These can range from a "hot review" where a certain number of its audit engagements will be reviewed by another public accountant, to a suspension of not more than two years, or a cancellation of its registration as a public accountant in extremely serious and repetitive breach.
Associate Professor Lawrence Loh, who is a director at the Centre for Governance, Institutions and Organisations (CGIO) at NUS Business School, said it must be a very serious development for a company's auditor to say its audited reports for the past five consecutive years can no longer be relied upon.
"Because of the assumptions and acceptable standard of verification in an audit process, the result of an audit is necessarily persuasive but not conclusive." On Friday, Singapore Exchange Regulation (SGX Reg Co) said it has been in engagement with the Chinese Embassy in Singapore in relation to communications with the relevant authorities in China on developments at Midas.
ZICO Insights Law LLC managing director Yap Lian Seng as well as counsel and deputy head of its China desk Qiu Yang welcomed SGX Reg Co's active intervention, believing it brings in a certain degree of assurance and comfort to minority shareholders of Midas that they won't be left alone.
"While investigations are ongoing, the signs may point to issues as momentous as frauds or other grave misdeeds by the company.
The auditor's due diligence may also be called into question," added Prof Loh.
"This also shows a move towards 'meaningful regulation'.