Auditing of Oil & Gas Companies in Singapore 2025

Introduction

Singapore is a major hub for the oil & gas industry, home to some of the world’s largest refineries, petrochemical plants, offshore marine services, and LNG (liquefied natural gas) trading businesses. The sector includes exploration, drilling, refining, storage, trading, and distribution of oil, gas, and petrochemical products.

With volatile oil prices, high capital investments, complex global supply chains, environmental regulations, and international trade compliance requirements, proper auditing is essential for financial transparency, regulatory compliance, fraud prevention, and operational efficiency.

This article explores why auditing is crucial for oil & gas companies in Singapore, key audit challenges, and best practices to ensure compliance and financial efficiency in 2025.

---

Why Auditing is Essential for Oil & Gas Companies

Oil & gas businesses handle multi-billion-dollar transactions, long-term infrastructure investments, fluctuating commodity prices, and international tax obligations, making financial audits critical. Here’s why audits are crucial:

1. Compliance with Financial & Tax Regulations

• Singapore Companies Act Compliance: Oil & gas firms registered as private limited companies must submit audited financial statements to ACRA.
• GST & Tax Compliance:
  • Domestic sales of refined petroleum products are subject to GST, while
  • International oil trading and bunker fuel sales may qualify for zero-rated GST.
  • Auditors verify GST filings and corporate tax compliance with IRAS.
• Energy Market Authority (EMA) & Maritime and Port Authority (MPA) Compliance:
  • Oil refineries, LNG terminals, and offshore fuel traders must comply with EMA’s energy regulations.
  • Marine fuel suppliers must meet MPA’s bunker quality and financial reporting standards.

2. Revenue Recognition & Commodity Price Audits

• Oil & gas companies generate revenue from oil exploration, refining, LNG trading, petrochemical exports, and bunker fuel sales.
• Auditors verify that revenue recognition policies comply with SFRS 15 (Revenue from Contracts with Customers).
• Hedging gains or losses from oil price fluctuations must be accounted for accurately.

3. Capital Investment & Asset Depreciation Audits

• The oil & gas sector requires heavy infrastructure investments in refineries, offshore drilling rigs, storage tanks, pipelines, and LNG terminals.
• Auditors assess whether companies apply the correct depreciation method (straight-line, reducing balance) for energy assets under SFRS 16 (Leases).

4. International Trade & Forex Risk Compliance

• Many oil & gas businesses conduct cross-border transactions in multiple currencies, exposing them to forex volatility and tax obligations.
• Auditors ensure that international transactions comply with IRAS, World Trade Organization (WTO) rules, and transfer pricing regulations.

5. Fraud Prevention & Supply Chain Risk Audits

• The oil & gas industry is vulnerable to procurement fraud, contract manipulation, illegal fuel trading, and environmental regulation breaches.
• Auditors conduct financial risk assessments to detect fraudulent transactions and unethical business practices.

6. ESG (Environmental, Social, Governance) & Sustainability Reporting

• Oil & gas companies are increasingly required to report their carbon emissions, sustainability goals, and ESG compliance.
• Auditors verify compliance with Singapore’s carbon tax policies, emissions tracking, and sustainability-linked financing frameworks.

---

Key Audit Challenges Faced by Oil & Gas Companies

Despite its importance, auditing oil & gas businesses presents challenges due to commodity price volatility, geopolitical risks, complex supply chains, and environmental regulations.

1. Multi-Segment Revenue Recognition & Hedging Compliance

• Oil & gas businesses operate in multiple revenue segments (exploration, refining, trading, fuel distribution, petrochemicals), making revenue recognition complex.
• Hedging strategies for oil price fluctuations must be audited to ensure compliance with Singapore Financial Reporting Standards (SFRS 9).

2. GST Compliance for Domestic & International Fuel Sales

• Petroleum and petrochemical sales within Singapore are subject to GST, while
• Bunker fuel and exported oil products may be zero-rated for GST.
• Auditors verify whether GST input claims and tax filings comply with IRAS requirements.

3. High Capital Costs & Asset Depreciation Audits

• Oil & gas companies invest heavily in refineries, drilling equipment, and offshore rigs, requiring proper long-term depreciation tracking.
• Auditors verify that capital investments comply with SFRS 16 (Leases) and IFRS 16 (Asset Management).

4. International Trade & Transfer Pricing Audits

• Many oil firms operate across multiple tax jurisdictions, requiring proper transfer pricing documentation.
• Auditors ensure compliance with OECD Base Erosion and Profit Shifting (BEPS) guidelines and IRAS international tax rules.

5. Fraud Risks in Procurement & Oil Trading Transactions

• The industry faces risks related to overpricing of crude oil contracts, non-existent fuel shipments, and falsified supplier invoices.
• Auditors conduct random procurement audits and trade verification checks to detect financial fraud.

6. ESG & Carbon Emission Reporting Compliance

• Environmental laws require accurate reporting of carbon emissions, sustainable fuel production, and green energy transitions.
• Auditors ensure compliance with Singapore’s carbon tax policies and ESG financial reporting standards.

---

Best Practices for a Smooth Audit Process

To ensure financial accuracy and regulatory compliance, oil & gas companies should adopt strong financial controls and audit best practices.

1. Maintain Accurate Financial & Trade Records

• Use oil & gas-specific accounting software (e.g., SAP for Energy, Oracle Energy & Commodity Trading, QuickBooks) to track fuel trading, refining costs, and revenue streams.
• Maintain detailed records of commodity pricing, hedging contracts, and international tax obligations.

2. Implement Strong Internal Controls & Fraud Prevention Measures

• Establish separate financial teams for procurement approvals, commodity trading, and refinery cost management.
• Conduct random audits on crude oil purchase contracts and bunker fuel distribution records.
• Implement blockchain-based tracking for fuel transactions and international supply chain transparency.

3. Ensure Proper GST & Tax Filing Compliance

• Verify GST classifications for local fuel sales, refinery exports, and offshore oil trading.
• Work with auditors to review quarterly GST filings and IRAS energy tax deductions.

4. Conduct Regular Infrastructure Depreciation & Asset Audits

• Maintain an updated record of refinery maintenance costs, pipeline depreciation schedules, and offshore rig leasing agreements.
• Ensure that all fuel storage and distribution agreements comply with EMA regulations.

5. Strengthen ESG & Carbon Credit Reporting Compliance

• Implement carbon footprint tracking tools to ensure accurate sustainability reporting.
• Conduct periodic ESG audits to ensure compliance with green financing standards and carbon tax obligations.

6. Reconcile Multi-Currency Transactions & Hedge Forex Risks

• Monitor foreign exchange fluctuations for international energy contracts.
• Auditors ensure that forex risks are properly hedged and accounted for in financial reports.

7. Work with a Professional Audit Firm Specializing in Oil & Gas

• Engage audit firms experienced in energy finance, oil trading, and refinery cost management.
• Auditors provide financial risk assessments, tax optimization strategies, and fraud detection measures.

---

Conclusion

Auditing is essential for oil & gas companies in Singapore to ensure financial transparency, tax compliance, fraud prevention, and sustainability reporting accuracy. Given the volatile oil market, high capital investments, and regulatory challenges, oil & gas businesses must implement robust financial management and compliance frameworks.

By leveraging energy-focused accounting systems, ensuring proper tax compliance, strengthening fraud prevention controls, and engaging professional auditors, oil & gas firms can optimize financial performance, prevent financial misstatements, and achieve long-term sustainability in 2025.