Company Audits in Singapore: Requirements and Exemptions
Company audits are vital in ensuring that financial statements of the company are true and fair. Thus, the Companies Act (CA) lays out requirements relating to several aspects of company audits, such as the appointment of auditors and which companies are exempt from audit requirements. This article explores these issues.
The following infographic is a summary of company audits requirements and exemptions in Singapore:
(Click on the image to download it in a new tab.)
Appointment of Auditors
The directors of a company are required to appoint at least one accounting entity to be the company’s auditor within 3 months of the company’s incorporation. In Singapore, only public accountants or accounting firms approved by the Accounting and Corporate Regulatory Authority (ACRA) can act as company auditors.
Auditors will hold office from the time of their appointment until the conclusion of the company’s next annual general meeting (AGM). Therefore when a newly-incorporated company first appoints an auditor, this auditor will hold office until the conclusion of the company’s first AGM.
Then during the first AGM, the company will have to appoint a new accounting entity (or reappoint the same accounting entity) to act as the company’s auditor until the conclusion of the next AGM. This auditor will then hold office until the conclusion of the company’s subsequent AGM, and so on and so forth.
If the directors fail to appoint a company auditor, any company member may apply to ACRA to have it appoint an auditor for the company instead.
A company auditor can be removed by passing a resolution at a general meeting for which special notice has been given. For more information, refer to our article on removing a company auditor in Singapore.
Role of Auditors
The role of auditors is to report on whether the company’s financial statements:
- Comply with financial reporting standards; and
- Provide true and fair view of the company’s financial position and performance.
The auditor’s report must be attached to or endorsed upon those financial statements when these statements are laid before the company at its AGM.
Auditors are entitled to access the company’s accounting records, or obtain any information and explanations from the company’s officers as required for audit purposes.
Companies are required to disclose auditor remuneration in a general meeting if a request for details of all payments paid to or receivable by the company auditor is made by:
- At least 5% of the total number of members of the company; or
- Shareholders who hold at least 5% of the total number of issued company shares.
Who can decide the auditor’s fees?
In general, the party which appointed the auditor will be able to fix the auditor’s fees. For example, if the directors had appointed the auditor, then the directors would be able to fix the auditor’s fees.
Alternatively, if the auditor had been appointed by the company at a general meeting, then the auditor’s fees must be fixed by the company in general meeting. (For this scenario however, the company’s members can also authorise the directors to fix the auditor’s fees at the most recent AGM.)
It appears that Singapore’s laws do not state how much auditors should be paid or when payment should be made. These issues are therefore up for negotiation when companies look for public accountants or accounting entities to appoint as their auditor(s).
Exemption from Audit Requirements
Companies that are regarded as a “small company” for a particular financial year, or are dormant, are exempt from audit requirements. These companies therefore do not need to appoint auditors (or have their financial statements audited) for that financial year.
If you are unsure of the end date of your company’s financial year, you may find our article on determining the financial year end of a company useful.
Small company exemption
In general, a company will be considered a “small company” if it is a private company throughout the current financial year, and satisfies any 2 of the following criteria for each of the 2 financial years immediately before the current financial year:
- The company’s annual revenue does not exceed $10 million;
- The value of the company’s total assets does not exceed $10 million; or
- The company does not have more than 50 employees.
Refer to paragraphs 3 and 4 of the Thirteenth Schedule of the CA for the criteria that companies incorporated for less than 3 years, or incorporated before 1 July 2015 respectively, have to meet in order to be considered a “small company”.
Exemption for small companies that are part of groups
(The concept of “group” in the CA has the same meaning as that in the Singapore Financial Reporting Standards.)
Small companies that are part of groups (whether as the parent company, or a subsidiary) will only be exempted from audit requirements if they are part of a “small group”.
For a group of companies to be considered a “small group”, it has to satisfy any of the 2 of the following criteria for each of the 2 consecutive financial years immediately before the current financial year:
- The group’s consolidated revenue does not exceed $10 million;
- The value of the group’s consolidated total assets does not exceed $10 million; or
- The group does not have more than 50 employees.
A company will also be exempt from audit requirements if:
- It has been dormant from the time of its formation; or
- It has been dormant since the end of the previous financial year.
A company is dormant during a period in which no accounting transaction occurs. Dormant companies will cease to be considered dormant once such an accounting transaction occurs.
The following are not to be considered as accounting transactions (refer to section 205B(3) of the CA for the full list):
- The appointment of a company secretary
- The appointment of an auditor
- The keeping of company registers and books
- The payment of any fees or charges that the law requires to be paid
Exception to exemption from audit requirements
Even if a company is exempt from audit requirements, the Registrar may still require the company to lodge its audited financial statements and an auditor’s report if the Registrar is satisfied that the company has breached laws relating to the:
- Keeping of accounting records (section 199 of the CA); or
- Laying of its financial statements at its AGM (section 201 of the CA).
If you’re looking for an auditor for your company, you may wish to check out our competitive rates for audit services in Singapore.
- Appointing Company Directors in Singapore: Eligibility, Process etc.
- Managing Director vs CEO in Singapore: Roles and Obligations
- Guide to Directors' Remuneration in Singapore
- Directors' Duties in Singapore
- Shadow Directors: Who are They and What Duties Do They Owe to the Company?
