Singapore
  • Hong Kong
  • UK
  1. Osome Blog Singapore
  2. How Small Companies Can Qualify for Audit Exemptions

How Small Companies Can Qualify for Audit Exemptions

How Small Companies Can Qualify for Audit Exemptions

In Singapore, every company is responsible for getting its financial statements and accounts checked by an external auditor at least once a year. This allows a company’s accounting records to be examined objectively giving shareholders greater confidence in the business.

However, there are some situations where companies may be exempted from auditing, especially if you are a small company. By the way, if you find accounting a chore, our accountants can put together your paperwork, check numbers, and file annual returns on time for you, perfect for busy founders.

What is an audit exemption?


On 1 July 2015, the Companies (Amendment) Act was put into effect, allowing more small companies to qualify for an audit exemption in Singapore.

What are the criteria for an audit exemption in Singapore?

To qualify, companies must:
1. Be a private limited company over the two preceding financial years.
2. Be considered a small company, with at least 2 out of 3 of these criteria met:

  • Have a total annual revenue not exceeding S$10 million
  • Have 50 full-time employees or less at the end of the financial year
  • Have total assets not exceeding S$10 million (as at the end of the financial year) annual revenue of $5 million or less

What is a private limited company?

A private company — also known as a private limited company — is defined as one that has a minimum of 20 shareholders, but no more than 50 shareholders. Unlike public companies, private companies cannot sell shares to the public. But they can issue stock or additional shares to existing shareholders.

What if my company was incorporated before July 2015?

If your company was registered and incorporated before 1 July, 2015, it could still qualify for an audit exemption as. As long as:

  1. It is a private company, and
  2. It meets the above criteria for a small company, whether in the first or second financial year after 1 July, 2015.

To put things into perspective, let’s use the example of a fictional company, Coracle & Co, which was incorporated as a private limited company on 1 January, 2015.

At the end of the financial year — and on 31 December 2015 — Coracle & Co had a total annual revenue of S$5 million, 40 full-time employees, and total assets valued at S$3 million.

In the following financial year — and on 31 December 2016 — Coracle & Co had a total annual revenue of S$8 million, 48 full-time employees, and total assets valued at S$9 million.

The company was not publicly listed, and therefore did not offer shares for sale.

Here’s a closer look at whether Coracle & Co meets the qualifying criteria for an audit exemption.

Qualifying criteria Does Coracle & Co meet the definitions of a small company?
Your company meets the criteria for a small company (as set out above) for the financial year of 2015 Yes; it fulfilled all three criteria for what defines a small company
Your company meets the criteria for a small company (as set out above) for the financial year of 2016 Yes; it fulfilled all three criteria for what defines a small company
Your company meets the criteria for a small company (as set out above) over two preceding financial years Yes; it fulfilled the criteria for a small company for the financial years ended 2015 and 2016

Can group companies qualify for an audit exemption?


If you have a Group of companies, then your holding company (also known as a Parent company) and its subsidiaries could qualify for an audit exemption if it fulfills the criteria as stated above.

In essence, if your group is looking for an audit exemption for the financial year ended 2020, it must meet the above criteria for a small group in the financial years of 2018 and 2019.

Your group’s individual companies should also each meet the definitions of a small company.

Can a company be disqualified from audit exemption?

Yes, it can A company can be disqualified from audit exemption if it:

  • Is no longer operating as a private company in the financial year
  • Fails to satisfy the criteria for a small company in the two preceding financial years.

My company meets the audit exemption criteria. Am I still required to prepare and file my accounts?

Regardless of whether your company is exempted from an audit, it is crucial that you maintain proper bookkeeping records, since your business’ annual financial statements are required when filing for Corporate Income Tax Returns.

Finding bookkeeping a hassle? Send us your docs the minute you have them: we reconcile every 24 hours and show what’s missing. Outsource your bookkeeping to us.

Share this post:

Tips to run your business smarter.
Delivered to you monthly.

You'll receive a verification email you'll have to open and confirm the subscription.

You might like it

5 Tips for a Streamlined Payroll Process for SMEs
Payroll

5 Tips for a Streamlined Payroll Process for SMEs

For a business to run smoothly, the payroll process must be streamlined and error-free. It is easy to streamline and optimize your payroll and other back-office processes within your SMB. Did you know that this can improve your cash flow?

