An audit is required in Singapore for every Singapore-incorporated company unless it qualifies for the small company audit exemption. A private company is exempt if it meets at least two of three criteria (total annual revenue of S$10 million or less, total assets of S$10 million or less, 50 employees or fewer) for the immediate past two consecutive financial years. If your company sits in a group, the whole group must also pass the same test on a consolidated basis. Everything else is detail and edge cases, covered below.

ACRA’s small-company exemption looks simple in the legislation. In practice, group structures, mid-year threshold crossings and new incorporations all complicate it. Here is the decision tree we use with every prospect, the four edge cases that catch SMEs out, and the three situations where an exempt company should still get an audit anyway.

An audit is required in Singapore for every Singapore-incorporated company unless it qualifies for the small company audit exemption. A private company is exempt if it meets at least two of three criteria (total annual revenue of S$10 million or less, total assets of S$10 million or less, 50 employees or fewer) for the immediate past two consecutive financial years. If your company sits in a group, the whole group must also pass the same test on a consolidated basis. Everything else is detail and edge cases, covered below.

ACRA’s small-company exemption looks simple in the legislation. In practice, group structures, mid-year threshold crossings and new incorporations all complicate it. Here is the decision tree we use with every prospect, the four edge cases that catch SMEs out, and the three situations where an exempt company should still get an audit anyway.

The default rule: every Singapore-incorporated company

Start from the default. Under the Companies Act, a company incorporated in Singapore must have its financial statements audited by a Public Accountant registered with ACRA. The exemption is the exception to that rule, not the other way around.

So the real question is not “do I need an audit.” It is “do I qualify to skip it.”

The small company exemption: the criteria

A private company qualifies as a small company, and is therefore exempt from statutory audit, if it meets at least two of these three criteria for the immediate past two consecutive financial years:

• Total annual revenue of S$10 million or less
• Total assets of S$10 million or less
• 50 employees or fewer

These rules apply to financial years beginning on or after 1 July 2015, under Section 205C read with the Thirteenth Schedule of the Companies Act.

Two of three, for two years running. Meeting only one criterion is not enough. The company must also be private; a public company is not eligible.

Worked examples: who qualifies and who does not

Company (private)	Revenue	Assets	Employees	Criteria met	Qualifies?
A	S$6m	S$4m	30	3 of 3	Yes
B	S$12m	S$5m	40	2 of 3 (assets, employees)	Yes
C	S$12m	S$11m	40	1 of 3 (employees only)	No
D	S$12m	S$11m	60	0 of 3	No

Read the table as a guide to the logic, not as advice on your company. A criterion is met when the figure is at or under the threshold: revenue or assets of S$10 million or less, 50 employees or fewer.

Company B is the case worth studying. Its revenue is over the threshold, yet it still qualifies, because assets and headcount both pass and the test is two of three. Company C fails on the same logic in reverse: one criterion is not enough. Always test your own figures across two consecutive financial years.

The small group exemption: the criteria

If your company belongs to a group, qualifying is a two-part test. The company must itself meet the small-company criteria, and the entire group, including foreign entities, must meet at least two of the same three thresholds on a consolidated basis for the immediate past two consecutive financial years. (Source: ACRA.)

This is the small group audit exemption, and it is where many SMEs lose an exemption they assumed they had. A small subsidiary inside a large group does not get to skip its audit on its own numbers alone.

Decision tree: are you required to audit this year?

• Are you a private company? If no, for example a public company, you are generally not eligible for the small company exemption, so an audit is required.
• Did you meet at least two of the three criteria (revenue, assets, employees) in each of the past two financial years? If no, an audit is required.
• If you are part of a group, did the whole group meet at least two of the three on a consolidated basis for the past two years? If no, an audit is required.
• If yes to the relevant tests, you qualify as a small company and are exempt this year. You still prepare financial statements and file an annual return.

Edge case 1: crossing the threshold mid-year

The test looks at the past two consecutive financial years, not a single moment. A company that grows past a threshold in one year does not automatically lose exemption that year. It loses exemption once it has failed the two-of-three test for two consecutive years. Track the trend, not a single spike.

Edge case 2: new incorporation timing

A newly incorporated company has no two-year history to test. It can qualify for exemption in its first years if it meets the criteria in those years. The two-consecutive-years rule applies once there is enough history to apply it.

Edge case 3: group structures and consolidation

This is where most SMEs trip. A standalone company might pass the small-company test on its own figures, but if it sits in a group, the consolidated group test also applies. A small Singapore company owned by a large overseas parent often cannot claim exemption, because the group fails the thresholds.

Edge case 4: foreign-parent subsidiaries

For a Singapore subsidiary of a foreign parent, the group test includes foreign entities. The parent’s global figures can push the group past the thresholds, removing the subsidiary’s exemption even when the subsidiary is small locally. Subsidiaries should confirm the group position, not just their own. This is also why many subsidiaries end up choosing a mid tier audit firm for the resulting audit.

