New "Small Company" Concept for Audit Exemption in Singapore

What is the Small Company Audit Exemption?

Under the Companies Act, a company qualifies as a "small company" if it meets at least two of the following three criteria for the immediately preceding two consecutive financial years: total annual revenue not exceeding S$10 million, total assets not exceeding S$10 million, and number of employees not exceeding 50.

Companies that qualify as small are exempt from the requirement to have their financial statements audited by an external auditor. This can result in significant cost savings, particularly for startups and small businesses.

Which Companies Qualify?

The exemption applies to private companies. A company that is part of a group qualifies if the group as a whole is a "small group" — meaning the group on a consolidated basis meets at least two of the three criteria mentioned above.

It is important to note that certain types of companies are excluded from the exemption regardless of size, including companies whose securities are listed on a securities exchange, and companies that are subsidiaries of listed companies.

Impact on Financial Reporting

Even if a company is exempt from audit, it must still prepare financial statements in accordance with Singapore Financial Reporting Standards (SFRS). Directors remain responsible for ensuring the financial statements give a true and fair view of the company's financial position.

Many small companies still choose to have their accounts reviewed or compiled by professional accountants, even if a full statutory audit is not required. This provides an additional level of assurance for shareholders, banks, and other stakeholders.

How We Can Help

CorpXervices' accounting team can assess whether your company qualifies for the small company audit exemption and advise on the most appropriate level of financial reporting for your business. We provide comprehensive accounting, bookkeeping, and financial reporting services tailored to companies of all sizes.