When Do You Need To Audit?

In Singapore, the requirement for a company to undergo an audit depends on whether it qualifies as a "small company" under the Singapore Companies Act. The criteria for audit requirements are as follows:

Small Company Criteria:

A company is considered a "small company" if it meets at least two of the following three criteria:

• Total annual revenue does not exceed S$10 million.

• Total assets do not exceed S$10 million.

• Number of employees does not exceed 50.

While being exempt from audit can save costs, not undergoing an audit might lead to missed opportunities in certain areas. Here’s a deeper look at the implications:

1. Financial Credibility:

• Access to Financing: Banks and financial institutions often require audited financial statements as part of the loan approval process. Without an audit, it may be harder for SMEs to secure loans, lines of credit, or other financial products.

  
  

• Attracting Investors: Investors typically look for audited financial statements to assess the financial health and reliability of a company. Lack of audited accounts might deter potential investors or lead to unfavorable terms.

  
  

2. Business Opportunities:

• Tendering for Projects: Large corporations, government agencies, and some private sector clients may require audited financial statements as a prerequisite for bidding on contracts. SMEs without audited accounts might be disqualified from tendering for such projects.

  
  

• Building Trust with Partners: Audited financial statements can enhance credibility with suppliers, partners, and clients, who may see the audit as a sign of transparency and reliability.

  
  

3. Internal Control and Efficiency:

• Identifying Weaknesses: An audit can help identify weaknesses in internal controls, accounting practices, or financial reporting. This can lead to improvements in operational efficiency and risk management.

  
  

• Regulatory Compliance: Even if not mandatory, an audit ensures that financial statements comply with accounting standards and regulatory requirements, reducing the risk of non-compliance issues that could lead to penalties.

At every stage of your business journey, your needs evolve. Contact us to better understand your company's current position and discover how we can help you maximize efficiency and unlock new opportunities.