If you run a company in Singapore, you probably think of your accounting firm or auditor as a fixed point: a trusted party who signs off your financial statements, keeps your books in order, and tells you honestly when something does not look right. You may not have given much thought to who actually owns that firm, or who sits behind the partners you deal with day to day.
On 6 April 2026, the Accounting and Corporate Regulatory Authority (ACRA) issued Practice Direction No. 1 of 2026 on External Private Capital Arrangements in Accounting Entities. It is a technical-sounding document aimed squarely at accounting firms, but its underlying concern is one that should matter to every business owner: as private equity, venture capital and family office money increasingly flows into professional accounting practices, who is really in control of the firm that audits or advises your company, and can you still trust its judgement to be independent?
This article explains, in plain English, what ACRA’s Practice Direction says, why the regulator felt the need to issue it now, and, most importantly, what practical questions you should be asking about the accounting firm, auditor or corporate service provider you rely on.
What Is ACRA’s Practice Direction No. 1 of 2026?
ACRA is Singapore’s regulator for company registration and for the accounting and audit profession. Under the Accountants Act 2004, any accounting corporation, accounting firm or accounting limited liability partnership (LLP) that wants to provide public accountancy services (which includes statutory audit) must be approved by ACRA and comply with strict ownership and control rules.
Practice Direction No. 1 of 2026 does not change those underlying legal rules. Instead, it sets out ACRA’s regulatory expectations for accounting entities that are considering, implementing or already operating under what it calls “external private capital arrangements”. According to ACRA, this covers a wide range of situations, including:
- Minority or majority equity investments by private equity firms, venture capital funds, family offices or other external investors;
- Holding company, platform or group structures introduced above an accounting firm; and
- Other capital restructuring arrangements that change who ultimately owns, governs or controls the firm, even where there is no single identifiable external investor.
In other words, ACRA is responding to a real and growing trend: outside capital is moving into accounting and audit practices, not just in Singapore but globally, and the regulator wants firms to manage this carefully rather than let ownership changes quietly erode the independence and quality that clients rely on.
Why ACRA Introduced These Rules
ACRA has been candid about its reasoning. In its announcement, the regulator acknowledged that external private capital can genuinely benefit accounting firms: it can fund investment in technology, support strategic acquisitions and help firms expand their service offerings. Singapore’s accounting sector, like accounting sectors elsewhere, has faced real pressure to modernise, and capital can help with that.
The concern is what happens alongside the benefit. When a firm’s ownership, governance or control changes, this can create commercial pressures and conflicts of interest if it is not properly managed. An external investor, quite reasonably, wants a return. If that investor gains influence over how the firm is run, over its growth targets, key performance indicators or client relationships, there is a risk that commercial considerations start to weigh on judgements that are supposed to be made independently, most obviously in audit work.
The legal backbone: who must control an accounting firm
The Practice Direction rests on existing provisions in the Accountants Act 2004. Sections 17, 18 and 18A of the Act require that, for a firm to be approved as an accounting corporation, accounting firm or accounting LLP:
- At least two-thirds of its directors (for a corporation) or partners (for a firm or LLP) must be public accountants; and
- The part of its business that involves providing public accountancy services in Singapore must remain under the control and management of public accountants who are ordinarily resident in Singapore.
ACRA’s Practice Direction reminds accounting entities that these requirements do not disappear simply because a private capital arrangement is introduced. Public accountants must retain effective control and management over the provision of public accountancy services, in substance and not merely on paper. Firms are also expected to continuously apply the conceptual framework under the ACRA Code (the Code of Professional Conduct and Ethics for public accountants and accounting entities) to identify and manage threats arising from financial interests, business relationships, remuneration structures, or any arrangement that could give an outside party influence over professional judgement.
ACRA has also pointed accounting entities to the International Ethics Standards Board for Accountants’ Staff Alert on private equity investment in accounting firms (July 2025) as a further reference point, reflecting the fact that this is a live issue for regulators internationally, not just in Singapore.
What This Actually Means for You as a Business Owner
You are not the direct audience of a Practice Direction addressed to accounting entities. But the substance of it should change how you think about the firm you engage for audit, accounting or corporate secretarial support, for three practical reasons.
First, independence is not automatic. Business owners often assume that because a firm is licensed and registered, its judgement is by definition independent. The Practice Direction exists precisely because that assumption cannot be taken for granted once external capital, and the commercial expectations that come with it, enter the picture.
