Is Annual Audit Mandatory for Singapore Companies? Key Points You Must Know!

Do Companies in Singapore Need Annual Audits?

Business owners operating in Singapore, as well as investors planning to set up a company, often ask the same question Are Singapore companies required to undergo annual audits? While the question may seem straightforward, the answer actually depends on several factors. This article will explore the issue from multiple angles-legal requirements, business size, industry type-and incorporate recent news to help you gain a comprehensive understanding of this important topic.

1. Legal Requirements Not All Companies Are Mandatorily Audited

According to the Accounting and Corporate Regulatory Authority ACRA, not all companies registered in Singapore are required to conduct annual audits. Under Section 205 of the Singapore Companies Act, only qualifying large private limited companies and public companies are obligated to submit audited financial statements.

Specifically, a company must undergo an audit if it meets any two of the following criteria in each of its last two financial years

Annual revenue exceeding S$10 million;

Total assets exceeding S$10 million;

More than 50 employees.

This means that many small and medium-sized enterprises SMEs, especially startups, may be exempt from mandatory audits during their early stages. This exemption helps reduce operational costs and compliance burdens.

2. Industry Type May Also Affect Audit Requirements

While legal standards provide clear guidelines, certain industries such as finance, healthcare, and education may impose additional audit requirements due to regulatory oversight. For example, licensed financial institutions are typically subject to stricter financial supervision and may need to undergo annual audits even if they don’t meet the above thresholds.

Additionally, if a company is applying for government grants, participating in major tenders, or seeking financing, partner organizations or lenders might request audited financial statements to assess the company’s financial health and creditworthiness.

3. Recent News Growing Compliance Awareness Among SMEs

According to a July 2025 report by Lianhe Zaobao, as Singapore's economy continues to recover, more SMEs are placing greater emphasis on financial transparency and compliance management. Despite being legally allowed to opt out of audits, many businesses are choosing to voluntarily engage professional auditing firms for annual reviews.

The reasons behind this trend include enhancing corporate credibility, facilitating investment attraction, and preparing for potential future listings or acquisitions. In recent years, several cases of business failures caused by financial fraud have also raised awareness among entrepreneurs. Even when not legally required, maintaining sound financial records and independent audit mechanisms has become increasingly recognized as essential for long-term growth.

4. No Audit ≠ No Financial Reporting Obligations

Even if your company is exempt from annual audits, it still needs to submit unaudited financial statements to ACRA on time. According to regulations, every company must file its annual return within one month after its Annual General Meeting AGM, along with documents such as the directors’ report and financial statements.

For audit-exempt companies, unaudited financial statements can be submitted, but these must still comply with the Singapore Financial Reporting Standards FRS and be signed by the directors to confirm their accuracy and completeness. Therefore, even without an audit requirement, companies should not neglect proper financial management.

5. How to Determine If Your Company Needs an Audit

To determine whether your company requires an audit, consider the following

1. Company Type Public companies must undergo audits regardless of size, while private limited companies depend on meeting the threshold criteria.

2. Financial Data Review Check whether your revenue, total assets, and employee count in the past two financial years have exceeded the specified thresholds.

3. Consult Professionals Due to potential updates or differing interpretations of regulations, it is advisable to consult regularly with accountants or legal advisors to ensure ongoing compliance.

6. Conclusion

In conclusion, whether a company in Singapore must undergo an annual audit is not a one-size-fits-all matter. It largely depends on the company’s nature, scale, and industry. While many SMEs benefit from legal exemptions, this does not mean that financial governance can be neglected. On the contrary, as markets become more transparent and competitive, proactively improving financial transparency and audit quality can help businesses build trust and unlock new growth opportunities.

For business owners, understanding these key points not only reduces compliance risks but also lays a solid foundation for sustainable development in the future.