The Companies (Amendment) Act of 2014 updated the audit exemption standards and inserted the term “small companies.” Existing and newly established private limited firms in Singapore can use the small company model. This article will describe the small business idea and the qualifying parameters that a corporation might use to avoid having to undertake an annual audit.
The New Audit Exemption Criteria
Unless the firm fulfils the audit exemption criterion, the Singapore Companies Act requires every business to have its financial statements and accounting records audited by an auditor on an annual basis.
In 2014, the Firms Act was updated to bring the audit exemption requirements for companies up to date and to add the idea of a “small business.” A firm that meets the definition of a small business is not required to hire an auditor or have its books examined. Beginning July 1, 2015, the Amended Act went into force. If a firm meets at least two of the following three criteria, it is classified as a small business;
- The total annual revenue of the company must not exceed S$10 million
- The total assets of the company for the financial year end must not exceed S$10 million
- The number of full-time employees at the end of the financial year must not exceed 50
In addition to individual corporations, group businesses (holding and subsidiary firms) can qualify for the audit exemption provided they meet the conditions outlined below.
Group Company Audit Requirement
A group company is defined as a holding company and its subsidiaries that together form a group due to a common source of control. A group company will be exempt from annual audit of its accounts if the holding and all subsidiary companies individually;
- Fulfil at least 2 of the small company qualifying conditions and
- Belong to a “small group”
To qualify as a “small group,” the group (which includes all of the enterprises) must have met two of the three standards listed below in the two previous financial years.
- The consolidated revenue must not exceed S$ 10 million
- The consolidated total assets must not exceed S$ 10 million
- The total number of employees of the group must not exceed 50
In other words, to qualify for the audit exemption, both individual subsidiary firms and the holding company as a whole must meet the small business eligibility criteria.
What does it mean to be Audit Exempt
Your unaudited yearly financial statements must still be prepared and filed. The basic foundation for calculating and filing your business tax return is your company’s yearly financial statements, among other things. The main distinction is that if your company is exempt from audit, you are not compelled to hire an audit firm and have your financial statements audited.
Small businesses’ compliance duties have been considerably simplified by the adjustment of audit exemption criteria. Singapore remains to be a very appealing location for incorporating a company. The country has some of the friendliest business legislation in the world, making it simple to establish and grow your company. It is a world-class economy with limitless prospects for anyone with creative ideas and the will to build a great company.
Whether your firm is audit-exempt or not, we provide a comprehensive range of accounting and tax filing services. When an audit is necessary, we will work with the assigned audit company to ensure that the audit is performed quickly and without stress for you. If you want assistance, please contact us right away.