What You Need To Know About Unaudited Report
What is an unaudited report?
An unaudited financial statement is an accounting report that has not been verified for accuracy by a certified external auditor. Even for a company that is exempted from the audit requirement, it is compulsory to prepare a full report of unaudited financial statements for the Accounting and Corporate Regulatory Authority (ACRA). An unaudited report will also be needed for filing tax and Annual General Meetings (AGMs). A company must hold its first AGM within 18 months after its incorporation.
An unaudited report will include:
- Statement of Comprehensive Income, which denotes the turnover, sales, expenses and profit within a year
- Statement of Financial Position, which details the assets, liabilities and equities of the company at the point of closing of the statement
- Notes to Financial Statements
- Cash Flow statement
- Statement of Changes in Equity
- Accounting Policies
- Directors’ Report and Statement
Directors’ report should include a statement of the company’s affairs at the financial year-end, the names of company directors, and indicate each director’s interests in the company. The report also requires approval through a written Director’s Resolution and the signatures of minimally two directors.
Is my company exempted from the audit requirement?
A company will be exempted from the audit requirement if it qualifies as a “small company”, a “small group”, or a “dormant company”, starting from 1 July 2015.
- To qualify as a “small company”, a private company must fulfil at least two of the following requirements for the immediate past two consecutive financial years:
- Total revenue must not exceed $10 million
- Total assets must not exceed $10 million
- Number of full-time employees must not exceed 50
2. If a private company qualifies as a “small company”, and it is part of a group, it may then fall under the “small group” exemption. To do so, it must fulfil at least two of the following requirements for the immediate past two consecutive financial years:
- Total revenue of the group must not exceed $10 million
- Total assets of the group must not exceed $10 million
- Number of full-time employees must not exceed 50
Should the company exceed the listed requirements for two consecutive financial years, it will no longer qualify as a “small company” or a “small group.
- A “dormant company” is one that has ceased trading and does not have any accounting transactions.
What are the other uses of an unaudited report?
An unaudited report may be prepared for loan applications, or for the due diligence part of a company expansion project, such as a merger, acquisition or joint venture. Business partners like suppliers and contractors may also request for interim financial statements to estimate a company’s financial credibility.
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