|
Home >
Information Index >
News Bulletins
Audit
Exemption for Smaller Singapore Companies
To reduce business costs of startups and small businesses in
Singapore and in line with the practices of other jurisdiction such as
Australia, for financial periods starting from 15 May 2003, the
requirement for audit of annual accounts has been waived for (i)
companies which are dormant and (ii) exempt private companies with
annual turnover of less than S$5 million. This is good news for most
small to medium-size enterprises.
Although your firm may be exempted from the audit requirement under the
new law, your statutory duties under the Act remain unchanged. You are
still required to:
- Maintain proper accounting records and prepare financial
statements that comply with the Singapore Financial Reporting
Standards.
- Present annual accounts at the Annual General Meeting (“AGM”) of
the shareholders. An AGM has to be held once in every calendar year
and not more than six months from the end of the financial year or
within fifteen months from the preceding AGM, whichever is earlier.
As before, you are required to prepare balance sheet, profit and
loss account, statement of changes in equity, cash flow statement,
notes to financial statements, and directors’ report.
- Upon conclusion of the AGM, a company is required to lodge with
the Registrar of Companies its annual accounts together with an
Annual Return within one month from the date of the AGM. In the case
of an exempt private company which is solvent at all relevant times,
there is no need to file the accounts with the Registrar. In lieu of
the accounts, such exempt private company will have to file a
certificate in the prescribed form signed by the officers of the
Company.
- File the annual accounts with the Inland Revenue Authority of
Singapore for income tax purposes.
The Inland Revenue Authority of Singapore has issued a circular
advising corporate tax payers to file their tax returns accompanied by
un-audited financial statements that fully comply with the Singapore
Financial Reporting Standards. Failure to comply may result in rejection
of the tax returns and penalties. Penalties may also be imposed if
accounts are not prepared on time.
For dormant companies, notwithstanding the audit exemption provided
under the Companies Act as above, a shareholder holding at least 5% of
the issued share capital or the Registrar of Companies has the right to
require a dormant company to obtain an audit of its accounts. A company
is dormant if no accounting transaction occurs during the financial
year/period concerned. Certain transactions, for example, subscription
of shares for the purpose of incorporation of a company, appointment of
company secretary and auditors, maintenance of registered office,
keeping of registers and minute book and payment of fees to the
Registrar of Companies are not considered to be accounting transactions.
An exempt private company with an annual turnover of less than S$5
million is also exempted from having its accounts audited. An exempt
private company is a private company which has not more than 20 members
and none of its shares is held directly or indirectly by any
corporation.
Companies that may be exempt from audit can still choose to have their
accounts audited with certain benefits in mind that include:
- To facilitate the sale and purchase of businesses
- To help deter and detect fraud and errors
- To comply with banking covenants
Related Topics
Singapore Company
Registration
Information Index
Contact Us
Home
Our Services
|
Options for Foreign Individuals
Options for Foreign Companies
Options for Singapore Residents