Audit Exemption for Small Companies in Singapore
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In 2003, the Singapore Companies Act was amended allowing exempt private companies to be exempted from audit. The purpose of introducing such exemption is to reduce regulatory burden and compliance cost for smaller companies that have a small market and limited budget. The New Audit Exemption regulation introduced on 1 July 2015 allows more categories of companies to qualify for exemption from conducting statutory audit of their financial statements. This implies that larger number of small to medium companies can exempt themselves from conducting Audit Assurance.
Criteria for Exempt Private Company
1. Not having more than 20 individual members (shareholders); and
2. Not having corporate shareholders (shares held by another company);
Prior to 1 July 2015, only Exempt Private Companies (EPCs) qualifies under Singapore law to be exempted from statutory audit, if:
(1) Annual revenue is less than SGD $5 million SGD (US$3.61 million);
(2) Have less than 20 shareholders;
(3) Have no corporate shareholders;
(4) Are not part of a group of companies.
Criteria for Audit Exemption for Small Companies
The concept of private exempt company has been removed, which means companies with more than 20 shareholders which previously were required to file an annual audit with ACRA will now count as exempt. A private company which has corporate shareholders but fulfils the criteria can be entitled to the small company audit exemption.
In order to qualify as a “small company”, a company must be a private and fulfil at least 2 of the following 3 quantitative criteria in each of the immediate past two financial years (FYs). (Note: The earlier exemption was applicable to exempt private companies with annual revenue of SGD$5 million or less for the Financial Year.)
Safeguards to the Audit Exemption for Small Companies
No policy comes without the safeguards. Existing safeguards will be retained, such as requiring all companies to keep proper accounting records, and empowering shareholders with at least 5% voting rights to require a company to prepare audited accounts.
If you have further inquires, please do not hesitate to contact Tannet at anytime, anywhere by simply visiting Tannet’s website www.tannet-group.net, or calling Hong Kong hotline at 852-27826888 or China hotline at 86-755-82143512, or emailing to firstname.lastname@example.org. You are also welcome to visit our office situated in 16/F, Taiyangdao Bldg 2020, Dongmen Rd South, Luohu, Shenzhen, China.
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