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Audit exemption lets a small Singapore private company skip the external audit. It qualifies when it meets at least two of three tests for the past two consecutive financial years: revenue of S$10 million or less, total assets of S$10 million or less, and 50 employees or fewer. The Accounting and Corporate Regulatory Authority (ACRA) sets the rule. Checked against ACRA's audit exemption page.
Who qualifies for audit exemption in Singapore?
Two conditions, both from ACRA. The company must be a private company in the financial year. And it must pass the size test.
| Test | Limit |
|---|---|
| Total annual revenue | S$10 million or less |
| Total assets | S$10 million or less |
| Employees | 50 or fewer |
Meet any two and you pass. The test looks at the immediate past two consecutive financial years, so one good year does not qualify you and one bad year does not disqualify you.
ACRA says the rule applies to financial years beginning on or after . A company no longer needs to be an "exempt private company" to qualify.
How does the two-year test work in practice?
Take a company with a December year end. Its revenue is S$4 million in year one and S$11 million in year two. Assets are S$2 million and S$3 million. Staff are 12 and 18.
Revenue fails in year two. Assets and staff pass in both years. Two tests are met in both years, so the company is exempt. Only the number of tests passed matters, not which two.
A company younger than two years is tested on the current financial year alone. ACRA states this for newly incorporated companies.
How do groups and subsidiaries qualify?
For a company in a group, the whole group must meet the same two of three tests. ACRA uses the holding company's consolidated financial statements. A tiny subsidiary of a large group therefore does not get the exemption on its own numbers.
ACRA is looking at this rule. See the review section below.
Is the exemption automatic, and what do you still file?
You do not apply. The company decides each year whether it qualifies, and the directors stay responsible for that call. An exempt company must still:
- Keep proper accounting records.
- Prepare financial statements under the Singapore accounting standards that apply to it.
- File the annual return with ACRA within seven months after the financial year end, with the S$60 filing fee.
- File its tax return with IRAS.
ACRA states in plain words that the exemption "does not change" the financial statement filing requirement. Filing details are on XBRL filing and annual return and AGM. Tax filing is covered at corporate tax.
What changes if the company is dormant?
Section 205B of the Companies Act exempts a dormant company from audit, regardless of company type. A separate rule, section 201A, lets a dormant relevant company skip preparing and filing financial statements altogether. One of its tests is total assets that did not exceed S$500,000 at any time in the financial year. A dormant company still files its annual return.
Is ACRA changing the thresholds?
Possibly. ACRA announced a review of the audit exemption framework on . It consulted from March and set a feedback deadline of . The review looks at raising the revenue and assets thresholds, and at letting some subsidiaries qualify even when the group does not.
The ACRA pages read for this guide give no new figures. The S$10 million tests above are the ones in force at the check date. Two provider guides that rank for this topic do not mention the review. Before you rely on a threshold, check ACRA's audit exemption page for any outcome.
ACRA also says shareholders who hold at least 5% of the issued shares keep the right to require an audit.
When should a small company pay for an audit anyway?
The law does not force it, but other people can. A bank may ask for audited accounts before a loan. An investor may ask for them in a funding round. A buyer may want them in due diligence. A shareholder with 5% can demand one. If any of these is likely in the next two years, ask your accountant whether a voluntary audit is cheaper now than a rush later.
ACRA does not publish audit prices, and audit fees are set by each firm. Request two or three quotes and compare the scope.
What mistakes do directors make with this rule?
- Testing one year instead of two. The rule reads the last two financial years.
- Ignoring the group. A subsidiary uses consolidated group figures.
- Treating exemption as no filing. Accounts still go to ACRA.
- Missing a change of status. A company that stops being private loses the exemption.
- Skipping the annual return for a dormant company. The return is due either way.
Want a provider to do the accounts and the filing? Use the quote form on this page and we will pass your request to accounting firms that take small companies. The next page on the path is accounting services.
Sources
- ACRA, audit exemptions and the small company concept: https://www.acra.gov.sg/manage/companies/legal-requirements-common-offences/preparing-financial-statements/audit-exemptions/ (thresholds, groups, new companies, dormant companies, filing duty).
- ACRA, review of the audit exemption framework: https://www.acra.gov.sg/news-events/news-announcements/reducing-compliance-costs-for-small-companies--review-of-audit-exemption-framework/ (review dates, 5% shareholder right).
- ACRA, financial statements filing requirements: https://www.acra.gov.sg/manage/companies/legal-requirements-common-offences/filing-financial-statements-in-xbrl-format/requirements-exemptions/ (dormant relevant company, S$500,000 asset test).
- ACRA, deadline and requirements for annual returns: https://www.acra.gov.sg/manage/companies/legal-requirements-common-offences/filing-annual-returns-companies/deadline-requirements/ (seven month deadline).
- ACRA, service and transaction fees: https://www.acra.gov.sg/manage/companies/service-transaction-fees/ (S$60 annual return fee).
