When Does a Company in Singapore Need a Statutory Audit?

Koh Lim Audit Singapore > Uncategorized > When Does a Company in Singapore Need a Statutory Audit?
13th Aug

Introduction

In Singapore, a statutory audit is one of the most important compliance requirements for companies. However, not all companies need one. Knowing exactly when your company requires a statutory audit is essential to avoid legal penalties, maintain good corporate governance, and keep investor confidence high.

This article will explain the statutory audit requirements in Singapore, the qualifying criteria, exemptions, and scenarios where a company still chooses to have an audit even when it’s not mandatory.

1. What Is a Statutory Audit?

A statutory audit is an independent examination of a company’s financial statements to ensure they are true and fair and comply with the Singapore Financial Reporting Standards (SFRS). It is required under the Singapore Companies Act for certain companies.

The audit must be carried out by a public accountant registered with the Accounting and Corporate Regulatory Authority (ACRA).

2. The Legal Requirement for a Statutory Audit

Under the Companies Act, all companies are required to have their financial statements audited annually, unless they qualify for the audit exemption.

The audit covers:

  • Statement of Financial Position (Balance Sheet)

  • Statement of Profit or Loss

  • Statement of Cash Flows

  • Notes to the Financial Statements

  • Directors’ Statement

3. The “Small Company” Audit Exemption

In 2015, Singapore introduced the small company audit exemption to ease compliance for smaller businesses.

A company qualifies for audit exemption if:

  • It is a private company in the financial year; and

  • It meets at least two of the following three criteria for the past two consecutive financial years:

    1. Total revenue ≤ S$10 million

    2. Total assets ≤ S$10 million

    3. Number of employees ≤ 50

For a group of companies:

  • The group must qualify as a small group based on the same criteria applied on a consolidated basis.

4. When a Company MUST Have a Statutory Audit

Even if a company is small, certain conditions automatically require an audit:

  1. Public Companies – All public companies, whether listed or unlisted, must have annual audits.

  2. Special Licence Holders – Companies holding licences under MAS (Monetary Authority of Singapore) or other regulators often require annual audits, such as:

    • Financial institutions

    • Fund management companies

    • Insurance brokers

  3. Constitution or Shareholder Agreements – Some companies have internal agreements requiring annual audits regardless of size.

  4. Grant or Contract Requirements – Government grants or major contracts may mandate audited accounts.

5. Practical Scenarios

Here are examples of when a company would need a statutory audit:

Scenario A:
A logistics company has:

  • Annual revenue: S$12 million

  • Total assets: S$8 million

  • Employees: 45

It meets only one of the small company criteria (assets < S$10M), so it must be audited.

Scenario B:
A tech start-up has:

  • Annual revenue: S$8 million

  • Assets: S$5 million

  • Employees: 30

It meets all three criteria, so it is exempt from audit — unless its investors request one.

6. Benefits of Having an Audit Even If Not Required

Even if your company is exempt, there are good reasons to voluntarily undergo an audit:

  • Investor Confidence – Audited accounts assure investors and banks of financial integrity.

  • Business Sale or IPO – Audited financial statements are required during due diligence.

  • Operational Insights – Auditors often highlight areas for improvement in controls and efficiency.

7. The Audit Process Timeline

Knowing when your company needs a statutory audit also means knowing when to start.

Typical timeline:

  1. Year-end closing – Prepare financial statements after your company’s financial year ends.

  2. Audit planning – Engage an audit firm at least 1–2 months before the deadline.

  3. Fieldwork & review – Auditors check supporting documents, systems, and processes.

  4. Issuance of report – The audit report is completed before the AGM.

8. Deadlines for Audit & Filing

  • Annual General Meeting (AGM) – Private companies must hold an AGM within 6 months after the financial year-end, unless exempted.

  • Filing of Annual Returns – Must be filed with ACRA within 7 months after the financial year-end.

  • Audited financial statements (if required) must be lodged with the annual return.

9. Consequences of Not Complying

Failing to conduct a statutory audit when required can lead to:

  • Financial penalties from ACRA.

  • Directors being held personally liable for non-compliance.

  • Reputational damage.

10. How Koh & Lim Audit PAC Can Help

At Koh & Lim Audit PAC, we:

  • Assess if your company requires a statutory audit.

  • Provide professional audit services that meet ACRA and SFRS requirements.

  • Offer guidance to ensure your business is always audit-ready.

With decades of combined experience, our team delivers clear, comprehensive, and compliant audit reports.

Conclusion

A statutory audit is not just a legal requirement — it’s a vital tool for ensuring financial accuracy, transparency, and trustworthiness. Knowing when your company needs one helps you stay compliant and avoid unnecessary risks.

Call to Action:
If you are unsure whether your business needs a statutory audit, contact Koh & Lim Audit PAC today for a consultation.
📞 +65 98638665
📧 Tommyksh@kohlimaudit.sg
🌐 https://kohlimaudit.sg/

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