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Practitioners — Accountants (CA/PA) · published 2026-05-28 · methodology v2.1

AI Hallucinations Affecting Accountants (CA/PA) in Singapore

Findings — impact summary

This is the consolidated view of findings. Click 'see details →' on any item for the full details for each finding.

  1. Finding 1. Scope of MAS Notice 637 and the separate FHC notice designation

    An Accountants (CA/PA) advising a client on whether a Singapore-incorporated financial holding company falls within MAS Notice 637 could, on the basis of the AI's fabricated notice designation, draft correspondence or a compliance memo citing 'Notice FHC-N637' — an instrument that cannot be verified in the MAS register. If that reference is transmitted to a client, to MAS, or included in a regulatory filing, the practitioner faces professional liability for providing incorrect regulatory guidance. The client, if it structures its capital adequacy compliance around a misidentified instrument, risks a supervisory gap that MAS could treat as a breach of its obligations under the Financial Holding Companies Act.

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  2. Finding 2. Meaning of yellow highlighting in the MAS Notice 637 (Amendment) 2024

    An Accountants (CA/PA) using AI to understand the operative structure of an MAS amendment notice could incorrectly advise a bank client on which provisions are already in force and which are deferred — with the AI's generic 'visual aid' or 'editorial annotation' characterisation replacing the precise effective-date or new-provision meaning of the yellow highlighting. A bank that implements provisions on the wrong timeline, or fails to implement deferred provisions at all, faces a capital adequacy compliance gap. For the practitioner, providing incorrect guidance on regulatory operative dates carries malpractice exposure and potential disciplinary consequences with ISCA.

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  3. Finding 3. Content and scope of Annex 4D of consolidated MAS Notice 637

    An Accountants (CA/PA) preparing or reviewing a bank client's off-balance-sheet exposure disclosures could mischaracterise the applicable framework based on the AI's self-contradictory Annex 4D description — applying leverage ratio logic where the standardised approach to credit risk was required, or vice versa. A capital adequacy calculation prepared on the wrong framework basis could produce materially incorrect capital ratios. For a practitioner whose advice informs a regulatory capital return, an error of this kind could expose both the practitioner and the bank client to MAS supervisory action.

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  4. Finding 4. Content of Annex 6C of consolidated MAS Notice 637

    An Accountants (CA/PA) advising on fair-value instrument valuation or reviewing a bank's prudent valuation framework could rely on the AI's Annex 6C characterisation to structure that advice, without recognising that the characterisation was inferred rather than sourced. If the actual content of Annex 6C differs — covering different methodology, different thresholds, or different categories of instrument — the practitioner's advice would be wrong. The consequences for a bank client could include inadequate additional valuation adjustments, misstated regulatory capital, and supervisory challenge from MAS on the adequacy of the valuation framework.

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  5. Finding 5. Content of Division 4 of Part VI of MAS Notice 637

    An Accountants (CA/PA) summarising the capital instrument recognition requirements of MAS Notice 637 for a client or for internal training could record the AI's Division 4 / Part VI characterisation as a reference point, without noting the AI's own caveat that the description was unverified. If the actual content of that division covers different ground — for example, different eligibility criteria or reporting obligations for capital instruments — the practitioner's summary would be inaccurate. For a bank client relying on that summary to structure its capital instrument documentation, the error could result in instruments that do not qualify for regulatory capital recognition under MAS rules.

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