Audit Exemption for Singapore Companies (2020 Guide)
The Amendment of the Singapore Companies Act 2014 brought into view the concept of small companies that replaced private companies from audit exemption. The introduction of the small company concept has enabled an increased number of companies to qualify for audit exemption and knowing that is critical if a company is to maximize its benefits.
Some of the key benefits of the small business concept include a reduction in the cost of compliance, which creates such a business-friendly environment.
Here are some of the small companies that qualify for audit exemption;
According to the amended act; a company is considered to be small within a specific financial year if;
- It’s a private company all through the financial year.
- If it meets any of these two criteria or for each of the two financial years that precedes the financial year
- If revenue for each of the financial years doesn’t exceed SGD10million.
- If the value of the company assets at the end of the financial year doesn’t exceed SGD10million.
- If the company has at the end of the year, not more than 50 employees.
The criteria are also consistent with the approach embraced by the Singapore Financial Reporting Standards for small companies. It also incorporates an additional requirement that the small company’s status should be determined in reference to the historical two-year period.
A company that’s considered to be a member of a group either as the parent or a subsidiary company is not likely to qualify for audit exemption unless it is by itself a small company and the group also qualifies as a small group. A small group is that which meets the set quantitative criteria for a small company on a consolidated basis, as indicated in chapter 7 of the Thirteenth Schedule. In this regard, it’s applied when an entity is considered part of a group. The basis of consolidation is to be decided based on the relevant accounting standards.
A newly incorporated company in Singapore can also qualify for an audit exemption in either the first or second financial year. This exemption is applicable if the company is incorporated as a private company and meets the quantitative criteria set for that specific financial year. A similar criterion is also applicable to a small group that’s newly formed.
Cessation of being a small company
Once a company has been awarded audit exemption status, it will continue to enjoy the privileges until it ceases into becoming a small company, according to paragraph 5 of the Thirteenth Schedule. This takes place when the company ceases from becoming a private company within a particular financial year due to failure to meet the quantitative criteria for each of the two consecutive years.
Knowing your company’s status and whether it can benefit from audit exemption can be of great help to an organization. Working with a reputable corporate service provider, Singapore can be of great help as one can get professional advice on matters impacting business operations.
Originally published by onestop-ca.com