In Singapore, many companies may be exempt from the statutory audit required under the Companies Act if they fulfill specific preconditions. The most common such exemption applies to companies that are classified as “small companies” or those that are dormant.
1. Audit Exemptions for Small Companies:
A company is a “small company” if it fulfills at least two of the following three criteria for the immediate past two consecutive financial years:
- Annual revenue of not more than $10 million SGD in a financial year.
- Total assets at any time during the financial year of not more than $10 million SGD.
- The number of employees is not more than 50.
The company must fall within the above criteria on a consolidated basis for exemption in case it forms part of a group. It is said that the concept of a small company has been devised so as to help alleviate the regulatory burden on the smaller firms, which find auditing costly and unnecessary considering their limited scale of operation.
2. Dormant Company Exemption:
A company is exempted from audit if it is classified as a dormant company. A company will be classified as a dormant company in case has not entered any accounting transaction in the relevant financial year. The exemption on account of such small size will be irrespective of its size. However it must have been inactive in that period.
Exemptions like these enable Singapore to balance corporate transparency, reducing the administrative burden from smaller or inactive firms, while retaining audits for larger businesses to ensure good financial governance. At One IBC, with worldwide presence and experience in corporate services, ensures businesses get full support in the field of company formation, banking, and accounting in such a way that it will meet all compliance needs.