Does your companyqualify for audit exemption?
A company may qualify for audit exemption if it meets the definition of a small company under Singapore regulations.
Who qualifies for audit exemption?
To be eligible under the small company concept, the company must satisfy both the private-company condition and the quantitative test.
Private Company Status
The company must be a private company during the financial year.
Quantitative Criteria
The company must meet at least two of the following three criteria for the immediate past two consecutive financial years, based on financial statements prepared in accordance with applicable accounting standards.
Important additional assessments.
Newly incorporated companies and companies belonging to a group apply the criteria differently. These checks are important before concluding that an exemption is available.
Less than two years old
A newly incorporated company assesses the private-company and two-out-of-three quantitative criteria using its current financial year.
Company and group must qualify
If the company is part of a group, both conditions must be met:
- The Singapore company or subsidiary qualifies as a small company.
- The entire group, including foreign entities, satisfies at least two of the three criteria on a consolidated basis for the immediate past two consecutive financial years.
Frequently asked questions.
01Can companies with corporate shareholders qualify for audit exemption?
Yes. Companies with corporate shareholders can still qualify for audit exemption, provided they meet the required small company criteria.
Unlike the previous framework, it is not necessary for a company to be an exempt private company to be eligible for audit exemption.
02Does this affect financial statement filing requirements?
No. Audit exemption does not change the requirement to prepare and file financial statements.
Companies that qualify for audit exemption are still required to:
- Prepare financial statements in accordance with applicable accounting standards.
- File the required financial statements with the relevant authorities.
- Maintain proper accounting records to support financial reporting.
03Is audit exemption only for private companies? What are the criteria?
Yes. Audit exemption under the small company regime applies only to private companies. However, there is also a separate exemption for dormant companies.
Under Section 205B of the Companies Act, a dormant company may be exempt from audit requirements. This exemption is not limited to private companies.
Under Section 205C, read with the Thirteenth Schedule of the Companies Act, a small company may be exempt from audit requirements. This exemption applies only to private companies.
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