In the business world, financial statements play a crucial role in determining a company’s financial health and performance. In Singapore, audited financial statements hold significant importance, providing transparency and credibility to both local and international stakeholders. This article aims to shed light on the requirements and guidelines for Singapore audited financial statements, particularly for private companies. By understanding these obligations, companies can ensure compliance and foster trust among their investors and partners.
Singapore audited financial statements requirements
Singapore imposes specific requirements for audited financial statements to ensure transparency and accountability in financial reporting. These requirements apply to various types of companies, depending on their size, nature, and listing status. The key requirements for audited financial statements in Singapore are as follows:
- Annual Financial Statements:
Every company registered in Singapore is required to prepare annual financial statements.The balance sheet, income statement, cash flow statement, and statement of changes in equity are among these statements. The company’s financial status and performance should be accurately depicted in the financial statements.
- Statutory Audit:
Certain companies are mandated to undergo a statutory audit by an independent auditor. The Companies Act stipulates the criteria for determining which companies must have their financial statements audited. Factors considered include the company’s size, annual revenue, and the number of shareholders. Public companies and large companies generally fall within the scope of mandatory audits.
- Compliance with Financial Reporting Standards:
Companies in Singapore must comply with the Singapore Financial Reporting Standards (SFRS) or International Financial Reporting Standards (IFRS). These standards establish guidelines for financial reporting, ensuring consistency and comparability across different entities. Adhering to these standards helps maintain the quality and reliability of audited financial statements.
- External Auditor Appointment:
Companies subject to statutory audits must appoint an external auditor who is registered with the Accounting and Corporate Regulatory Authority (ACRA) in Singapore. The auditor’s role is to independently examine the company’s financial statements, assess internal controls, and express an opinion on the fairness and accuracy of the financial information presented.
- Filing Requirements:
Companies are required to file their audited financial statements with ACRA within a specified period after the financial year-end. The filing deadline depends on the company’s type and whether it is listed on the Singapore Exchange (SGX). Timely filing ensures compliance with regulatory obligations and allows stakeholders access to accurate and up-to-date financial information.
- Additional Reporting for Public Companies:
Public companies listed on the SGX have additional reporting requirements. They must comply with the SGX Listing Rules, which include disclosing financial information, key events, and corporate governance practices. These additional disclosures aim to provide investors with comprehensive information for making informed investment decisions.
- Internal Controls and Audit Committee:
Companies subject to statutory audits are encouraged to establish robust internal control systems and maintain an audit committee. Internal controls help safeguard company assets, prevent fraud, and ensure accurate financial reporting. An audit committee oversees the company’s financial reporting process, internal controls, and engagement with auditors.
It is essential for companies in Singapore to understand and comply with these requirements to meet their legal obligations, maintain transparency, and instill confidence in stakeholders. Failure to comply with the audited financial statements requirements may result in penalties, legal consequences, and reputational damage. Therefore, engaging professional auditors and staying updated with regulatory changes are crucial for businesses operating in Singapore.
What company need to be audited in Singapore
In Singapore, the requirement for a company to undergo an audit depends on various factors, including its type, size, and listing status. Here are the main categories of companies that typically need to be audited in Singapore:
- Public Companies:
Public companies listed on the Singapore Exchange (SGX) are subject to mandatory audits. The auditing requirement aims to ensure transparency, accountability, and the accuracy of financial reporting for the benefit of shareholders and the investing public.
- Large Companies:
Large companies, regardless of their listing status, generally require statutory audits. A company is considered large if it meets any two of the following criteria for two consecutive financial years: total annual revenue exceeding SGD 10 million, total assets exceeding SGD 10 million, or employing more than 50 employees. The aim is to ensure that companies of substantial size are subject to independent scrutiny.
- Companies with Shareholder Requests:
Regardless of their size, a company may be required to undergo a statutory audit if requested by shareholders who collectively own at least 5% of the company’s shares. This provision allows minority shareholders to request an audit if they have concerns about the company’s financial affairs.
- Financial Institutions:
Financial institutions, such as banks, insurance companies, and capital market intermediaries, are subject to rigorous regulatory oversight. They are required to undergo regular audits to ensure compliance with industry-specific regulations and to maintain the stability and integrity of the financial system.
- Subsidiaries of Foreign Companies:
Singapore-incorporated subsidiaries of foreign companies may have audit requirements imposed by their parent companies or as a result of contractual agreements. These requirements aim to ensure consistency in financial reporting across the group and to meet international standards.
- Companies Seeking Government Grants or Incentives:
Certain government grants or incentives in Singapore may have audit requirements as a condition for eligibility. Companies applying for such programs may be required to undergo an audit to verify their financial information and compliance with program guidelines.
It is important for companies to understand their specific obligations and consult with professionals, such as auditors or accounting experts, to determine whether they fall within the scope of mandatory audits. Adhering to audit requirements not only ensures legal compliance but also contributes to the credibility, transparency, and trustworthiness of a company’s financial information.
Audit requirements for a private company in Singapore
Audit requirements for private companies in Singapore include three key aspects as outlined by ACRA.
- Appointment of Auditors:
Within three months of incorporation, all private companies in Singapore are required to appoint at least one auditor who must be a public accountant or an accounting firm registered with ACRA. The appointed auditor will serve until the first annual general meeting, at which point the company can choose to retain the same auditor or select a new one.
- Role of Auditors:
As part of the audit process, private companies in Singapore must prepare audited financial statements that encompass the balance sheet, income statement, cash flow statement, and other relevant information. Auditors play a crucial role by:
– Providing an opinion on the accuracy and fairness of the audited financial statements, identifying any significant discrepancies they may find.
– Verifying compliance with local and international financial reporting standards.
– Accessing company records to effectively and timely conduct the audit.
- Auditor Remuneration:
The Companies Act stipulates that auditors must be compensated for their services. However, there is no specific law governing the exact fee charged by audit firms. The remuneration is typically negotiated between the client and the audit firm. In case shareholders request it, companies are required to disclose the auditor’s remuneration during a general meeting.
What happens if a company’s auditor resigns or is removed?
In the event of an auditor’s resignation or removal, the company must take appropriate steps to appoint a new auditor. Failure to do so can lead to the Accounting and Corporate Regulatory Authority of Singapore (ACRA) stepping in to appoint an auditor on behalf of the company. The procedures for appointing a new auditor differ based on the circumstances:
– Removal of the previous auditor: The company must inform the auditor of their removal, conduct a general meeting, and appoint a new auditor with the approval of at least three-fourths of the attendees. Subsequently, the company notifies the Registrar about the removal.
– Resignation of the previous auditor: Within three months of receiving the auditor’s resignation notice, the company holds a meeting to appoint a new auditor. After the appointment is approved during the general meeting, the company notifies the Registrar within 14 days.
Non-compliance with these regulations may result in a fine of S$5,000 imposed on companies that fail to adhere to the requirements.
Conclusion
Singapore’s auditing requirements are designed to maintain transparency, accountability, and the credibility of financial information provided by companies. By understanding the obligations surrounding audited financial statements, companies can fulfill their compliance responsibilities and establish trust with stakeholders. Whether it is a public company, a large enterprise, or a small private company, adhering to the regulations not only ensures legal compliance but also instills confidence in investors and partners.
