Key facts about a Statutory Audit in Singapore

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Key facts about a Statutory Audit in Singapore

Key facts about a Statutory Audit in Singapore


Key facts about a Statutory Audit in Singapore

A statutory audit is a type of external audit usually conducted annually to meet a specific set of regulations set by the legislation. Such an audit is required by the laws of the stipulated governing Act .  In Singapore, ACRA (Accounting and Corporate Regulatory Authority) is the authority that governs the laws and regulations of companies.

Legal requirements of statutory audit in Singapore:

In Singapore, all companies are required to appoint an auditor within 3 months of its incorporation unless exempted from an audit.

The audit exemptions applies for companies that falls under the  “Small Company” or “Small Group” category.

As per the Singapore Company’s Act, a company qualifies as a small company if:

  1. it is a private company in the financial year in question; and
  2. it meets at least 2 of 3 following criteria for immediate past two consecutive financial years: 
  1. total annual revenue ≤ $10m;
  2. total assets ≤ $10m;
  3.  no. of employees ≤ 50. 


    For a company which is part of a group*:

    1. the company must qualify as a small company; and
    2. entire group must be a “small group”

    to qualify to the audit exemption.

    For a group to be a small group, it must meet at least 2 of the 3 quantitative criteria on a consolidated basis for the immediate past two consecutive financial years.

    Where a company has qualified as a small company, it continues to be a small company for subsequent financial years until it is disqualified. A small company is disqualified if:

    1. it ceases to be a private company at any time during a financial year; or
    2. it does not meet at least 2 of the 3 the quantitative criteria for the immediate past two consecutive financial years.

     
    Where a group has qualified as a small group, it continues to be a small group for subsequent financial years until it does not meet at least 2 of the 3 the quantitative criteria for the immediate past two consecutive financial years.

    *Note:: Under SFRS 110 Consolidated Financial Statements defines a “group” as “a parent and its subsidiaries”. Paragraph 12(b)(ii) of the Thirteenth Schedule to the Companies Act states that for groups where consolidated financial statements are not prepared by a parent in relation to a group, “consolidated revenue” means the aggregate revenue of all the members of the group and “consolidated total assets” means the aggregate total assets of all the members of the group

     

    Penalties for non-compliance

    Not appointing an auditor in time or presenting misleading information to ACRA in Singapore is a punishable offense and may incur penalties.

    • Section 173A (1) states that a company shall by notice furnish to the Registrar -
    • Within 14 days after a person becomes a director, chief executive officer, secretary or auditor; and
    • Within 14 days after any change (e.g. resignation of directors or secretaries) in the appointment of any director, chief executive officer, secretary or Auditor.


    Failure to comply with any of the above sections is an offense under section 173H (1) of the Act and every officer of the company who is in default shall each is guilty of an offense and shall be liable on conviction to a fine not exceeding $5,000 and also to a default penalty.

     

    Our audit methodology focuses first on understanding our clients’ business and identifying key risks areas. We would then assess and evaluate the effectiveness of our clients’ internal control on those key risks areas. This is followed by determining and managing any residual audit risk arising from our assessment and performing additional audit procedures to substantiate our eventual opinionThis approach ensures that we carry out our audit in a timely and efficient manner and yet not neglecting any key risk or material areas.

    Our diverse portfolio of clients consisting of both local enterprises and multinational corporations ensure that we have the right balance of technical and business knowledge to serve our clients from various industries.


    Precursor Team

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