Singapore companies are subject to financial reporting requirements under the Companies Act 1967. While certain private companies may qualify for audit exemption, it is important for directors and business owners to understand when an audit is required and how the exemption criteria apply.
1. Are All Singapore Companies Required to Be Audited?
Not all Singapore companies are required to have their financial statements audited. A private company may qualify for audit exemption if it meets the requirements of the small company concept under the Companies Act.
2. Small Company Audit Exemption
A private company generally qualifies as a small company if it meets at least two of the following three criteria for the relevant financial years:
• Total annual revenue of S$10 million or less
• Total assets of S$10 million or less
• 50 employees or fewer
For an existing company, these criteria generally need to be satisfied for the immediate past two consecutive financial years. Different rules apply to newly incorporated companies.
3. Companies That Are Part of a Group
Where a company is part of a group, additional requirements apply. The company must qualify as a small company and the entire group must also meet the applicable small group criteria on a consolidated basis.
4. Audit Exemption Does Not Remove Financial Reporting Responsibilities
Qualifying for audit exemption does not mean that a company is exempt from its financial reporting responsibilities. Directors remain responsible for ensuring that the company prepares financial statements that comply with the applicable accounting standards and give a true and fair view of the company’s financial position and performance.
5. When Should Businesses Seek Professional Advice?
Audit exemption can become more complex where a company is part of a group, has undergone significant growth or changes in ownership, or is uncertain whether it continues to meet the applicable criteria. Businesses should assess their circumstances carefully before determining whether an audit is required.
How CDT Assurance PAC Can Help
CDT Assurance PAC provides independent audit and assurance services to businesses in Singapore. If you are unsure whether your company requires an audit or would like to discuss your audit requirements, please contact us.
This article is intended for general information only and does not constitute professional advice. Specific advice should be obtained based on your circumstances.