Company Statutory Audit in Singapore | Key Facts
What is a Statutory Audit in Singapore?A statutory audit is a type of external audit usually conducted annually to ensure compliance with laws and regulations. As the word statutory suggests, every company in Singapore must undergo a statutory audit unless it qualifies for audit exemption. A statutory audit entails examining an organization’s financial data and book of accounts to ensure its credibility and prevent any misstatements or discrepancies.
Table of Contents
1. What is the Legal Requirement of Statutory Audit?
Small Company Audit Requirement:
Small Group Company Audit Requirement:
According to the Singapore Companies Act, all corporations that are part of a “small group” must qualify as “small companies.”
A group company is an entity formed of a set of companies that are under common control.
A group company will be exempt from the annual audit of its accounts if the holding and all subsidiary companies individually:
For a Group to be a “small group,” it must meet at least two of the three following quantitative criteria on a consolidated basis (Parent + Subsidiaries) within the last two consecutive financial years :
Company A was incorporated as a private company on January 21, 2020. Company A gross assets were $6 million at the end of the financial year 2020, with 42 employees and annual revenue of $8 million. Company A was not required to undergo a Statutory Audit as the qualifying criteria for a small company were met.
When a private company ceases to be a private company, it is subject to statutory audit. Likewise for Company A, statutory audit is required if it ceases to be a private company in the year 2021.
2. What causes a change in the Audit Status of the Company?
When a group qualifies for the “small group” category, they usually keep this status for subsequent financial years until they fail to meet at least two of the three quantitative criteria within the previous two financial years.
3. What are the requirements for audit-exempt companies?
4. Transitional Provisions for existing companies:
5. What are the penalties for non-compliance in a Statutory Audit?
Not appointing an auditor in time in Singapore is a punishable offense and may incur penalties. Section 173A (1) states that a company shall by notice furnish to the Registrar –
Failure to comply with the above section is an offense of the Act and every officer of the company who is in default shall each be guilty of an offense and shall be liable on conviction to a fine not exceeding $5,000 and also to a default penalty.
Statutory Audit is not required for a “small company” or a “small group”.
These businesses must meet a number of quantitative criteria in order to qualify as a small business or a small group, allowing them to be exempted from statutory audits. When a “small company” or a “small group” qualifying exemptions are not met, the company or group must appoint a statutory auditor and conduct a statutory audit.
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Frequently Asked Questions
Small Company Audit Requirement:
In Singapore, every registered company must file financial statements and have their statements and accounting records officially audited every year, unless they are exempt from a statutory audit.
To determine if a company qualifies as a small company in its first two financial years following incorporation, it must analyze whether it meets the requirements in each year. For example, suppose a company is incorporated after July 2015. It should consider whether it is a private company and whether it meets two out of three quantitative criteria in its first financial year to determine whether it qualifies for exemption. If it doesn’t work,it will still get a chance to qualify in its second financial year, if it is a private company and meets the 2 out of 3 quantitative criteria in its second financial year.
Based on the number of full-time employees employed by the company at the end of the financial year, the number of employees is computed.
Only Singapore incorporated companies are eligible for the small company audit exemption. However, when assessing whether a corporation belongs to a small group, all entities within that group, including foreign entities, are considered to calculate whether the group’s consolidated total revenue and consolidated total assets match the thresholds.
Companies in such sectors may shift their operations to countries with less stringent carbon prices, resulting in job losses without benefitting the climate. To avoid such a scenario, the Government has rolled over a transition framework wherein allowances are provided for part of companies’ emissions, based on efficiency standards and decarbonization targets.