In Singapore, auditors play a critical role in ensuring the accuracy, transparency, and compliance of a company’s financial statements. Their review provides assurance to stakeholders that the financial information is reliable and follows Singapore Financial Reporting Standards (SFRS). Auditors are vital in detecting errors, fraud, and ensuring accountability in business operations.
When Is an Audit Required for Singapore Businesses?
The involvement of an auditor becomes necessary in several situations:
Annual audits are mandatory for most companies unless exempted under the audit exemption criteria.
Regulatory compliance with ACRA often requires companies to submit audited financials.
Tax filing accuracy often benefits from an audit to validate figures submitted to IRAS.
Investor requirements or stakeholder confidence may demand audited reports.
Suspected fraud or financial irregularities may prompt an audit for investigation.
Legal Audit Requirements Under Singapore Law
Under the Companies Act, newly incorporated companies must appoint an auditor within three months unless exempted. Companies that do not qualify for audit exemption are legally required to have their accounts audited annually.
Key Regulatory Authorities for Audits in Singapore
Accounting and Corporate Regulatory Authority (ACRA): Oversees compliance, public accountants, and corporate service providers. Enforces the Companies Act and ensures financial transparency.
Inland Revenue Authority of Singapore (IRAS): Manages tax administration and ensures compliance with tax laws and accurate filing.
Singapore Financial Reporting Standards (SFRS): Provides a standardized framework for financial reporting aligned with international standards (IFRS).
Which Singapore Companies Need an Audit?
Type of Company
Audit Requirement
Public Companies
All must be audited annually to protect shareholders.
Large Private Companies
Audit required if they meet at least two of the following: revenue > S$10 million, assets > S$10 million, or more than 50 employees.
Small and Exempt Private Companies
May be exempt – see below.
Which Companies Qualify for Audit Exemption in Singapore?
To be exempt from audit, a company must qualify as a “small company” by meeting at least two of the following criteria for the past two financial years:
Total revenue ≤ S$10 million
Total assets ≤ S$10 million
Number of employees ≤ 50
Dormant companies that conducted no business during the financial year may also qualify for audit exemption.
Group audit exemption: Holding and subsidiary companies may qualify as a “small group” if they collectively meet two out of the three small company criteria.
What Audit Exemption Means for Your Business
While exempt from audits, companies are still required to maintain proper records and prepare compliant financial statements. Audit exemption reduces administrative costs and time for smaller businesses, but financial discipline remains essential.
What Auditors Do
Auditors provide independent assurance on the accuracy and fairness of your company’s financial statements. Their duties include:
Assessing internal controls and financial practices
Uncovering fraud or accounting errors
Ensuring compliance with regulations
Reporting findings transparently to shareholders and regulators
Approved Auditors
Only ACRA-approved auditors or audit firms are authorized to conduct audits in Singapore. They must adhere to Singapore Standards on Auditing (SSA) to ensure professionalism and quality.
How Long Does a Company Audit Take in Singapore?
The duration of an audit depends on the company’s size, complexity, and readiness of documentation. On average, audits take 2 to 6 weeks from planning to finalization. Companies should plan ahead, especially if audited financials are needed for regulatory or investor purposes.
Frequently Asked Questions About Audit Exemption in Singapore
1. What is audit exemption in Singapore?
Audit exemption allows qualifying companies to forgo the requirement of annual audits, easing compliance and reducing costs.
2. What qualifies a company for audit exemption?
Companies must meet at least two out of three criteria: total revenue ≤ S$10 million, total assets ≤ S$10 million, and ≤ 50 employees.
3. Are dormant companies automatically exempt?
Yes, provided they have had no transactions during the financial year and meet ACRA’s criteria for dormancy.
4. Do audit-exempt companies still need to file financial statements?
Yes, they must still prepare and file financial statements in compliance with the Singapore Financial Reporting Standards (SFRS).
5. Can a company lose its audit exemption status?
Yes, if it no longer meets the small company criteria for two consecutive years.
6. Who can be appointed as an auditor in Singapore?
Only auditors or firms approved and registered with ACRA can conduct statutory audits.