If you qualify, what do you actually do?

Qualifying removes the statutory audit, not your other obligations. You still prepare financial statements, you still hold an AGM unless you dispense with it under the Companies Act, and you still file an annual return within seven months of your financial year end.

The difference is that your accounts can be unaudited. Keep the records clean anyway, because the moment you grow past the thresholds an audit becomes mandatory, and clean books make it cheaper.

Three reasons an exempt company should still get an audit

Exemption is permission to skip, not a reason to. Three situations regularly justify a voluntary audit.

Reason 1: you are raising capital in the next 18 months

Investors and lenders read audited statements with more confidence than unaudited ones. If a funding round or a loan application is on the horizon, an audit, or a lighter review engagement, can smooth due diligence and protect your valuation. It is cheaper than a stalled raise.

Reason 2: your shareholders include external investors

When ownership extends beyond the founders, an independent audit reassures outside shareholders that the numbers are sound. It also protects the directors, by putting an independent opinion between them and any later dispute over the accounts.

Reason 3: you expect to cross the threshold next year

If growth will push you past the small-company thresholds soon, auditing a year early avoids a hard first audit with no comparatives and no established process. Your first mandatory audit then starts from an already-audited base, which is faster and cheaper.

The lighter alternative: a review engagement

If a full audit feels like more than you need, a review engagement gives limited assurance at a lower cost. It suits an exempt company whose lender or investor wants some independent comfort without the full statutory audit. The full service catalogue is on AG’s audit services in Singapore page.

What changes the year you lose exemption

Exemption is not permanent. You lose it once you fail the two-of-three test for two consecutive financial years, or the moment you stop being a private company.

The year an audit becomes mandatory again, two things bite. First, you need an auditor in place early enough to finish before your AGM and annual-return deadlines. Second, your first audit back has no prior-year audited comparatives unless you kept clean records, which makes it slower and more expensive.

The practical lesson: if growth is pushing you toward the thresholds, keep audit-ready books before you are forced to. AG’s accounting services for audit-ready financials and financial reporting and statement preparation exist for this, and its audit services in Singapore handle the audit once it becomes mandatory.

How to confirm your status in writing

Because group structures and the two-year rule create grey areas, do not rely on a single year’s figures or a quick read of the legislation. Test revenue, assets and headcount across the past two financial years, apply the consolidated group test if you are part of a group, and confirm you are still a private company.

If any of those is unclear, get it confirmed in writing before you decide to skip the audit. A wrong call here is a compliance breach, not a saving.

Audit deadlines and what happens if you miss them

If you are required to audit, the engagement has to finish in time for filing. A non-listed company must hold its AGM within six months after its financial year end and file its annual return within seven months after financial year end. (Source: ACRA, Timeline for Holding AGMs.)

Missing these can expose the company and its directors to penalties, so build the audit into the calendar early. The audit process itself, week by week, is in auditing firm Singapore.

Frequently asked questions

When is an audit required in Singapore?

An audit is required in Singapore for every incorporated company unless it qualifies as a small company. A private company is exempt if it meets at least two of three criteria (revenue of S$10 million or less, assets of S$10 million or less, 50 employees or fewer) for the past two consecutive financial years. (Source: ACRA.)

Do I need an audit in Singapore if my company is small?

Not if you meet the small company audit requirement for exemption: two of three criteria for two consecutive years, and, if you are in a group, the group must also qualify on a consolidated basis.

Who qualifies for audit exemption for small companies in Singapore?

A private company that meets at least two of three criteria (revenue of S$10 million or less, assets of S$10 million or less, 50 employees or fewer) for the past two consecutive financial years. (Source: ACRA.)

What are the audit exemption Singapore criteria for a group?

Under the small group audit exemption, both the company and the whole group, including foreign entities, must meet at least two of the three thresholds on a consolidated basis for the past two consecutive financial years.

Does audit exemption remove my filing obligations?

No. The small company audit exemption removes the audit only. You still prepare financial statements and file an annual return within seven months of your financial year end.

Should an exempt company ever get an audit anyway?

Yes, in three cases: you are raising capital within 18 months, you have external investors, or you expect to cross the threshold next year. A review engagement is a lighter, lower-cost alternative.

Does a dormant company need an audit?

Dormant companies may be exempt from audit under separate provisions, but they still have filing obligations. Confirm your specific position, since the rules differ from the small company exemption.

What happens the year I stop being exempt?

An audit becomes mandatory. Appoint an auditor early enough to finish before your AGM and annual-return deadlines, and expect the first audit back to take longer if you have no audited prior-year comparatives.

Not sure if you are required to audit?

A short call settles it. Book a free 15-minute call with AG, or send an enquiry with your figures, and we will confirm in writing whether you are required to audit, and tell you if you are exempt rather than selling you an audit you do not need.