In Singapore, whether your company's financial statements qualifies for audit exemption or not depends on how big your company is; and if your company is in a group of companies, how big that group is. The small company and small group concepts are explained below:
Size Matters ...
So why does size matter? Because small companies in Singapore are not required by the Companies Act to have their financial statements audited. And to qualify as a small company, a company must be a private company that fulfills at least two of the following three quantitative criteria in each of the immediate past two financial years (FYs): (a) Total annual revenue of not more than $10 million; (b) Total assets of not more than $10 million; (c) Number of employees of not more than 50.
A company which has qualified as a “small company” in the first or second FY commencing on or after the date of commencement of the “small company” criteria continues to be a “small company” until it is disqualified as a “small company”. Disqualification would occur if it: a) Ceases to be a private company at any time during the FY, or b) Does not meet the quantitative criteria for the immediate past two consecutive FYs.
However, if the company is part of a group of companies, it will only be exempted from audit if the entire group qualifies as a small group. To qualify as a small group, the group would need to satisfy at least two of the above criteria for small company on a "consolidated" basis for the immediate past two FYs.
In other words, even if the company qualifies as a small company but is not part of a small group of companies, it's financial statements will still be required to be audited. This is so even if the parent company is not incorporated in Singapore.
Size not only matters when it comes to audit, but it also matters which financial reporting standard you are allowed to adopt in Singapore. More on that later.
If you are not sure if your company qualifies for audit exemption, you can contact us for an obligation-free consultation!
size doesn't matter ...
If your company does not fit the "small company" definition, then under the present Company's Act, it's financial statements would have to be audited. However, even if your company qualifies for audit exemption, it could still need to get its financial statements audited.
The following are scenarios which this could arise :
i) Other regulatory requirement Licensing from other government agencies might require the financial statements to be audited. For example, licenses from the Money Authority of Singapore, Building and Construction Authority would typically require the licensee's financial statements to be audited.
ii) Bank's requirement If the company has bank loans, the bank would usually require the company's financial statements to be audited, regardless of the size of the company.
iii) Supplier's requirement Some suppliers would insist on reviewing a company's audited financial statements before deciding the credit terms or even to do business with the company altogether.
iv) Shareholders' requirement If the company has several shareholders, they might wish to have the company's financial statements audited to have assurance that their interests are properly managed.
v) Potential Investors' requirement Potential investors would typically request to review the audited financial statements of the company they are looking to invest in.
What really matters
When you do require audit services, what really matters is you get the assurance that provides confidence to you and those around you. Our customized audit plan focuses on business areas significant to your financial statements and that are critical to your risk profile. By identifying business and control vulnerabilities and opportunities, we direct our audit efforts to areas of greatest risk.
The result is an efficient and effective audit that would cater to your every need.
Contact us today and let us know how we can be of service!