In Singapore, all registered companies are required to prepare financial statements and undergo an annual statutory audit. However, certain businesses can qualify for an audit exemption, which eases administrative and financial burdens. Knowing these audit requirements in Singapore is essential for your company to avoid penalties and maintain financial transparency. In this article, we will shed light on the exemption criteria, compliance obligations, and transitional provisions for existing businesses.
Audit Exemption Criteria for Small Companies
The small company audit exemption in Singapore aims to reduce compliance costs for smaller firms while guaranteeing financial accountability. To qualify, a company must meet at least two of the following conditions:
- Revenue Threshold
Total annual revenue does not exceed SGD 10 million.
- Asset Threshold
Total assets do not exceed SGD 10 million.
- Employee Threshold
The company has at most 50 full-time employees.
For group companies, the exemption applies only if the entire group collectively satisfies these thresholds. This exemption benefits smaller entities by eliminating the need for a statutory audit, allowing them to focus resources on growth and operational efficiency.
Dormant Company Audit Exemption
Dormant company audit exemption provides a streamlined approach to compliance, helping to reduce costs and administrative burdens. A company is considered dormant if it has had no accounting transactions during a financial year, excluding certain statutory fees such as the Accounting and Corporate Regulatory Authority (ACRA) filing costs.
Although these companies do not need to conduct a financial report audit, they must still comply with regulatory requirements by filing financial statements and tax submissions.
Audit Exemption Compliance Requirements
Even if your business qualifies for an audit exemption, it is crucial to adhere to audit exemption compliance requirements. These include:
- Preparation and Filing of Financial Statements
Financial statements must align with the Singapore Financial Reporting Standards (SFRS).
- Annual Submissions to ACRA and IRAS
While exempted from audits, private exempt companies must file accurate financial records for corporate tax and regulatory purposes.
Non-compliance with these audit requirements in Singapore may result in penalties, even if the company is exempt from undergoing a statutory audit.
Transitional Provisions for Existing Companies
For businesses incorporated before the 2015 amendments to Singapore’s Companies Act, transitional provisions allow them to qualify for audit exemption under certain conditions. These include:
- Being a private company since 1 July 2015.
- Meeting the small company criteria in either the first or second financial year following the amendment.
These provisions enable older companies to align with updated regulations without disruption to their operations.
Why Audit Exemption Matters
Determining if your business qualifies for an audit exemption is key to managing costs effectively and staying compliant with regulations. Adhering to the audit requirement in Singapore ensures your company upholds financial transparency and avoids legal complications.
At the same time, it also protects your business reputation and maintains smooth regulatory filings. For more professional advice, consult financial auditing experts to meet your specific needs.
The Importance of Statutory Audits
Statutory audits offer assurance to external stakeholders, including investors, regulators, and creditors, by verifying that the financial statements are accurate and reliable. Conducted by an independent auditor, these audits ensure compliance with financial reporting standards and regulations.
Final Thoughts
The audit exemption framework in Singapore provides much-needed relief for small and dormant companies. It allows them to allocate resources more effectively while still meeting regulatory standards. Whether you need help understanding audit requirements in Singapore, preparing financial statements, or conducting internal reviews, connect with a trusted financial auditing professional today.
At Credo Assurance, we are committed to offering expert guidance on audit exemptions, internal audit services, and compliance, simplifying your financial operations for business success.
Contact us and let us assist you with meeting audit requirements in Singapore.
