Qualify as a Small Company in Singapore to Get Audit Exemption

Last modified: December 12, 2015

Small-Company-in-Singapore1

Singapore is a place where authorities are very prompt about updating their legislations and keeping pace with the changes in the business conditions. Their intention is to maintain the status of Singapore as the pro-business business destination.

Singapore has yet again simplified the statutory audit compliance for its companies. It has amended its Company Law and introduced the concept of Small Company. The purpose is to bring the audit exemption to as many local companies as possible. Singapore has already started implementing updated audit exemption requirements from 1 July 2015.

Audit Exemption for Singapore Private Companies Before, 1 July 2015

Before 1 July 2015, the Exempt Private Companies (EPCs) having annual revenues less than S$5 Million and having no corporate as their shareholder used to get audit exemption. It was a great relief for them from having to prepare financial statements and get their audits done. It allowed them to reduce their administrative burden and costs.

Audit Exemption for Singapore Private Companies After, 1 July 2015

After 1 July 2015, according to the Small Company qualifying requirements, only a private company can ask for the audit exemption.

In addition, the private company has to fulfill at least 2 of the following 3 criterion for the past 2 years.

  • Total annual revenue is $10m or less
  • Total assets are $10m or less
  • The number of employees is 50 or less

The new changes apply to the financial year starting on or after 1 July 2015. If a private company acquires the status of Small Company then it remains so. However, if it fails to fulfill the criterion for two consecutive financial years or if it is no more a private company, it loses the status.

Qualifying as a Small Company

Existing Private Company

It is easy for an existing private company to qualify as a small company. All it needs to do is to fulfill 2 of the 3 criterion in the first or the second financial year on or after 1 July 2015.

Newly Registered Private Company

A Singapore private company registered on or after 1 July 2015 can also qualify as a small company by fulfilling the criterion during the first or second financial year on or after 1 July 2015.

Singapore authorities have urged companies to meet the new audit exemption criterion either, during the first or the second financial year after the implementation of the new changes. It is marked as the transition period. Afterwards, the Singapore companies will have to meet the criteria for the 2 financial years in succession to acquire the status of Small Company.