Introduction

Audits play an important role in ensuring that a company’s financial statements are accurate, transparent, and in compliance with relevant standards. In Singapore, not all audits are the same. The two main categories are statutory audits and non-statutory audits, each with different purposes, requirements, and benefits.

For business owners, directors, and finance managers, understanding the differences between these two audit types is crucial for compliance, stakeholder trust, and making informed decisions. This article explains what a statutory audit and a non-statutory audit are, how they differ, and when each is appropriate.

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1. Defining a Statutory Audit

A statutory audit is a legally mandated review of a company’s financial statements. In Singapore, it is required under the Companies Act for:

• All public companies.

• Private companies that do not qualify for audit exemption under the Small Company Concept.

• Subsidiaries of companies that are not small companies.

• Companies in certain regulated industries (e.g., banking, insurance, finance).

Purpose:

• Provide assurance to shareholders, regulators, and stakeholders that the financial statements give a true and fair view.

• Ensure compliance with Singapore Financial Reporting Standards (SFRS) and the Companies Act.

Who can perform it:

• Only ACRA-registered public accountants can conduct statutory audits.

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2. Defining a Non-Statutory Audit

A non-statutory audit is not required by law but is conducted voluntarily by a company or organisation for various business or stakeholder purposes.

Purpose:

• Provide assurance to third parties such as banks, investors, or potential buyers.

• Meet internal governance or funding requirements.

• Evaluate specific areas such as operational efficiency, grant usage, or internal controls.

Who can perform it:

• While there’s no legal restriction, reputable companies usually engage an ACRA-registered public accountant for credibility and quality.

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3. Key Differences Between Statutory and Non-Statutory Audits

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4. Examples of Statutory Audits in Singapore

• Annual audits for public companies.

• Audits of private companies exceeding the Small Company thresholds:

  • Revenue > S$10 million.

  • Total assets > S$10 million.

  • More than 50 employees.

• Audits required for companies in regulated sectors (e.g., MAS-regulated financial institutions).

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5. Examples of Non-Statutory Audits

• Grant Audit: Required by funding bodies to verify proper use of funds.

• Due Diligence Audit: Conducted during mergers, acquisitions, or investment deals.

• Operational Audit: Reviews efficiency and effectiveness of business processes.

• GTO Audit: For retail tenants in shopping malls to verify gross turnover.

• Voluntary Annual Audit: For small companies seeking credibility with banks or investors.

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6. Why Statutory Audits Matter

• Legal Compliance: Avoid penalties and maintain regulatory standing.

• Investor Confidence: Audited statements build trust in financial integrity.

• Market Reputation: Demonstrates transparency and good governance.

• Creditworthiness: Banks often require statutory audited accounts for large loans.

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7. Why Non-Statutory Audits Are Valuable

• Flexibility: Customised scope to address specific needs.

• Business Improvement: Can focus on internal processes, risk management, and operational efficiency.

• Stakeholder Assurance: Offers independent verification to parties like lenders, donors, or potential partners.

• Preparation for Growth: Helps small companies get ready for IPOs, expansion, or regulatory audits in the future.

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8. Choosing Between Statutory and Non-Statutory Audits

Factors to consider:

• Legal Obligation: If your company meets statutory audit criteria, it’s mandatory.

• Stakeholder Requirements: Lenders, investors, or grant authorities may require an audit regardless of size.

• Business Goals: Even without legal requirements, a voluntary audit can enhance credibility and help secure opportunities.

• Resources: Consider time, budget, and internal capacity to prepare for an audit.

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9. Can a Company Have Both?

Yes. Some businesses undergo:

• Statutory Audit to meet legal obligations.

• Non-Statutory Audit for additional purposes, such as a grant audit or operational review.

This combination provides both compliance assurance and targeted business insights.

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10. The Koh & Lim Audit PAC Perspective

At Koh & Lim Audit PAC, we handle both statutory and non-statutory audits with the same level of professionalism and attention to detail.

• For statutory audits, we ensure compliance with all ACRA, SFRS, and Companies Act requirements.

• For non-statutory audits, we customise the scope to meet your specific needs — whether it’s for investor confidence, operational improvement, or regulatory preparation.

We see audits not just as compliance work, but as opportunities to strengthen your business.

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Conclusion

The key difference between a statutory audit and a non-statutory audit lies in whether it’s legally required. Statutory audits are mandated by the Companies Act for certain entities, while non-statutory audits are voluntary or stakeholder-driven. Both serve important purposes — one ensures legal compliance, the other provides tailored insights and assurance.

Choosing the right type of audit depends on your legal obligations, business objectives, and stakeholder expectations.

Call to Action:
Whether you need a statutory audit for compliance or a non-statutory audit for business improvement, Koh & Lim Audit PAC can help.
📞 +65 98638665
📧 Tommyksh@kohlimaudit.sg
🌐 https://kohlimaudit.sg/