Auditing your company’s finances is essential for validating the fairness and accuracy of a business’s financial statements. This is why the audit regulations in Singapore state that every registered company in Singapore must submit financial statements each year.
Unless exempted from audit, businesses must have their statements and accounting records adequately audited.
The Singapore Companies Act (CA) specifies guidelines for several areas of company audits, including the appointment of auditors and the types of businesses that are exempt from audit obligations.
This article will walk you through the audit regulations in Singapore that every business owner has to be aware of.
What Is A Statutory Audit?
A statutory audit is an external audit often performed yearly to fulfill a specific set of legal requirements, including financial reporting standards.
Based on audit regulations in Singapore, statutory audits are mandated to ensure that your company’s financial statements accurately and fairly reflect its financial standing. Auditors can do this by providing an unbiased perspective of the financial statements.
After this, stakeholders may be more inclined to trust your financial reporting and make wise investment choices.
Private limited companies in Singapore must conduct an annual statutory audit under the Companies Act, and a certified auditor or public accountant must perform this audit.
Singapore’s Accounting and Corporate Regulatory Authority (ACRA) is the main regulatory body for audit regulations in Singapore.
What Is Needed to Conduct a Statutory Audit?
Some specific pieces of information are examined during a statutory audit of a Singapore company. Such details consist of the following:
- Comprehensive Income Statement
- Cash Flow Statement
- Statement of Financial Position
- Statement of Changes in Equity
- Summary of all the main accounting principles used by the firm
The auditors must examine each of these to finish the statutory audit of the company.
Which Companies Are Obligated To Be Audited?
According to the audit regulations in Singapore, private limited companies must conduct an annual audit of their financial statements with the help of a licensed public accountant.
Companies that must undergo audits under Singapore business law must do so for ACRA and other government authorities to verify that the company is adhering to the guidelines established by Singapore’s regulatory bodies.
The Singapore Companies Act states the framework for conducting routine audits in Singapore, while ACRA serves as the primary regulatory body for company audits.
Audit Exemptions for Select Companies
Based on the audit regulations in Singapore, certain businesses are exempt from undertaking audits in Singapore if they meet the requirements. For instance, dormant companies, small groups, and small companies in Singapore are not subject to audits.
The Singapore Companies Act was amended to exempt small businesses from doing audits under the Companies (Amendment) Act of 2014.
However, even if a company is exempt from audits, ACRA may still decide to audit it if it violates any laws or rules about reporting financial statements during the annual general meeting (AGM) or maintaining accounting records.
Audit Regulations In Singapore: Requirements For An Audit
The three basic audit requirements for a private company laid out by ACRA are the auditors’ appointment, role, and remuneration.
1. Appointment of Auditors
Unless exempted from an audit, all Singapore companies are required to appoint an auditor within three months of their incorporation. The auditor must be a certified public accountant or an accounting firm that ACRA accredits.
Until the shareholders’ first annual general meeting, the auditor will remain in this position. The company can also choose a new auditor at that time or keep the current one.
The auditors must conduct the audit in compliance with other laws and standards, such as the Singapore Standards on Auditing (SSA), to render an audit assessment of the financial statements.
According to the audit regulations in Singapore, specifically the Companies Act, it is illegal and punishable to present false information to ACRA or fail to appoint an auditor on time.
2. Role of Auditor
Singapore companies must create an audited financial statement as part of the audit procedures. Statements such as the income statement, balance sheet, and cash flow statement are all included in the business’s financial statements.
The auditors’ job is to assess whether the company fairly and accurately depicts its financial status in the audited financial statements. Additionally, auditors are required to identify any significant discrepancies they uncover.
Another role of an auditor is to determine whether the financial statements adhere to national and international reporting standards. To thoroughly and promptly audit the firm’s financial statements, auditors must have access to company records.
3. Remuneration of Auditor
According to audit regulations in Singapore, companies must compensate auditors for their services. However, no established law specifies the fees that audit firms must charge their clients. This indicates that the client and the audit firm are free to discuss the charge.
A company that uses an entity to conduct the audit must disclose this in the general meeting. The notice will state how much the company paid the auditor. The directors are also in charge of deciding on the compensation.
On the other hand, this relies on their appointment conditions. The AGM must decide on the auditor’s compensation if a resolution was adopted in the AGM that led to the appointment.
Audit Regulations In Singapore: Exemptions From An Audit
Several Singapore companies are exempt from being audited. These are the small companies, small groups, and dormant companies.
1. Small Companies
The audit regulations in Singapore have laid out the specific terms for a company to be exempt from an audit. Specifically, ACRA revised the Companies Act under the Small Company Concept in July 2015.
Under this revision, employing an auditor and having the accounts audited would not be required if the business qualifies as a small company.
Generally, a business will be regarded as a “small company” if it is privately held for the entirety of the current financial year. Additionally, it must meet any two of the following requirements for each of the two financial years immediately preceding the current financial year:
- The company’s total annual revenue is less than $10 million;
- The overall value of the assets of the company is less than $10 million; or
- The number of employees in the company is no more than 50.
