According to the Singapore Companies Act, all companies are required to have an annual audit of their financial statements and accounting records, unless they meet the exemption criteria. The Companies Act was amended in 2014 to introduce the concept of a “small company” and update the audit exemption criteria. As of July 1, 2015, a small company is not required to appoint an auditor and have its accounts audited. To qualify as a small company, a company must satisfy at least two of the following three conditions:

1. The company’s total annual revenue must not exceed S$10 million.
2. The company’s total assets at the financial year-end must not exceed S$10 million.
3. The number of full-time employees at the end of the financial year must not exceed 50.

In addition to private companies, group companies such as holding and subsidiary companies may also qualify for the Singapore audit exemption if they meet the criteria for a small group.

So is Financial Statements Audit still necessary?

1. an audit provides an independent assessment of the company’s financial statements and accounting records, which can enhance the credibility and reliability of the company’s financial information. This can be particularly beneficial for small companies that may be seeking external financing or investment, as audited financial statements may provide greater assurance to potential investors or lenders.

2. an audit can help identify weaknesses or inefficiencies in a company’s financial management processes, allowing the company to improve its operations and potentially increase profitability. The auditor may also provide recommendations for improving internal controls or risk management, which can be valuable for small companies that may have limited resources or expertise in these areas.

3. an audit can help ensure compliance with legal and regulatory requirements, including tax and accounting standards. This can help small companies avoid potential penalties or legal issues that may arise from non-compliance.

4. Preparation for future growth: Even if a small company is not currently required to undergo an audit, choosing to have an audit can help prepare the company for future growth. By establishing robust accounting practices and undergoing regular audits, the company can build a solid financial foundation that can support expansion and increased complexity in the future.
In summary, while small companies in Singapore may be eligible for an audit exemption, undergoing an audit can provide several benefits, including improved credibility, operational efficiency, and legal compliance.

5. An audit can serve as a deterrent against employee fraud and other financial irregularities within a company.During an audit, the auditor will review the company’s financial records and internal controls, looking for any signs of fraud or mismanagement.

Assurance Services from USafe:
Apart from meeting the compliance with Companies Acts, a quality audit can give assurance on accuracy and transparency of the Company’s financial information to management and stakeholders for a better decision making.

✓ Statutory audit
✓ Due Diligence audit
✓ Special-purpose audit