COUNTRY

Singapore

UNAUDITED FINANCIAL STATEMENTS SINGAPORE

All businesses in Singapore must submit audited reports or unaudited financial statements in Singapore to ACRA annually. 

These reports are applicable to those businesses that are exempted from an independent audit. Generally, small businesses and dormant companies are exempted from audit requirements. 

Until a certified external auditor examines and certifies the financial accounts, they are deemed not audited.

The Companies Act requires that an auditor be appointed within three months of the company’s establishment. An auditor would need to be chosen by the directors to audit the accounts.

Directors who don’t keep accurate accounting records could face a default penalty in addition to a fine of up to S$2,000 or a sentence of up to 3 months in jail. Directors who fail to comply with the FRS may also be subject to fines of up to S$50,000. Unaudited financial statement preparation is unquestionably essential to avoid legal repercussions for failing to prepare them at all.

Contact us for Singapore company registration service.

WHAT IS INCLUDED IN UNAUDITED FINANCIAL STATEMENTS IN SINGAPORE?

Directors’ Statement and Report – The company’s directors describe their responsibilities for the creation and presentation of the financial statements in their Directors’ Statement and Report. It might also include more details or explanations of the company’s financial position and performance.

Statement of Financial Position – Also known as the balance sheet, this document gives a quick overview of the business’s financial situation as of a particular date. An overview of the company’s total financial situation is provided by the presentation of its assets, liabilities, and shareholders’ equity.

Statement of Comprehensive Income – Also referred to as the income statement or profit and loss statement, this document shows the revenues, costs, profits, and losses experienced by the organisation during a given time period. It displays the company’s net profit or loss for that time frame.

Financial Statement Notes – These notes offer additional details and explanations that go along with the financial statements. For a complete knowledge of the financial statements, they provide significant accounting policies, specifics of particular transactions, contingencies, commitments, and other relevant information.

Statement of Cash Flows – This statement breaks down the company’s cash inflows and outflows into operating, investing, and financing operations for a specific time period. It offers details about the business’s cash flow, investment activity, and funding sources.

Statement of Changes in Equity – This statement describes how the equity of the shareholders has changed over a certain time period. It demonstrates how variables such as net profit or loss, dividend payments, share issuance or buybacks, and other comprehensive income have impacted the company’s equity.


WHO CAN PREPARE UNAUDITED FINANCIAL STATEMENTS?

The company’s internal accounting team, which is made up of certified accountants or financial professionals, is capable of preparing unaudited financial statements. 

Accuracy and compliance are still essential even though unaudited financial statements are not subject to external audits because they serve several functions, such as:

  • Applying for government grants or making loan applications
  • Filing taxes
  • Carrying out due diligence, particularly when looking into company-related issues for joint ventures, mergers, and acquisitions
  • Demonstrating accountability to the company’s investors
  • Discussing issues at the annual general meeting
  • Meeting regulatory requirements in specific industries
  • Avoiding the high costs related to external auditing to achieve cost efficiency.

STATUTORY AUDIT EXEMPTIONS IN SINGAPORE

The company must still generate and submit unaudited yearly financial statements even if it is exempt from statutory audits. The corporate tax returns of the business are calculated and prepared with the help of the annual financial statements. However, if the firm is exempt from audit, they are not required to appoint an auditor within three months of establishment, and the accounts are not subject to formal auditing.

REQUIREMENTS FOR SMALL COMPANIES

The Singapore Companies Act specifies that organisations that fall under the “small company” category must be private businesses during the current fiscal year and must have met at least two of the three requirements throughout the previous two fiscal years.

  • 50 employees or less, 
  • SGD$10 million or less in total annual revenue, 
  • SGD$10 million or less in total assets.

Small businesses are exempted from submitting audited financial statements but they still need to lodge unaudited financial statements. The company has to be able to track the many profits and losses it has experienced, which is why unaudited profit and loss accounts are essential. Additionally, planning is necessary so that the firm can figure out how to grow financially or in other aspects of the business.

REQUIREMENTS FOR DORMANT COMPANIES

A dormant firm is one that has not produced any revenue for a particular amount of time, usually a financial year, according to the IRAS. It might, however, have incurred expenses.

ACRA, however, defines an inactive firm as one that has no accounting transactions during the course of a financial year. A company with selected transactions can still be deemed inactive if the transactions meet the below requirements. 

  • The appointment of an auditor;
  •  maintaining a registered address; 
  • paying any fines or fees imposed by ACRA;
  • The appointment of a company secretary;
  • Maintenance and bookkeeping of records and business books;
  • Transactions involving the acquisition of shares by a new shareholder or subscriber under specific circumstances.

STEPS TO COMPLETE THE UNAUDITED FINANCIAL STATEMENT PREPARATION IN SINGAPORE

Relin consultants will gather all necessary financial information, including records of earnings, costs, assets, liabilities, equity, and cash flow for the accounting period.

We will organise and make accessible all supporting documentation, including bank statements, expense reports, invoices, and receipts.

We will prepare the unaudited financial statements using the financial data that has been gathered.

When creating the financial statements, our team will follow the relevant accounting guidelines, such as International Financial Reporting Standards (IFRS).

We will make sure that the company’s financial performance and position are accurately reflected in the financial statements.

An insolvent company must also prepare an XBRL report prior to submission to ACRA. Refer to XBRL filing Singapore for more information.

Relin Consultants will create the compilation report, which is a declaration made by confirming that we prepared the unaudited financial statements using the given financial information.

Details related to the compilation engagement, any exclusions or limitations, and the accountant’s validation of compliance with accounting rules and regulations will all be included in the compilation report.

Reach out to us at Relin Consultants for further assistance with your unaudited financial statement preparation.

FAQs

What are unaudited financial statements?

Financial statements that are not reviewed or verified by a qualified independent auditor are considered to be unaudited. The company’s accounting and finance departments frequently create unaudited financial statements for internal use in management.

In Singapore, who needs audited financial statements?

In Singapore, a private company must undergo an audit unless it is a small firm, a small group, or a dormant corporation.

Who is qualified to create unaudited financial statements?

Unaudited financial statements may be prepared by a certified public accountant on behalf of a client or with their help. As opposed to an audit of financial statements conducted in accordance with widely recognized auditing standards, this form of engagement is an accounting service.

Who in Singapore is exempted from filing financial statements?

You are exempt from filing FS with ACRA if you are a sole proprietor, partner, limited liability partner, or limited partnership owner.

How do audited and unaudited financial accounts differ from one another?

An independent accountant has reviewed the audited financial statements to ensure that the data is truthful and accurate. Unaudited financial statements, on the other hand, lack this guarantee.

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