If you are thinking of starting a business or incorporating a company in Singapore, you will need to be familiar with the legal requirements. One of them is the Singapore statutory audit requirements.
The Singapore statutory audit applies to almost all companies incorporated in Singapore and yours will likely fall within that bracket.
To help you through the entire process, we will take a look at the Singapore statutory audit requirements and everything you need to know about it.
Singapore Statutory Audit Requirements
The Singapore statutory audit is performed externally to ensure that a company meets and complies with all the laws and regulations.
There are a few exemptions to the statutory audit but any company that doesn’t qualify for an exemption is required to undergo a statutory audit and meet the Singapore statutory audit requirements.
Such companies are expected to appoint an auditor within the first three months of its incorporation. The audit usually involves a look at the company’s financial records to ensure compliance and reveal any discrepancies or errors.
The Accounting and Corporate Regulatory Authority (ACRA) is in charge of company law and regulation in Singapore; therefore, they oversee the Singapore statutory audit requirements as well.
Companies Exempted from the Statutory Audits
One thing you should note is that certain companies are exempted from meeting Singapore statutory audit requirements. To that end, the companies in this category are not required to undertake a statutory audit.
All small companies fall under the exemption banner and are not required to undertake the statutory audit.
To be classified as a small company, the company must be private for the given financial year and meet at least 2 of the following requirements:
- Have less than 50 employees
- Must have under 10 million Singapore dollars in asset value
- Not more than 10 million Singapore dollars in annual revenue
Companies that cease to be private at any time during a given financial year will be liable to the statutory audit.
Furthermore, for a company to continue being classified as small and being exempt from statutory audit, it must maintain at least two of the above criteria for a minimum of 2 years.
To ensure your company complies with these regulations, you can seek external help from Premia TNC. Our experts are ready to help your business with the Singapore statutory audit requirements.
It is important to note that being exempted from statutory audits only excuses you from the audits themselves.
You will still have to file your unaudited financial statements. There will be no auditing of the company’s accounts, but the company’s financial reports will still need to be filed.
Why Does the Audit Status of a Company Change?
If a company has been classified as a small company, or as part of a small group, it will tend to retain that classification unless they are disqualified.
There are one of two possible reasons a company’s status changes from being a small company.
The first reason is that the company ceases to be classified as private during a financial year.
The second reason is that it no longer meets at least two of the requirements for exemption from the statutory audit.
You should note that for a company to cease being a small company, it needs to fail to meet at least 2 of the small company exemption criteria, for two financial years.
What Happens to Your Company If There is Non-compliance with the Statutory Audit?
Every company in Singapore that isn’t exempted from a statutory audit is required to appoint an auditor within its first three months of incorporation.
In the event of non-compliance, the person(s) guilty of the offense shall face a maximum fine of 5,000 Singapore dollars and any other default penalties.
To ensure your company does not default this mandate, the company is required to notify the registrar of:
- A new director, CEO, secretary, or auditor position not more than 2 weeks after it occurs.
- Any changes to the director, CEO, secretary, or auditor positions not more than 2 weeks after it occurs.
Conclusion
The Singapore statutory audit is mandatory for all companies that are not qualified for exemption. To ensure compliance with Singapore statutory audit requirements and determine your company’s status, you can contact Premia TNC.
With the proper guidance, you can focus solely on your business and not worry about non-compliance regarding Singapore statutory audit requirements.
Frequently Asked Questions
Are foreign companies exempt from statutory audits?
Only companies that qualify for exemption are not required to complete a statutory audit and meet Singapore statutory audit requirements.
All other companies both local or otherwise are required to be audited annually. A foreign company can qualify for exemption if it meets all requirements for exemption.
When did the small company exemption law come into effect?
With the small company audit exemption coming into effect from July 2015, the law was applied to all subsequent financial years after the change.
The criteria for exemption require that a company meet certain requirements in the previous two financial years to qualify for an exemption.
As long as your company meets this criterion, you are qualified for the small company audit exemption, even if the financial requirements are from before the law.
How does a new company qualify as a small company with no prior financial information to assess?
New companies do not have financial records that span two previous years, which are part of the requirements to be classified as a small company.
To that end, new companies can be classified as small companies if they meet the requirements for the given financial year. Those that do not qualify in the first year, can still qualify in the subsequent year if their status changes.
How can you assess the number of employees in your company?
For a company to qualify as a small company and subsequently exemption status, it will need to have less than 50 employees.
Only full-time employees in a company for a given financial year are considered employees. Temporary staff or part-time workers are not counted as employees when determining your company’s status.