For these smaller businesses, the small company audit exemption lowers compliance costs. Additionally, it includes more parties interested in the company’s financial statements, such as customers, employees, and creditors.
2. Groups of Companies (Small Group)
If they meet the criteria for a “small group,” holding companies and the subsidiaries under them may also be free from audit compliance.
The group (consisting of all the companies) must have satisfied two of the following three requirements in the most recent two financial years to be qualified as a “small group”:
- The combined revenue cannot be greater than $10 million;
- The combined total assets cannot be worth more than $10 million;
- The group’s overall staff count cannot be more than 50.
This means that both the holding company as a whole and each of the subsidiary firms individually must meet the requirements of a small company to be eligible for the audit exemption.
3. Dormant Company
Based on audit regulations in Singapore, specifically ACRA, a dormant company is a company that has not carried out any transaction from the time of incorporation.
Meanwhile, the Singapore Companies Act states that a company is dormant if it has not made any financial or accounting transaction. To be considered dormant, a firm must also meet the following requirements:
- The company did not carry out any accounting or financial transactions from its establishment.
- There has been a transaction between the start of the financial year and its end.
How We Can Help – Our Audit Services
Companies should always be ready with accurate financial statements and accounting records to comply with audit regulations in Singapore. Businesses can outsource these responsibilities to professional service firms that are knowledgeable in accounting and bookkeeping procedures.
Service firms can assist companies in maintaining accurate financial records and statements over the long term and in complying with auditing standards. Premia TNC offers clients thorough, expert auditing, accounting, bookkeeping, and taxation services in Singapore.
Our company has years of extensive experience, comprehensive knowledge of audit regulations in Singapore, and cutting-edge technology to conduct the necessary processes for your business’s needs.
Thanks to Premia TNC’s top notch audit solutions in Singapore, you can:
- Focus on your customers to increase client retention by being aware of the value you provide.
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- Focus on growing by paying attention to your main revenue-generating activities, such as sales, marketing, and business expansion.
Since we regard ourselves as visionary business partners that help customers identify the best solutions to their business needs, we provide much more than standard audit services in Singapore.
At Premia TNC, we provide every one of our clients with premium value by offering both audit services and complete corporate advisory services.
Are you conducting an audit of your company? Let us handle your auditing requirements so you can focus on your core business. Contact us today for a FREE consultation on your auditing needs!
Frequently Asked Questions
1. Which Singapore companies are exempt from audit requirements?
Based on audit regulations in Singapore, small companies in Singapore are exempt from audit requirements.
The term “small companies” refers to private limited companies with annual total revenue of less than S$10 million, assets totaling less than S$10 million throughout a given financial year, and less than 50 employees at the end of a particular financial year.
Companies affiliated with group companies are also exempted if the entire group meets at least two of the requirements mentioned earlier and has done so during the previous two financial years.
2. Is it required for private companies in Singapore to be audited?
Yes. According to the audit regulations in Singapore, every firm, including a private company, is required to have its financial statements and accounting records audited at least once annually under the Singapore Companies Act. Only companies that meet the requirements for exemptions do not need auditing.
3. Who can carry out company audits?
According to the audit regulations in Singapore, the Companies Act mandates that only public accountants certified by the Accounting and Corporate Regulatory Authority of Singapore (ACRA) with the necessary skills may perform company audits.
4. When should I appoint an auditor for my company?
A company must appoint an auditor within three months of the date of incorporation, as stated in the audit regulations in Singapore. However, if the company is eligible under Section 205B or 205C of the Companies Act, this exempts it from audit obligations.
5. Is the appointment of an auditor required?
Yes. Unless your firm is excluded from the requirements of the audit regulations in Singapore, you must appoint an auditor to assess and verify your accounting records. After incorporation, you have three months to appoint an auditor.
According to the 1949 Chartered Accountant Act, a statutory auditor must be recognized as a CA (Chartered accountant).
6. What would happen if a company auditor left or was fired?
If the current auditor is fired or steps down, the company will need to hire a new one. The Accounting and Corporate Regulatory Authority of Singapore (ACRA) may designate an auditor on behalf of the company directors if they fail to do so, in compliance with the audit regulations in Singapore.
7. How frequently should a statutory audit be carried out?
Every company must have its financial statements and accounting records audited by an auditor at least once yearly, according to the audit regulations in Singapore, unless the company qualifies for an audit exemption under the Singapore Companies Act.
8. If my company is exempted from an audit, do we still need to submit financial statements?
Yes, even if your business is exempt, you’ll still need to submit your annual financial statements. However, they don’t have to be officially audited according to the audit regulations in Singapore.
9. What are auditing services?
Auditing services are professional services that provide compliant financial statements and ensure that the finances are in order according to the audit regulations in Singapore before engaging with essential stakeholders.
10. What is an audited financial statement?
An audited financial statement is typically the by-product of an external audit. Statements such as the income statement, balance sheet, and cash flow statement are included in this report.
An auditor’s primary responsibility is to assess the integrity of the data reported in this document and ensure the company is compliant with the audit regulations in Singapore.