Phase 2 Heightened Alert Support Package for SMEs (July to August 2021)
Government Grant

Phase 2 Heightened Alert Support Package for SMEs (July to August 2021)

From 22 July 2021, Singapore has reverted to Phase 2 (Heightened Alert). Fortunately, the Singapore Government will be cushioning the impacts of the harsher COVID-19 restrictions with a $1.1 billion support package.

How To Offer Free Shipping Profitably
E-commerce

How To Offer Free Shipping Profitably

Should a customer or seller bear the shipping cost? Let’s explore how a profit margin can still be maintained while offering free shipping.

What Is a Register of Controllers and Why Singapore Companies Now Have To Submit This Document
Secretary

What Is a Register of Controllers and Why Singapore Companies Now Have To Submit This Document

In April 2020, Singapore businesses will have to submit the Register for Registrable Controllers to ACRA. Before, your company was only obliged to maintain it internally. Now you will have to file the Register with ACRA electronically and maintain it updated at all times.

SG Govt Will Extend Loans for SMEs by 6 Months as Part of Heightened Alert Support Measures
Government Grant

SG Govt Will Extend Loans for SMEs by 6 Months as Part of Heightened Alert Support Measures

Singapore's Phase 2 and 3 periods of heightened alert have undoubtedly affected many businesses, especially Small- and Medium-sized Enterprises (SMEs). As such, Finance Minister Lawrence Wong has announced additional support measures for these Singapore-registered companies on 5 Jul 2021.

Clickshare Media Ventures Scales Up E-commerce Operations With Osome as Accounting Partner
Seller Spotlight

Clickshare Media Ventures Scales Up E-commerce Operations With Osome as Accounting Partner

Clickshare Media Ventures (CSMV) is one of the fastest-growing e-commerce companies in Southeast Asia. In just 3 years, CSMV has built itself to be an 8-figure business with more than 10 direct-to-consumer e-commerce brands in the baby, beauty, and personal care industries.

The 10 Best E-Commerce Payment Gateway for Online Sellers
E-commerce

The 10 Best E-Commerce Payment Gateway for Online Sellers

Other than branding and marketing, these technologically savvy consumers are well acquainted with the Internet and convenient payment gateways and demand nothing less than a seamless e-commerce transaction.

SMEs Can Apply for Relief Measures and Delay Full Loan Repayments till 30 Sep
Government Grant

SMEs Can Apply for Relief Measures and Delay Full Loan Repayments till 30 Sep

As the pandemic gradually transitions to an endemic, the Monetary Authority of Singapore (MAS) has announced the 'final extension' of relief measures for small and medium-sized enterprises (SMEs) affected by the COVID-19 situation to resume full loan repayments.

8 Tips to Improve Your E-commerce Photos
E-commerce

8 Tips to Improve Your E-commerce Photos

Want to kickstart your start-up or bolster an existing online business? These 8 e-commerce photography tips could have a direct impact on small businesses owners in Singapore, take a look.

Finding And Selling Niche Products Online
E-commerce

Finding And Selling Niche Products Online

Launching an online business is not an easy achievement, with increasingly more entrepreneurs entering the online market space. Competition is fierce, product ideas are saturated, and consumers are getting more well-versed in sieving out the best prices for online products.

A Quick Guide to Wage and Rental Support for SMEs in P3HA
Government Grant

A Quick Guide to Wage and Rental Support for SMEs in P3HA

The Singapore Government has introduced measures to help businesses cushion the impact of the pandemic, including more salary support for affected firms to retain employees, one-off payments for rental relief and individuals for Phase 3 (Heightened Alert).

How To Change My Singapore Company’s Name?
Secretary

How To Change My Singapore Company’s Name?

There might come a point when the name you chose for your company during incorporation no longer fits where you want it to go. Often an application to ACRA to change your company name might be more efficient and cheaper, too.

Tips to run your business smarter. Delivered to you monthly.

You'll receive a verification email you'll have to open and confirm the subscription.

We’re using cookies! What does it mean?