Singapore, over the years, has acquired the trust of international investors and entrepreneurs alike through its status as an international business center that boasts well-defined legal and regulatory frameworks. Amongst these main frameworks is the auditing requirement the country has instituted on its companies to ensure a certain standard of financial integrity and corporate governance. No matter if the corporation is big or small, knowing what the audit requirement for Singapore companies is, plays an essential part. Knowing the legal audit requirement gives the chance to avoid a penalty that could be associated with non-compliance. The paper will take into account the statutory audit requirements in Singapore, how ACRA Singapore audit requirements influence companies, and the general Singapore audit requirement landscape.
Audit Requirement for Singapore Companies
Not all companies in Singapore are required to conduct audits of their financial statements. Some may be based on the size, the revenue earned by the company, or on exemption from audit grounds. A brief understanding of the audit requirement for Singapore companies shall help to find out whether your business needs auditing or not.
Generally speaking, it is required by the Companies Act of Singapore that all companies appoint an auditor within three months from its date of incorporation unless it qualifies for audit exemption. All companies that are not qualified for audit exemption have to carry out a statutory annual audit and file audited financial statements with ACRA.
Understanding the Audit Requirements for Singapore Companies
An Overview of Singapore Statutory Audit Requirements for Companies
Statutory audit requirements are determined in Singapore under both the Companies Act of Singapore and the Financial Reporting Standards. The audit requirements thereby apply to most companies, whereas the regulatory framework of Singapore allows for certain small companies to be exempt from the statutory audit.
Exemption from Small Company Audit
Singapore introduced the audit exemption for a “small company” effective 2015. Unless at least two of the following three criteria are met, no audit exemption is available:
- The company’s total annual revenue does not exceed SGD 10 million
- The company’s total assets do not exceed SGD 10 million
- The company has less than 50 employees
A company qualifies as a small company if it satisfies two out of three criteria in the current financial year and also in the preceding financial year. If the company belongs to a group, the entire group must qualify on a consolidated basis for the exemption.
No audit of financial statements is needed and hence this would lessen the costs as well as administrative effort needed for small companies that qualify for this exemption. However, such companies are still required to prepare the financial statements in compliance with SFRS as well as file these with ACRA.
Non-Exempt Companies
The audit is statutory for those companies that do not meet the small company criteria. In this case, to meet the legal requirements in Singapore, the companies have to include in their accounting books an independent auditor who can verify the truthfulness of the financial statement.
The annual financial statements of these companies, inclusive of the auditor’s report would need to be lodged with ACRA upon the annual filing. This becomes both transparent and a means whereby regulatory standards are met. Auditing is most especially significant in the case of larger companies whereby an auditing process provides a sound, reliable representation of how well or badly a company may be doing financially.
Essential Audit Requirements for Companies in Singapore
Understanding Singapore Audit Requirements Under ACRA Regulations
ACRA Audit Requirements in Singapore are promulgated by the Accounting and Corporate Regulatory Authority, the regulatory body that supervises Singapore companies for their compliance with various legislation on corporate governance. Its role is to ensure that businesses comply with their statutory obligations to file their financial statements accurately and promptly with the registrar. As already indicated, such financial statements need to be audited first.
Filing Audited Financial Statements
Audited financial statements prepared in conformity with SFRS must be filed annually with the ACRA by companies whose financial statements are required to be audited.
The company needs to file its yearly returns with ACRA seven months from the end of its fiscal year, the financial statements having been audited. Non-compliance may attract penalties and fines imposed by ACRA and in very worst cases, striking off from the register
Appointment of Auditor
In the case of a company which is not qualified for an audit exemption, an auditor shall be appointed within three months from the date of incorporation. The auditor to be appointed should be an individual or firm registered with ACRA as a public accountant or public accounting firm. Appointed auditor will review the financial records of the company and will provide an audit report. The said report forms part of the annual filling of the company with ACRA.
Audit Requirements for Public Companies
Public listed companies have, therefore, to bear with stricter auditing demands. This is the case for all public companies listed on the SGX. They have to get their books of account audited annually by a public accounting company. The audits conducted will also have to be strictly according to rules and the public companies will have to be more strictly reported and disclosed for the protection of their shareholders interests and retention of market confidence in them.
Key ACRA Audit Requirements for Singapore Companies
Benefits of Compliance with Audit Requirements
Therefore, compliance with audit requirements in Singapore creates various advantages for the businesses involved. These include:
- Transparency: The audit provides a third-party overview of the company’s financial statements, and as such, ensures that the business is indeed conducted based on the principles of transparency, and that it is fair.
- Trust and Credibility: Businesses involved in audits make gains in the trust of shareholders, investors, and even creditors. An independent audit ensures stakeholder confidence in the state of affairs of the company pertaining to finances being presented correctly and credibly.
- By complying with the audit regulations, it means that the company is meeting the standards that are set by ACRA, and in addition, it has avoided penalties or legal repercussions for non-compliance.
- There is a prospect of improved financial management in that audits may point out weak points in finance or discrepancies; thus, the company will work on its financial management and internal controls.
Singapore Audit Requirement: Key Considerations
Understanding the Singapore audit requirement is quite vital in ensuring that your company complies with the law. A few key considerations are given below:
- Audit Exemption Criteria: Your company need not go for the annual audit if it falls under the small company audit exemption. However, the company shall still have to file with ACRA financial statements that are accurate.
- Appointment of Auditors: A non-exempt company needs to appoint an auditor within three months beginning from the date of incorporation. Make sure that the auditor you get is registered with ACRA and fit enough for the audit work.
Singapore Audit Requirement: Key Considerations
- Filing deadlines: ACRA requires companies to adhere to strict filing deadlines; therefore, the audited financial statements and annual returns should be filed within seven months of financial year-end.
- Consequences of Non-Compliance: Companies unable to fulfill the requirements related to audits will have to be penalized or/and fined, which may even involve striking off from the ACRA register. Ensuring timely and accurate submissions can help avoid these consequences.
Conclusion
In conclusion, understanding the audit requirements for Singapore company by One IBC is essential for compliance with ACRA regulations. While not all companies are required to undergo audits, larger companies or those meeting specific criteria must ensure that their financial statements are audited annually. These audits provide transparency, enhance investor confidence, and promote good corporate governance. Non-compliance can result in penalties, so it is crucial for companies to stay informed and seek professional guidance to meet their obligations. Adhering to Singapore’s audit requirements not only ensures legal compliance but also strengthens a company’s financial integrity and reputation.
