One of the reasons why Singapore remains one of the most attractive locations to start or expand a business is because of the high standard that companies are held to. A company statutory audit is an external audit conducted annually to ensure that companies are meeting the laws and regulations set by the government. Here are some key facts that you should know about!
What Companies Need to Undergo Company Statutory Audit?
As stated in the Singapore Companies Act, every company needs to undergo a statutory audit and have their financial statements and accounting records audited by an accredited auditor annually.
Are There Any Exemptions to the Company Statutory Audit?
The Accounting and Corporate Regulatory Authority (ACRA) has exempted small companies from having to undergo this process. A small company is defined as:
- A company that is classified as a private company in the current financial year
- A company that has met at least two of the following criteria in the past two consecutive financial years:
- Has a total annual revenue that doesn’t exceed SGD 10 million
- Has total assets worth not more than SGD 10 million
- Has no more than 50 employees, with these employees being full-time employees, at the end of the financial year
A company part of a group may also avail of this exemption so long as the company and its entire group qualify as a small group based on the definition above. This also comes with a few conditions that need to be met:
- For a group to qualify as a small group, it must meet at least two of the three criteria above for the immediate past two consecutive financial years
- Should a company qualify as a small group, it must continue to be a small company until it is disqualified. Disqualification can happen if either of the two criteria is satisfied:
- The company stops being a private company during a financial year
- The company has not met the required two out of the three small company criteria for the past two consecutive financial years
Are There Any Transitional Provisions for Existing Companies?
All companies that have been incorporated no later than June 30, 2015, can also qualify as a small company if two out of the three quantitative criteria for small companies are met.
What are the Requirements for Exempted Companies?
Companies that successfully qualify as small companies should still prepare and file their unaudited annual financial statements as these will help them with the calculation for their corporate tax returns. However, exempted companies are no longer required to appoint an auditor.
How to Choose an Auditor for Company Statutory Audit?
Within three months of the company’s incorporation, company directors must already appoint an auditor from ACRA’s roster of registered public accountants. The role of an auditor is to analyze a company’s financial statements and see whether these comply with the current financial reporting standards, as well as to offer an objective perspective regarding the company’s financial position.
What are the Penalties for Non-Compliance?
The company must by notice furnish to the Registrar:
- Within 14 days after a person is appointed auditor;
- Within 14 days after any change to the appointed auditor
Failure to appoint an auditor in time or submitting misleading financial statements and information can yield severe penalties, with every company officer in default being seen as guilty and liable to conviction, as well as a fine of up to SGD 5,000 and a default penalty.
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There are many reasons why a company’s financial statements are important, so it’s best to leave it to professionals who can handle it. WealthBridge offers a wide range of Singapore corporate services, including accounting and the preparation of accurate and timely financial statements. Let WealthBridge handle the paperwork so that you can continue growing your business!