- How to Remove a Director from a Company in Singapore
- Removal and Resignation of Company Auditor in Singapore
- Appointing a Company Secretary: Roles and Responsibilities
- Appointing an Authorised Representative for Foreign Companies in Singapore
- Process Agents in Singapore
- 2 Ways to Remove a Singapore Company Shareholder ASAP
- Guide to Paid-Up Capital in Singapore (Is $1 Enough?)
- Preparing a Register of Shareholders for a Singapore Company
- How to Issue Shares in a Singapore Private Company
- Guide to Transferring Shares in a Singapore Private Company
- Your Guide to Share Certificates in Singapore: Usage and How to Prepare
- Shareholder Rights in Singapore Private Companies
- Shareholder Roles and Obligations in Singapore Companies
- Dividend Payments Guide for Singapore Business Owners
- Share Transmission: What Happens If a Shareholder Dies in Singapore?
- How to Reduce the Share Capital of Your Singapore Company
- Buy-Sell Agreements: How to Write & Fund Them in Singapore
- Oppression of Minority Shareholders
- Essential Regulatory Compliance Guide for Singapore Companies
- Dormant Companies and Their Filing Obligations in Singapore
- Anti-Money Laundering Regulations and Your Business: What You Need to Know
- Price-Fixing, Bid-Rigging and Other Anti-Competitive Practices to Avoid
- Legally Conducting Lucky Draws for Singapore Businesses
- Restaurant Inspection and Food Safety Rules in Singapore
- Does Your Company Need a Legal Team (In-House Counsel)?
- Acqui-Hiring of Singapore Companies: How Does It Work?
- How to Change the Name of Your Singapore Company
- Can Directors be Liable for Company Debts in Singapore?
- Company Loans to Directors/Shareholders in Singapore
- 3 Types of Insurance Every Singapore Business Needs
- Creating and Registering Charges in Singapore: Guide for Companies
- Guide to Effective Business Continuity Planning in Singapore
- Business Asset Sale & Disposal in Singapore: How Do They Work?
- Business Partnership Disputes in Singapore: How to Resolve
- How to Commence a Derivative Action on Behalf of a Company in Singapore
- Business Will: How to Pass on Your Business to Your Successors in Singapore
- Record-Keeping Requirements for Singapore Companies
- Company Constitutions in Singapore and How to Draft One
- Company Memorandum and Articles of Association
- Company Resolutions: What are They?
- Board Resolutions in Singapore
- Minutes of Company Meeting in Singapore: How to Record
- How to Set Up a Register of Controllers
- How to Set Up a Register of Nominee Directors
- Guide to Filing Financial Statements for Singapore Business Owners
- Filing Annual Returns For Your Business
- Singapore Corporate Tax: How to Pay, Tax Rate, Exemptions
- Start-Up Tax Exemption Guide for New Singapore Companies
- GST Registration: Requirements and Procedure in Singapore
- What is Withholding Tax and When to Pay It in Singapore
- Singapore Influencers: Here's How to Calculate Your Income Tax
- Tax Investigation of Tax-Evading Business Owners in Singapore
- Small Business Accounting Services in Singapore
- Company Audits in Singapore: Requirements and Exemptions
- Suspect a PDPA Data Breach? Here's What to Do Next
- Must You Notify PDPC About a Data Breach in Your Business?
- Summary: Your Organisation's 10 Main PDPA Obligations
- Essential PDPA Compliance Guide for Singapore Businesses
- PDPA Consent Requirements: How Can Your Business Comply?
- Is It Legal for Businesses to Ask for Your NRIC in Singapore?
- Here's a 7-Step Plan for Companies to Prevent Unauthorised Disclosure When Processing and Sending Personal Data
- Cloud Storage of Personal Data: Your Business’ Data Protection Obligations
- GDPR Compliance in Singapore: Is it Required and How to Comply
- Appointing a Data Protection Officer For Your Business: All You Need to Know
- How Can Companies Dispose of Documents Containing Personal Data?
- Check the Do-Not-Call Registry Before Marketing to Singapore Phone Numbers
- How to Legally Install CCTVs for Home/Business Use in Singapore
- Is Web Scraping or Crawling Legal in Singapore?
- Legal Options If Employees Breach Confidentiality in Singapore
- Your Guide to E-commerce Website Terms of Service in Singapore
- Dealing with Defamation of Your Business: Can You Sue?
- Sending Email Newsletters That Comply With Singapore Law
- A legal guide to drafting a social media policy for your company
- Your Guide to a Media Release Form in Singapore
- Your Guide to an Influencer Marketing Agreement in Singapore
- Outdoor Advertising: How to Legally Display Public Ads in Singapore
- Should You Save or Close Your Zombie Company in Singapore?
- Voluntary Suspension of Business in Singapore: How to Handle
- Winding Up a Singapore Company: Grounds and Procedure
- Closing Your Singapore Business: What You Need to Settle
- Striking Off a Company
- Can a Company that Struck Itself Off the Register Later Apply to Restore Itself?
- Dissolution of partnerships in Singapore
- What Should a Creditor Do When a Company Becomes Insolvent?
- How to File a Proof of Debt Against a Company in Liquidation
- Validation of Payments Made by Companies Being Wound Up