SINGAPORE, Jan 28 — The Singapore Exchange (SGX) is getting tough on audit committees and external auditors of listed companies.

Speaking to reporters on Friday, Tan Boon Gin, the chief executive officer of its regulatory arm, SGX RegCo, said that it has been "a lot more interventionist” in a bid to increase the thoroughness of not just the year-end audits, but also special audits called to further investigate potential problems of listed companies.

Besides requiring some special auditors to report directly to SGX, the bourse operator is also looking to introduce new listing rules, such as giving it the power to require a company to appoint a second auditor, in addition to its existing one, in "exceptional circumstances”.

The changes come after SGX was criticised by market observers for not doing enough to protect people who have invested in Noble Group.

The embattled commodities firm recently completed a US$3.5 billion (RM14.4 billion) debt restructuring exercise, after an accounting scandal sent its shares plummeting, with the company losing 99 per cent of its market value.

In a message to auditors, Tan said that they should not "close ranks”.

He also said that auditors need to have the "gumption” to flag areas of concern.

"If they do find something (amiss with the company), they can’t hide behind the terms of reference and say, ‘This wasn’t covered under the terms of reference so I didn’t look into it’.

"And they shouldn’t phrase the language of the report in a language that is so vague that, frankly speaking, we as an exchange cannot take action on it,” Tan said.

What SGX has done

Since December last year, SGX has met with the audit committees and external auditors of 15 listed companies and highlighted to them areas of concern based on SGX RegCo’s review of the companies.