When is audit compulsory in Singapore?
In Singapore, an audit is compulsory for companies that do not qualify as a "small company." A company is exempt from audit if it meets at least two of the following criteria for the past two consecutive financial years: annual revenue of not more than SGD 10 million, total assets of not more than SGD 10 million, and no more than 50 employees. Public companies, financial institutions, and certain other entities are required to undergo an audit regardless of size.
An audit is compulsory for companies that meet certain criteria, reflecting the government's aim to reduce the regulatory burden on small companies while ensuring transparency and accountability in the financial reporting of larger entities. The criteria for mandatory audits are primarily based on the concept of a "small company" exemption. A company is exempt from having its accounts audited if it qualifies as a small company for the immediate past two financial years.
For a company to qualify as a small company, it must meet at least two of the following three criteria for the immediate past two consecutive financial years:
Total annual revenue of not more than SGD 10 million.
Total assets of not more than SGD 10 million.
No more than 50 employees.
Additionally, to qualify for the audit exemption, a company must be a private company within the meaning of the Singapore Companies Act.
For a company to qualify for the small company criteria for a particular financial year, it must meet two of the three quantitative criteria mentioned above for the immediate past two consecutive financial years. Once a company qualifies as a small company, it continues to be so unless it ceases to meet the criteria for two consecutive financial years.
Furthermore, a company that is part of a group can qualify for audit exemption if it qualifies as a small company itself and the group it is part of qualifies as a "small group". To qualify as a small group, the group must meet at least two of the three quantitative criteria on a consolidated basis for the immediate past two consecutive financial years.
However, certain types of companies are explicitly required to have their accounts audited regardless of their size. These include public companies, companies regulated by the Monetary Authority of Singapore (MAS), and companies that have corporate shareholders or are part of a larger group that does not meet the small group criteria.
It's important to note that regulations and thresholds can change, so it's always a good idea to consult the latest guidelines from the Accounting and Corporate Regulatory Authority (ACRA) of Singapore or seek professional advice to determine the specific audit requirements applicable to your company.