Auditing For Small Companies: Exemptions To Take Note Of
If considering formation of a company in Singapore, a private limited company is one of the most suitable forms of business structure that one can opt for in Singapore. Such a structure comes with a range of benefits such as tax savings, limited liability, alongside simple compliance obligations. The concept of a small company was introduced in 2015 and followed by the Companies Act of Singapore, which exempts the private companies that fulfill the given criteria from the annual audit requirement.
Under the small company concept, companies that qualify are permitted to reduce the regulatory costs since they tend to have fewer audit requirements that they need to comply with. Despite being exempted from audit, the small companies are still required by law to submit their unaudited reports for assessment. They are still required to empower the shareholders so as to have minimum voting rights of 5% that enables companies to prepare audited accounts. The small companies are also still required to maintain proper accounting records.
The following reports should be considered for exemption;
- Profit and loss accounts, the balance sheets, and consolidated accounts need not be audited by an approved auditor. An approved auditor is a reputable audit firm in Singapore that’s licensed and certified by the Institute of Singapore Chartered Accountants (ISCA).
- The members of the company don’t need to be furnished with copies of the audited reports.
- Copies of the audited reports are no longer required during the annual general meetings.
The small company concept, therefore, applies to companies that meet at least two of the below criteria;
- Total annual revenue of below $10 million
- Total gross assets at the end of the financial reporting period should not be over $10 million
- The total number of employees at the end of the financial year should not be over 50.
Companies that are considered to be part of a small group can also qualify for an audit exemption if they meet at least two of the below conditions;
- The aggregate turnover should not be over S$ 10 million
- The aggregate balance sheet total should not be more than S$ 10 million at the end of the financial reporting year.
- The aggregate number of employees should not be more than 50 at the end of the financial reporting year.
Before the changes came into force, if in case a company wanted to be considered for audit exemption, a threshold of $5 million had to be reached by the company. After the new adjustment was undertaken by ACRA, ABOUT 25,000 SMEs are likely to qualify for audit exemption.
Audit exemption for small companies has helped in positioning Singapore as the new business destination for entrepreneurs and foreign investors. The business environment in Singapore is quite ideal, considering its attractive tax regime and pro-business policies. Working with a reputable corporate service provider in Singapore, such as Onestop CA Singapore, can significantly help companies consider benefiting from audit exemption and other tax benefits.