Singapore is known as one of the best countries to build businesses. It is also considered the 2nd easiest place to do business according to the World Bank!
But though there are countless benefits one can get when building a business in the country, Singapore still has rules and compliance that need to be strictly followed by entrepreneurs, and investors alike, who incorporate their companies in the Lion City.
Adherence to audit and compliance standards is important, as it stands as a cornerstone for sustainable operations for every company in Singapore. According to Singapore’s Companies Act, companies must comply with the annual filing requirements from the Accounting and Corporate Regulatory Agency (ACRA), as well as the Inland Revenue of Singapore (IRAS).
Key Insight to Understand About Audit in Singapore
Auditing is the meticulous process of reviewing and verifying financial records to ensure accuracy and compliance. In Singapore, it plays a pivotal role in validating the integrity of financial statements and identifying potential risks.
The government body that oversees the auditing standard in Singapore is The Accounting and Corporate Regulatory Authority (ACRA). They are the ones who ensure adherence to the Singapore Financial Reporting Standards (SFRS).
Who is Obligated to be Audited?
Almost all companies that are incorporated in Singapore should undergo an audit as a requirement. But generally, it is based on their size and structure. Here's a breakdown of which company is obligated to be audited:
- Public Companies
All companies that hold public interest, such as listed companies, banks, insurance companies, and certain other entities, regardless of their size or turnover, are mandated to undergo annual audits.
- Large Private Companies
Private limited companies meeting at least two of the following criteria for two consecutive financial years are required to be audited:
- Total annual revenue exceeding SGD 10 million
- Total assets exceeding SGD 10 million
- Employing an average of more than 50 employees
- Other Entities Mandated by Statute or Regulation
Certain industries or sectors may have specific regulatory requirements mandating audits regardless of company size.
Audits can provide an independent and objective assessment of a company's financial statements, ensuring accuracy, reliability, and compliance with regulatory standards. They also enhance credibility and trust among stakeholders, including investors, creditors, and regulatory bodies. Audits help detect errors, fraud, or irregularities, fostering transparency and accountability within the company.
Who is Exempt from Audit Requirements?
According to the Singapore Companies Act, every company must get its financial statements and accounting records audited by an auditor on an annual basis. But some cases allow for a particular company to be exempt from audit if they meet this exemption requirement:
- Small companies with total annual revenue not exceeding SGD 10 million, total assets not exceeding SGD 10 million, and employing an average of not more than 50 employees
- Dormant companies with no significant accounting transactions during the financial year.
- Certain private companies are designated as Exempt Private Companies.
Audit and Compliance Procedures in Singapore
- Process Essentials
Audits in Singapore involve a structured series of steps. It begins with careful planning, where auditors assess risks, set objectives, and design an audit strategy. The next phase is conducting fieldwork, where auditors gather evidence by examining financial records, transactions, and internal controls.
Thorough documentation throughout the process ensures that findings, procedures, and conclusions are well-recorded. Finally, a comprehensive report is generated, summarizing the audit findings, highlighting any discrepancies, and providing recommendations for improvement. This meticulous process aims to ensure accuracy, reliability, and compliance with accounting standards.
- Compliance Measures
To comply with regulatory standards in Singapore, businesses establish and maintain robust internal controls. These controls are policies, procedures, and practices implemented to safeguard assets, prevent fraud, and ensure accurate financial reporting. Regular internal audits are conducted to assess the effectiveness of these controls. Additionally, maintaining accurate and transparent records is crucial to demonstrate compliance with statutory requirements and accounting standards.
- Hiring External Auditors
External auditors play a crucial role in providing an independent evaluation of a company's financial statements and compliance measures. Their objective assessment enhances the credibility of a company's financial reporting, reassuring stakeholders, including investors and regulatory bodies, about the accuracy and reliability of the information presented.
External auditors bring an unbiased perspective, validating the company's adherence to regulatory standards and bolstering confidence in its transparency and governance. Thus, hiring an external auditor is better for business success.
Leave Everything to Wealthbridge
With the strict regulatory environment in Singapore, ensuring your company follows audit and compliance is a must-do to prevent potential penalties and the possibility of ACRA issuing arrest warrants.
Save time and money by hiring Wealthbridge expert teams to ensure your company follows audit and compliance regulations.
Get in touch with us now and start your journey toward easy financial reporting in Singapore!