Small Company Audit Exemption In Singapore
Impact of Companies (Amendment) Bill 2014 on Audit Services
In October 2014, the Companies (Amendment) Bill marked a pivotal moment in parliamentary history, ushering in key changes that included the introduction of the “Small Company” concept for audit exemption. This concept is especially pertinent for private entities, subject to specific qualifying criteria over the immediate past two consecutive financial years:
- Total annual revenue ≤ S$10 million
- Total assets ≤ S$10 million
- Number of employees ≤ 50
Businesses that meet at least two out of these three criteria for the immediate past two consecutive financial years enjoy an exemption from the audit requirement.
Your FAQs Answered by ag-singapore.com
Discover the ins and outs of the small company audit exemption with our Frequently Asked Questions. At ag-singapore.com, we break down the complexities, offering clarity and guidance on how these changes impact your business.
Q: When does the small company audit exemption take effect?
A: The audit exemption applies to financial years beginning on or after the change in law (1 Jul 2015). Transitional provisions are in place for the first two years after the change.
Q: How does the small company criteria apply during the first 2 years after the exemption takes effect?
A: To qualify as a small company in the initial two financial years post-exemption (commencing 1 Jul 2015), the company must meet the criteria in each of those years. This assessment ensures eligibility for the audit exemption.
Q: How does a new company incorporated after 1 Jul 2015 qualify as a small company?
A: For newly incorporated companies, the qualification as a small company in the first two financial years depends on meeting the criteria for each respective year. Even with no previous financial information, the company can qualify in its first and second financial years post-incorporation.
Q: How do companies determine total assets, total revenue, and the number of employees?
A: Determination is based on accounting standards reflected in the financial statements. Total assets and revenue align with the accounting standards, while the number of employees is counted as full-time employees at the end of the financial year.
Q: Can a company with corporate shareholders enjoy the small company audit exemption?
A: Yes, a private company with corporate shareholders can qualify for the small company audit exemption if it meets the criteria, eliminating the previous requirement of being an exempt private company.
Q: If a holding company audits consolidated statements, does the subsidiary need to audit its financial statements?
A: To qualify for the small company audit exemption for Singapore companies , the group, including the subsidiary, must meet the small group thresholds on a consolidated basis. If the group does not qualify, the subsidiary cannot benefit from the audit exemption, even if it is a small company.
Q: Does the small company audit exemption apply to foreign companies?
A: The exemption is exclusive to Singapore-incorporated companies. However, for small group determination, all entities within the group, including foreign entities, are considered in assessing consolidated total revenue and assets.
Q: If the holding company is foreign, how are consolidated total revenue and assets determined for small group qualification?
A: Even with a foreign holding company, a Singapore subsidiary must evaluate whether the group qualifies as a small group. If consolidated financial statements exist, they determine total assets and revenue. If not, aggregation of individual members’ totals is used.
Q: Does the small company criteria affect obligations for filing financial statements with ACRA?
A: No, the small company criteria do not alter the obligations for filing financial statements. The filing obligations are determined by the company’s status as a solvent exempt private company, with no changes to existing criteria.
Unlocking Audit Excellence with ag-singapore.com
At ag-singapore.com, we take pride in being a distinguished audit firm in Singapore, offering a diverse spectrum of audit services tailored for businesses of all sizes. Whether you’re a burgeoning startup, a small audit firm, a mid-tier player, or a corporate giant, we are equipped to provide the services essential for ensuring the accuracy of your financial figures.
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Our Audit Services Include:
- Financial Statement Audits
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Your Journey to Success Starts with Accurate Numbers.
Explore the diverse audit services offered by ag-singapore.com , and let us be your partner in navigating the complexities of financial scrutiny.
