflects a more nuanced and forward-looking understanding of sustainable audit quality.
In a mature market such as Singapore, AQIs are no longer mere disclosures. When applied thoughtfully, they function as analytical instruments that support better judgement, stronger governance, and greater confidence in audit outcomes.
