Ethics of auditors in the crosshairs of regulator

Ethics of auditors in the crosshairs of regulator

The Securities and Exchange Commission (SEC) plans to talk with the Commerce Ministry and the Federation of Accounting Professions (FAP) soon about improving the quality and ethics of auditors.

The move follows a recent case where three former Ernst & Young (EY) assistant auditors were given a civil sanction for insider trading.

SEC secretary-general Ruenvadee Suwanmongkol said the quality and ethics of auditors is important, and the upcoming meeting will discuss reform measures for supervising the quality and ethics of each auditor, together with an approach to enhance investor confidence and maintain credibility of listed companies' financial reports.

As auditors play an important role in the reliability of financial reports, the SEC is concerned following the EY case, leading to punishment from the regulator. A letter was sent to the auditing firm to improve its auditing system, said SEC deputy-secretary general Sirivipa Supantanet.

A letter was also dispatched to the FAP's ethics committee to consider an additional offence against the ethics of the accounting profession, said Ms Sirivipa.

The SEC also sent letters to every auditing firm operating in Thailand's capital market to reiterate caution over customer confidentiality, she said.

The market regulator will invite all auditing office heads to attend a meeting to find a solution to tightening audit standards.

On Monday, Warot Norkeo and Jeeranan Buranaruk of EY were implicated for using the draft financial statements of listed company clients that had been audited, but not yet publicly disclosed, to trade securities and derivatives. Jeeraporn Buranaruk was implicated for disclosing insider information to other persons.

Their action was deemed a use of inside information related to 12 listed companies, an offence liable to civil sanction. They used such inside information to trade securities or derivatives of 12 listed company clients during 2015-2017.

"Most of the draft financial statements contained significant improvements in the clients' operating results, information likely to increase the securities price of the clients' companies," said the SEC.

"Such insider trading of securities and derivatives was partly because Ms Jeeraporn, a former assistant auditor, disclosed the draft financial statements of the clients under the responsibility of her audit group to her sister Ms Jeeranan, when she knew or should have known that Jeeranan would use such information to seek benefits."

The offenders have been ordered to pay a combined civil fine of 13.8 million baht and are prohibited from holding positions of director or executive of any securities-issuing company for 10 years.


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