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Singapore Audit Exemption Criteria

Singapore Audit Exemption Criteria

Singapore’s initiative to sustain its vibrant commercial landscape and foster the development of more SMEs or Small and Medium Enterprises altered the Companies Act in 2015. The change now allows exemption from audit of small firms upon meeting the Singapore audit exemption criteria.  

Before the July 1, 2015 change, only private companies with a yearly income below SGD five million were exempted from audit. The revised Companies Act introduced the small company concept with changes in the Singapore audit exemption criteria, which applies to existing and newly incorporated private limited firms in Singapore. 

Singapore Audit Exemption Criteria: Audit Obligations of Small Companies

In Singapore, every company must designate an auditor. This designation must be within the three months following its incorporation except for those exempt from audit. This Singapore audit exemption criteria applies to firms that belong to the small group or company category. The small firm audit exemption generally exists for a broader group of business stakeholders, such as customers, workers, and creditors. 

Such parties may have certain interests in a company’s financial statements and appreciate the reduction of compliance expenses of small companies. Still, even when a company is audit-exempt, it must continue preparing and filing its annual unaudited financial statements. 

Aside from other reasons such as compliance issues, the company’s yearly financial statements remain the primary source for financial decision-making, besides preparing the tax return. Being audit-exempt only frees the company from the requirement to officially designate an audit company to audit the books of accounts.

So, what makes your business eligible for the Singapore audit exemption criteria?

Singapore Audit Exemption Criteria: Audit Exemption Eligibility Criteria

The amended audit exemption regulations took effect on Singapore firms incorporated after July 1, 2015, and for companies having a fiscal year starting July 2, 2015, or onwards. The audit-exempt companies in Singapore must meet the following criteria:

  • Registered by way of a private business during the fiscal year, and;
  • The company satisfies two or all the listed conditions for the recent two years:

1. The total yearly company turnover is below SGD ten million

2. Total company assets are below SGD ten million

3. The company employs 49 or fewer employees

If the business is a member of a company group, then:

  • It must satisfy the conditions for a small Singapore company; and, 
  • The entire company group is considered a “small group”.

As stated by the Singapore law, a “small group” satisfies two or all of the conditions stated above of a “small company.” Upon meeting these eligibility conditions, the company qualifies for exemption on audit. Understanding or remembering all these conditions and checking if the company meets the criteria could be puzzling for some.

Hence, the best option is to engage a professional accounting or audit firm in Singapore, such as Premia TNC. Rest assured that our firm has professionals with complete knowledge of Singapore’s audit regulations and processes.

Singapore Audit Exemption Criteria: Annual Return Filing With ACRA

A Singapore firm needs to submit to ACRA an annual return within 7 months from the financial year end. The return must include details of the firm’s officers and its registered address, besides auditors. Effective December of 2019, companies can file their annual returns with ease as most of the data is already in the return form. 

The filer merely needs to check the pre-filled data based on the previous year’s return filing to ensure that it is still applicable for the present annual return. The yearly return’s user interface has likewise been enhanced to ease the filing process. Here are the steps for filing the annual return:

  1. Proceed to BizFile+
  2. Pick “Local Company” below the “e-Services”
  3. From “Annual Filing,” choose “Filing of Annual Return by Local Company (For FYE from August 31, 2018).”

For companies with the fiscal year ending before August 31, 2018, the steps are as follows:

  1. Proceed to BizFile+
  2. Pick “Local Company” below the “e-Services”
  3. From “Annual Filing,” choose “Filing of Annual Return by Local Company (For FYE before August 31, 2018)”

Another option for companies is using third-party software solutions developed with ACRA to preset the making and submission of the annual return and financial statements with ACRA. With a Simplified XBRL set-up, the software routinely generates the yearly returns. 

In addition, it stays linked to the BizFile+ portal of ACRA via APIs. As a result, this enables companies to submit annual returns without logging in to ACRA’s BizFile+ portal.

Singapore Audit Exemption Criteria: Annual Tax Return Filing With IRAS

A Singapore incorporated company must submit its yearly corporate tax return to IRAS on or before November 30. The city-state considers the previous year for the taxation basis. This means that the earnings for the fiscal year ending within the prior year are the starting point for a tax return filed in the current year.

Remember that the company directors are accountable and responsible for abiding by this annual filing obligation. Just like ACRA, filing at IRAS is online through mytax.iras.gov.sg. Whoever will be filing must first be authorized by the company for its income tax related issues via Corppass.

Singapore Audit Exemption Criteria: Key Concerns And Duties Of Small Businesses

As stated earlier, despite the Singapore audit exemption criteria of small companies, they still need to compile their audit-free financial statements. To do this, they must maintain their accounting records properly. In addition, as much as possible, they have to empower their shareholders by having at least five percent voting rights towards requiring their company to put audited accounts in order.

Singapore companies must keep proper accounting books even if covered by the audit exemption. The reason for this is that ACRA conducts checks occasionally. In addition, an independent or external auditor needs to be designated if the company has legal issues.

The company will also benefit if its accounting employees have enough experience and knowledge to ensure that the income statements and balance sheets are prepared well per the SFRS. Moreover, all related papers, such as bank statements and invoices, among many others, must be kept. The best solution for small businesses unsure of the stockholders’ voting rights is to consult the company secretary. Lastly, remember that a firm can be ineligible for audit exemption if it is no longer a private limited company during the fiscal year. Of course, ineligibility can also result from the company failing to satisfy the conditions of the Singapore audit exemption criteria for the past two years.

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