Audit Requirements in SingaporeSep 07, 2015
Recently, key changes were made to the Companies Act 2014, introducing new criteria that now determines what qualifies a small business for audit exemption. The new small company qualifications are best demonstrated in the following revised requirements. These new requirements also assume that qualified small companies aren't a part of the following groups of companies that have undergone:
1. Transitional provisions for the first two fiscal years following the beginning of the renewed small company criteria.
2. Any general applicability.
3. A completed incorporation following the start of the renewed small company criteria.
In general, a business entity qualifies for audit requirements in Singapore as a small company if the entity is a private company that meets the aforementioned criteria during the last two sequential fiscal years.
The changes depicted new qualifications for small companies, such as those that would qualify entities as a small company or business. According to the changes, a company must be a privately owned entity that fulfills two of three available criteria within the past two fiscal years.
To meet the new criteria, entities must have a:
1. Total annual revenue of no more than $10 million.
2. Total assets of no more than $10 million.
3. Amount of employed workers total no more than 50.
The aforementioned criteria replaces the current audit exemptions for exempt private companies that currently harbor an annual revenue of $5 million or less for the past fiscal year.
The renewed small company criteria also recognizes a wider reaching group of stakeholders, such as employees, creditors and customers, who may attain an interest in financial statements. Criteria similar to the recently revised standards have been utilized for specialized fiscal reporting in other countries like the United Kingdom and Australia.
Audits are useful, but they do cost time and money. The newly revised audit exemption will help reduce regulatory costs for smaller businesses, typically those who don't have wide market impact. It's also expected to result in a reduction of compliance costs for as much as 25,000 small businesses who currently don't qualify for an audit exemption.
Many of the previously existing safeguards will be kept active, including those that required all companies to uphold proper accounting records and to authorize shareholders with as much as 5 percent voting rights to necessitate a company to ready audited accounts.