Audit Exemption for Small Companies in Singapore

Starting and managing a business in Singapore comes with various compliance responsibilities, including the need for annual audits. However, thanks to the Companies (Amendment) Act 2014, certain small companies can benefit from an audit exemption. This exemption allows eligible companies to save on compliance costs while still maintaining financial transparency. This guide will explain the criteria for audit exemptions and how your company can benefit.

Understanding Audit Exemptions

Audit exemptions are designed to lighten the regulatory burden on smaller companies, making it easier and more cost-effective for them to operate. The criteria have evolved to include more businesses, further simplifying the compliance process.

Who Qualifies for an Audit Exemption?

Under the amended regulations, the definition of a small company has been broadened. To qualify for an audit exemption, a company must meet at least two of the following conditions within two consecutive financial years:

1. Total annual revenue does not exceed SGD 10 million.
2. Total assets for the financial year end do not exceed SGD 10 million.
3. The company does not have more than 50 employees.

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Special Conditions for Group Companies

Group companies, including a holding company and its subsidiaries, may also qualify for an audit exemption if each company in the group meets two of the above conditions independently and the group as a whole qualifies as a “small group”.

Benefits of the Audit Exemption

The audit exemption offers several advantages for eligible small companies:

1. Cost Efficiency: Reduces the financial burden associated with the auditing process.
2. Simplified Compliance: Eases the administrative load, allowing business owners to focus more on operational growth and less on compliance tasks.
3. Flexibility: Encourages more dynamic financial management within the parameters of regulatory compliance.

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Conditions That Lead to Disqualification

While the audit exemption is beneficial, certain conditions can disqualify a company from maintaining its exempt status:

• If a company increases its shareholder count to 51 or more.
• If it becomes a public company at any point during the fiscal year.
• If it fails to meet the small company criteria for two consecutive financial years.

Maintaining Compliance Despite Exemption

It’s important to note that exempt companies must still comply with other requirements like filing unaudited financial statements annually with the Accounting and Corporate Regulatory Authority (ACRA) and maintaining proper accounting records.

Summary 

The audit exemption is a beneficial provision for small companies in Singapore, allowing them to manage resources more effectively without the heavy burden of annual audit fees. However, maintaining eligibility requires careful attention to the company’s growth and changes in financial metrics. If you think your company might qualify for this exemption, it’s advisable to consult with a financial expert or a corporate service provider like Counto to ensure you meet the criteria and understand the implications for your business.

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