Apart from Outsourced Accounting Services, Audit is an examination of Company’s financial records to ensure the accuracy of financial statements and in accordance with applicable regulations and accounting standards. This statement is helpful when shareholders need to present the financial standings of the Company for greater credibility.

In compliance with the Company Act, a Company is considered to be a small company and can be exempted from audit if it fulfils at least two out of the following three conditions:

1.) The total annual revenue of the company must not exceed S$ 10 million;
2.) The total assets of the company for the financial year end must not exceed S$ 10 million;
3.) The number of full-time employees at the end of the financial year must not exceed 50.

Group companies (holding and subsidiary companies) can also enjoy the audit exemption if they qualify as a small group.

To qualify as a “small group”, the group (comprising of all the companies) must fulfil two out of the following three conditions in the immediate two preceding financial years:

1.) The consolidated revenue must not exceed S$ 10 million;
2.) The consolidated total assets must not exceed S$ 10 million;
3.) The total number of employees of the group must not exceed 50.

Say it differently, for a group to qualify for the audit exemption, the individual subsidiary companies as well as the holding company, as a group, must fulfil the eligibility criteria of a small company.

Auditor is responsible to ensure the Company’s financial statements:

a.) Comply with Singapore Standards on Auditing (SSA) guidelines and requirement
b.) Provide true and fair view of the Company’s financial performance and financial position

If the company is not exempted from audit requirements, the directors need to appoint company’s auditor within 3 months of the company’s incorporation. 

In Singapore, only public accountants or accounting firms approved by the Accounting and Corporate Regulatory Authority (ACRA) can act as company auditors.Companies that are regarded as a “small company” for a particular financial year, or are dormant, are exempt from audit requirements. 

These companies therefore do not need to appoint auditors (or have their financial statements audited) for that financial year.

Independence requires integrity and an objective approach to the audit process. The auditor should be independent from the client company so as to meet the following objectives : 

a.) Reliability of financial information in which is a key aspect of Corporate Governance
b.) Credibility of financial information with a qualified or unqualified audit report
c.) Value for money of audit work 
d.) Threats to professional standard