The audit exemptions for companies in Singapore were altered, and the notion of ‘small companies’ was supplemented. The Companies Act in Singapore has been changed and revised to benefit both entrepreneurs and the government better. This option offers audit exemption for both the existing and newly registered private limited companies in order to leverage the expansion of Small and Medium Enterprises (SMEs).
If you want to know more about company formation, refer to the Singapore company registration page.
Every registered company in Singapore must submit financial statements each year, and unless they are exempt from audit, must have their statements and accounting records formally audited.
For the audits to be approved, companies must comply with auditing standards and employ a public accountant that is registered with the Accounting and Corporate Regulatory Authority (ACRA).
NEW AUDIT EXEMPTION REQUIREMENTS IN SINGAPORE IN 2023
Unless the firm meets the audit exemption criterion, the Singapore Companies Act requires every company to have its financial statements and accounting records audited by an auditor on an annual basis.
The exemption criteria for a small company are as follows.
- The total annual revenue of the company must not be more than 10 million SGD.
- The total assets of the company for the financial year-end must not be more than 10 million SGD.
- The number of full-time employees at the end of the financial year must not be more than 50.
For private limited companies in Singapore, they do not need to do audits if;
- It is a dormant company, or
- It is an exempt private company (EPC) with annual revenue of 5 million SGD or less.
Despite this, the business must still file the financial statement with ACRA at least once in every fiscal year because it forms the basis for calculating the tax return.
The business is regarded as a member of a group company if it is a constituent, such as a subsidiary or holding company of a larger entity.
According to Singapore’s Inland Revenue and Authority, each of the group’s subgroups would be evaluated to determine whether or not they qualify for audit exemption based on the facts and numbers of the entire group of firms.
Group company audit requirement
When considered together, a holding company and all of its subsidiaries make up a group that is all under the same source of control.
If the company is both (1) a “small company” per se and (2) a subset of a “small group,” it can qualify for the audit exemption in Singapore as a mere member of a larger group company.
A group company or a holding company is exempted from audit if all of the subsidiary companies;
- Fulfill at least two of the conditions of a small company
- A relatively small group of companies.
A small group of companies is qualified as so if two of the small company criteria are met in two consecutive financial years.
Change in company status
In any of the following situations, the company would instantly forfeit its privileges as a “small company” and hire an independent auditor or audit firm to have its accounting records audited:
- Any time during a fiscal year, the company either adds the 51st shareholder or issues shares to the general public, ending its status as a private corporation.
- More than two of the three requirements to qualify as a “small company” for the last two immediate financial years have been violated by the organisation.
It is clear that recent incorporations would not be able to satisfy these requirements for the most recent two fiscal years.
A series of transitional rules have been implemented to accommodate this need, enabling businesses founded before the amendment to qualify as “small companies” and benefit from that status.
If the business was established before July 1, 2015, it can still be regarded as a “small company” if:
- Since then, it has operated as a private firm
- It could meet the set of requirements in the first or second fiscal year following the change.
Compliance with ongoing legal requirements
Businesses must comply with other ongoing statutory requirements such as submitting financial statements, maintaining accounting records, and being ready for shareholders who hold 5% or more of the voting rights to request audited accounts, whether or not a firm is free from audit requirements.
ACRA will continue to undertake periodic spot checks on the financial accounts of the companies. In the case that a company is involved in any legal matters, ACRA will also appoint an auditor to audit the company.
Businesses can hire a reputable audit firm to handle the necessary compliance, or they can outsource these responsibilities to staff knowledgeable in accounting and bookkeeping procedures. Audit firms assist organizations in maintaining accurate financial records and statements over the long term in addition to assisting organizations in complying with auditing standards.
Exempted audit disqualification
Your company can be disqualified from the small company status due to the change in company audit status. Disqualification occurs if;
- No longer categorized as a private company in the financial year.
- No longer fulfill the small company requirements for two consecutive financial years.
Contact us if you require further clarifications or assistance with a Singapore company audit.
Do companies need to be audited in Singapore?
Private limited corporations in Singapore must conduct an annual Statutory Audit under the Singapore Company Act. This is an audit of their financial accounts by a certified public accountant or auditor.
What companies are exempt from audit?
An exempt private firm is exempt from having its financial accounts audited if it has yearly revenue of $10 million or less for the fiscal year. A private company that is exempt from taxation is one with fewer than 20 members and no corporation that has a beneficial interest in the company’s shares.
What is Section 205C Companies Act Singapore?
If an exempt private company’s revenue for a given financial year does not exceed the threshold, then, according to section 205C(1), it is exempt from audit requirements.