What Does a Singapore Audit Services Firm Do for SMEs?

What Does a Singapore Audit Services Firm Do for SMEs?

Small and medium-sized enterprises (SMEs) are the backbone of Singapore’s economy, making up over 99% of all enterprises and employing about 70% of the workforce. As these businesses grow, the need for transparency, financial accuracy, and regulatory compliance becomes essential. This is where a Singapore audit services firm plays a critical role.

An audit services firm provides a wide array of financial and compliance-related services, ensuring that an SME operates efficiently, stays compliant with the law, and maintains stakeholder trust. But what exactly does an audit firm do for an SME? Let’s explore the comprehensive scope of services and how they benefit small and medium businesses in Singapore.

1. Statutory Audits for Financial Statements

One of the primary services of an audit firm is to conduct statutory audits. In Singapore, companies that exceed two of the following three thresholds for the past two consecutive financial years are required to be audited:

• Total revenue more than S$10 million

• Total assets more than S$10 million

• More than 50 employees

Audit firms perform a detailed review of the company’s financial statements, ensuring they comply with the Singapore Financial Reporting Standards (SFRS). The auditor expresses an opinion on whether the financial statements present a true and fair view of the company's financial position.

Why It Matters for SMEs:

• Investor Confidence: Audited financials boost investor and lender trust.

• Regulatory Compliance: Avoids penalties from non-compliance with ACRA and IRAS.

• Business Insights: Highlights inefficiencies, internal control weaknesses, and areas of improvement.

2. Internal Control Reviews

Audit firms also help SMEs by conducting internal control reviews. These reviews assess the company’s internal processes, such as inventory management, procurement, sales, and cash handling procedures.

Benefits for SMEs:

• Risk Reduction: Identifies fraud risks and procedural weaknesses.

• Operational Efficiency: Recommends controls that reduce wastage and improve workflow.

• Scalability: Prepares systems and controls that can handle business growth.

3. Regulatory and Compliance Advisory

Singapore’s regulatory landscape can be complex, especially for growing SMEs. Audit firms assist SMEs in interpreting and adhering to various laws and regulations such as:

• The Companies Act

• The Income Tax Act

• The Goods and Services Tax (GST) regulations

• Personal Data Protection Act (PDPA) (for data protection compliance)

By staying up to date with these regulations, audit firms guide SMEs in avoiding legal pitfalls.

4. Assistance with Tax Compliance and Advisory

While not all audit firms offer tax services, many full-service firms in Singapore assist SMEs with:

• Corporate tax return filing

• GST return filing

• Tax planning strategies

• Handling IRAS queries or audits

Why This Helps:

SMEs often lack in-house expertise to deal with Singapore’s tax regulations. An audit firm can help minimize tax exposure while ensuring that tax filings are timely and accurate.

5. Preparation for IPOs or Fundraising

SMEs with expansion plans may consider fundraising, mergers, or even listing on the Catalist Board of the Singapore Exchange (SGX). Audit firms play a crucial role in this process by:

• Preparing the company for due diligence

• Ensuring audited financials meet regulatory expectations

• Supporting compliance with SGX listing rules

Even if the SME is only raising capital from private investors or banks, clean and professional audited financials make the business more credible.

6. Gross Turnover (GTO) Audits for Retail and F&B SMEs

Many SMEs operating in shopping malls or franchises are required by their landlords or franchisors to submit Gross Turnover (GTO) audit reports. Audit firms verify and certify the accuracy of the reported sales figures.

This is especially important for:

• Retail stores

• F&B outlets

• Franchisees

Why It’s Important:

• Compliance with tenancy agreements

• Transparency in revenue sharing models

• Avoids penalties for under-reporting

7. Special Purpose Audits

Sometimes SMEs require specific audit reports outside of the standard financial audit. These may include:

• Grant audits (for verifying use of government or institutional grants)

• Project audits (to verify costs of specific initiatives)

• Agreed-upon procedures (when clients or partners request specific checks)

8. Business Valuation and Due Diligence Services

Audit firms are also equipped to provide business valuation and financial due diligence services. These are essential when:

• Buying or selling a business

• Bringing in investors

• Planning for succession or exit

Having a neutral, professional third party to verify the financial standing of a business adds credibility to any deal.

9. Support for SMEs with Limited Financial Expertise

Many SMEs operate without a full-fledged finance department. In such cases, the audit firm becomes a critical financial partner by:

• Training in-house staff

• Recommending best practices for accounting and reporting

• Suggesting software tools or external bookkeeping services

10. Enhancing Credibility for Loans and Partnerships

When SMEs apply for bank loans, grants, or enter into partnerships, audited financial statements give external stakeholders assurance that the business is stable and trustworthy.

Banks, in particular, may require audited accounts for:

• Business term loans

• SME working capital loans

• Government-assisted schemes such as Enterprise Financing Scheme (EFS)
  

Choosing the Right Audit Firm in Singapore

Not all audit firms are equal. When selecting a firm, SMEs should consider:

• ACRA Registration: Ensure the firm is registered and licensed with ACRA.

• Experience in SME Sector: Prefer firms that understand the nuances of SME operations.

• Industry Knowledge: Firms with expertise in your sector (e.g., retail, construction, F&B) will add more value.

• Range of Services: Consider firms that offer integrated audit, tax, and advisory services.

• Proactive Communication: Choose a firm that provides timely reminders, updates, and practical advice.
  

Conclusion

A Singapore audit services firm offers much more than just ticking compliance boxes. For SMEs, they are valuable partners in financial reporting, risk management, tax compliance, and business planning. By working closely with a qualified audit firm, SMEs can gain not just peace of mind but also strategic financial insights that help their businesses grow confidently and sustainably.

If you're an SME owner in Singapore, engaging a trusted audit firm could be one of the best decisions for your company’s long-term success.