Second, ownership and control questions are now legitimate questions to ask your accountant, not intrusive ones. If a regulator is formally asking accounting firms to document how they manage these risks, a business owner asking a plain-English version of the same question, “who owns your firm, and does that affect how you serve me”, is entirely reasonable.
Third, this matters most if your company requires statutory audit, or if you are preparing your company for financing, a fundraising round, or any transaction where investors or lenders will scrutinise the quality and independence of your financial reporting. A conflicted or commercially pressured auditor is a due diligence red flag that can slow down or derail a deal.
Questions to Ask Your Accounting Firm or Auditor
You do not need to be a compliance expert to have this conversation. The table below sets out practical questions you can put to your accounting firm, auditor or corporate service provider, and what a satisfactory answer should look like.
| Question to ask | What a good answer sounds like |
|---|---|
| Is your firm owned or controlled by any private equity fund, venture capital fund, family office or holding company? | A clear, direct answer, not a deflection. If the answer is yes, the firm should be able to explain how it still meets ACRA’s ownership and control requirements. |
| Are at least two-thirds of your directors or partners registered public accountants, as required under the Accountants Act 2004? | A confident yes, with the firm able to point to its ACRA registration status if asked. |
| Who has final say over audit opinions, engagement decisions and client acceptance: public accountants, or an outside investor or holding entity? | Public accountants ordinarily resident in Singapore should retain that control, both formally and in practice. |
| Have there been any recent changes to your firm’s ownership, group structure or governance? | Firms should disclose material changes proactively rather than only when asked. |
| How does your firm manage conflicts of interest, remuneration incentives or growth targets that could put pressure on independence? | A firm with a genuine ethical framework should have a real answer, not silence or vague reassurance. |
| Does your firm cross-sell non-assurance services to audit clients, and if so, how is independence protected? | The firm should be aware of this as a specific independence risk area and have safeguards in place. |
What Good Practice Looks Like
A well-run accounting entity, whether or not it has taken on external capital, should be able to demonstrate a few consistent things. It should be transparent about its ownership structure when asked. It should be able to show that public accountants, not outside investors, retain day-to-day control and management of audit and accountancy work. It should have documented how it identifies and addresses independence threats, and it should update that assessment when circumstances change, rather than treating it as a one-off exercise.
If you are working with a smaller or mid-sized firm that has not taken on external capital at all, none of this changes your relationship. Many Singapore accounting and corporate secretarial practices remain wholly owned and controlled by their practising partners, which is itself a straightforward answer to most of the questions above. The point of this Practice Direction is not to cast suspicion on private capital as such; ACRA itself recognises its potential benefits. The point is that ownership changes should never be allowed to quietly compromise the quality or independence of the work you are paying for.
Beyond audit: the same principle applies to your wider service providers
The same underlying question, who is really in control, and does their commercial structure affect the advice they give me, is worth asking of any firm handling your company’s compliance obligations, not only your statutory auditor. If you are still handling your own bookkeeping and considering outsourcing it, or you already work with an outsourced accounting firm, it is worth understanding how that firm is owned and governed, and whether its incentives are aligned with giving you accurate, independent advice rather than simply upselling services. The same discipline that ACRA now expects of audit firms, understanding your own governance and control structure, and being transparent about it, is good practice for any regulated service provider you rely on, including when you are working through the requirements of the Companies Act 1967.
What This Means Going Forward
ACRA has said it will continue to monitor developments in this area and will review and update the Practice Direction as practices evolve. It has also encouraged accounting entities considering private capital arrangements to engage with ACRA early in their planning process, which suggests the regulator expects this trend to continue rather than fade.
For business owners, the practical takeaway is simple. You do not need to become an expert in the Accountants Act 2004 or the ACRA Code. You do need to know that ownership and control of your accounting firm or auditor are not irrelevant background details; they can have a direct bearing on the independence and quality of the work performed for your company. Asking a few pointed questions now, before you sign an engagement letter or renew one, costs you nothing and could save you from an unpleasant surprise later, particularly if your company is heading toward audit, fundraising, or a transaction where the quality of your financial reporting will be tested by outside parties.
If you are unsure how to assess your current accounting or audit arrangements, or you are choosing a new provider and want to understand what questions matter most for your situation, it is worth having that conversation with a corporate services team that can walk you through it in practical terms rather than regulatory jargon.
The Editorial Team, Raffles Corporate Services