As a private limited company in Singapore, understanding audit requirements is crucial for maintaining financial transparency and compliance. Whether your business has reached the stage where an audit is required or you’re looking to better understand the process, this guide provides the necessary insights. We’ll cover everything from audit exemptions to corporate secretarial responsibilities, timelines, costs, and practical advice for navigating the audit process.
An audit is an independent examination of a company’s financial statements by a licensed auditor. The purpose is to ensure that the financial statements accurately reflect the company’s financial position and comply with the Singapore Financial Reporting Standards (SFRS) and the Companies Act.
Example: If you run a software development company in Singapore and your annual revenue exceeds S$10 million due to expansion, you would need to undergo an audit. This process ensures your financial statements reflect your business’s true financial health, providing stakeholders with confidence in your company.
Not all companies in Singapore are required to undergo an audit. Your company may be exempt if it qualifies as a “small company.” This depends on meeting at least two of the following three criteria for the past two consecutive financial years:
Example: If your IT consultancy firm is the holding company of several subsidiaries, but the group’s total revenue exceeds S$10 million, the group won’t qualify for the small group exemption. Consequently, the holding company will need to prepare consolidated financial statements and have them audited.
As a company director, you have specific responsibilities when it comes to appointing an auditor:
Example: If your software development company has been working with the same auditor for a decade, it might be wise to review their performance. Changing auditors can bring fresh perspectives and enhance audit quality.
✅ At Counto, we prioritise your bottom line. Our expert accountants deliver comprehensive services—from bookkeeping to tax filing—at transparent rates. Explore our all-in accounting plans and keep more of what you earn.
Audits aren’t just legal requirements; they’re valuable tools for your business. Here’s why:
Example: After rapid growth, a Singapore-based software company undergoes an audit. While revenue recognition processes are sound, the audit reveals gaps in project cost tracking. This insight allows the company to streamline its expense tracking and improve budget control, enhancing profitability.
Understanding the audit process helps ensure smoother compliance. Here’s an overview:
1. Engage an Auditor: Select a qualified auditor who is a Public Accountant registered with the Accounting and Corporate Regulatory Authority (ACRA).
2. Planning the Audit: The auditor reviews your business, risks, and audit scope. This involves meetings and discussions to set expectations and timelines.
3. Fieldwork: The auditor reviews your financial records, such as invoices and bank statements, and interviews key personnel.
4. Review and Testing: The auditor tests your financial data for inconsistencies or errors.
5. Audit Report: After completing the audit, the auditor issues a report confirming whether your financial statements fairly represent your financial position.
Example: For a retail business, auditors may focus on cash handling and inventory management, both high-risk areas.
Being prepared ensures a smooth audit process. Consider the following tips:
Example: A small marketing agency’s pre-audit review reveals discrepancies in accounts receivable. Addressing these before the official audit avoids potential delays.
An audit provides valuable insights that go beyond compliance. Use the findings to improve your business operations:
Example: After an audit, a manufacturing company identifies the need for better cost controls. By implementing new budgeting procedures, they reduce expenses and boost profitability.
Understanding the costs and timelines involved in an audit can help with preparation:
Example: If your company’s financial year ends in December, aim to have your financial statements ready by February or March. This allows enough time for the audit to be completed before your AGM.
For companies with subsidiaries, the audit process involves additional steps:
Example: If your IT firm owns a digital marketing agency, both entities will need separate audits unless they qualify for the small company exemption. The group’s consolidated financial statements will reflect both businesses’ performance.
If your company qualifies as a small company, you may be exempt from an audit. However, review these criteria annually, as growth could change your audit requirements.
Selecting an auditor requires careful consideration of their industry experience, reputation, and fees. We can assist you in finding a qualified auditor who suits your business needs.
If your group no longer qualifies for the small group exemption, your holding company will need to prepare consolidated financial statements and undergo an audit. We can guide you through this process to ensure compliance.
Audits play a crucial role in maintaining your company’s financial integrity and transparency. Whether you’re navigating audit exemption criteria or managing multiple subsidiaries, understanding audit obligations ensures compliance and boosts stakeholder confidence. Preparation, the right auditor, and proactive actions based on audit findings can help your business strengthen its financial management. If you have any questions or need guidance on your audit requirements, Counto is here to assist you through the process.
Counto is the trusted outsourced provider of accounting, tax preparation and CFO services for startups and SMEs. Get accounting plans that combine bookkeeping with corporate tax filing to help you stay compliant at an affordable price. To learn more, speak to us directly on our chatbot, email [email protected], or use our contact form to get started.
Here are some articles you might find helpful:
Whatsapp 
Call