Some companies may be eligible for exemption of audit in Singapore, which allows them to forgo the audit process. If a company qualifies for audit exemption, it can prepare a compilation report/unaudited report without undergoing a statutory audit. However, it is important to note that not all companies are eligible for audit exemption, and it is vital to understand the criteria and requirements for exemption of audit in Singapore.
Eligibility Criteria for Exemption of Audit in Singapore:
So, how do you qualify for an exemption of audit in Singapore? Here is a guide on the requirements and process for obtaining audit exemption.
The first step in qualifying for audit exemption is determining if your company meets the eligibility criteria. According to the Companies Act, a company is eligible for audit exemption if it meets at least two of the following criteria:
To qualify for an exemption of audit in Singapore, a company must be a private company, as defined by the Companies Act. The private company is required to meet at least two of the following quantitative criteria:
- The turnover is less than S$10 million; this refers to the total revenue generated by the company in a financial year.
- The total assets are less than S$10 million; this refers to the full value of all the company’s assets, including cash, investments, and property.
- The total number of employees are less than 50.
If a company meets at least two of these criteria, it qualifies as a small company and may be eligible for an exemption of audit in Singapore. However, it is essential to note that some companies do not qualify for audit exemption, even if they meet the above criteria. These include:
- Companies listed on the Singapore Exchange (SGX)
- Companies that are subsidiaries of listed companies
- Companies that are registered as public companies
- Companies that are registered as financial institutions, such as banks and insurance companies.
If a company is exempted from audit, it is still required to prepare financial statements and have them certified by a director. However, these financial statements are not required to be audited. The company must also file these financial statements annually with the Accounting and Corporate Regulatory Authority (ACRA).
If a company is part of a group, the group’s consolidated revenue and total assets must also be considered when determining eligibility for audit exemption. A group is defined as a company, its subsidiaries, and any other companies with a controlling interest.
What is a Statutory Audit, and Why is it Required?
A statutory audit is an independent review of a company’s financial statements and records. It is required by law for specific companies, as the Companies Act specifies. The purpose of a statutory audit is to assure shareholders, creditors, and other stakeholders that the company’s financial statements are accurate and reliable.
The statutory audit is carried out by an independent auditor, a professional accountant with the skills and expertise to review a company’s financial statements and records. The auditor will assess the company’s financial position and performance and provide an opinion on whether the financial statements are presented fairly, in all material respects, in accordance with the relevant financial reporting framework.
There are several reasons why a statutory audit is required in Singapore. One reason is to ensure that the company’s financial statements are accurate and reliable. In addition, the statutory audit provides an independent and objective assessment of the company’s financial position and performance, which helps to build trust and confidence in the company’s financial information.
Another reason for a statutory audit is to identify potential issues or risks that may affect the company’s financial stability. The auditor will review the company’s financial statements and records and may identify any areas of concern that need to be addressed; this can help to prevent financial problems from arising in the future and protect the company’s shareholders and creditors from potential losses.
A statutory audit is also required to meet the regulatory requirements of the Companies Act. In Singapore, certain companies are required by law to undergo a statutory audit, regardless of their size or financial performance; this includes companies listed on the Singapore Exchange (SGX) and companies registered as public companies.
If you are in need of advice on auditing services, please follow this link for more information: https://sjhacc.com/sg/services/audit-services/