What Revenue Triggers Audit for Singapore Companies? A Comprehensive Guide

At What Revenue Level Does a Singapore Company Need an Audit? Unveiling the Truth

As a global financial hub, Singapore has become an increasingly popular destination for entrepreneurs and small to medium-sized enterprises SMEs looking to register companies and conduct business. However, as businesses grow and operations become more complex, compliance issues have become a critical concern for company leaders. One of the most frequently asked questions is whether a company is required to undergo an audit.

According to the Accounting and Corporate Regulatory Authority ACRA, not all companies are subject to mandatory annual audits. The specific requirements depend on key indicators such as annual revenue, total assets, and number of employees. So, what is the actual revenue threshold that triggers the need for an audit in Singapore? Let’s explore the facts behind this important regulatory issue.

1. Basic Criteria for Determining Audit Obligations

Singapore's current Companies Act allows eligible small companies to be exempt from audit obligations. A small company refers to a private limited company that meets at least two out of the following three criteria

1. Annual revenue does not exceed S$10 million;

2. Total assets do not exceed S$10 million;

3. Number of employees does not exceed 50.

If a company qualifies as a small company for two consecutive financial years, it may omit the audit report from its financial statements and submit unaudited financial statements directly to ACRA. This means that companies operating within reasonable size limits can enjoy certain compliance benefits.

2. What Happens When Revenue Exceeds the Threshold?

While revenue is not the sole determining factor, it is one of the most straightforward benchmarks. Once a company's annual revenue exceeds S$10 million, it no longer qualifies as a small company and is generally required to engage an independent auditor to review its financial statements.

For example, recent media reports have highlighted how some fast-growing tech startups in Singapore, after securing multiple rounds of funding, have seen their revenues rapidly increase beyond the S$10 million mark. These companies have had to begin working with professional accounting firms to ensure compliance and improve financial transparency.

Even if revenue remains below S$10 million, companies classified as public companies or part of a group structure such as holding companies and their subsidiaries may still be subject to mandatory audit requirements. Therefore, when assessing the need for an audit, companies must consider not only revenue figures but also organizational structure and other relevant factors.

3. Why Is an Audit Important?

Although audits add to compliance costs, they serve as a foundation for long-term, sustainable business growth. Audits enhance the credibility of financial information and build trust among investors, clients, and partners. During fundraising processes, potential investors often require audited financial statements to assess a company's true operational performance and profitability. Without an audit report, a company may face delays in fundraising or even receive a lower valuation.

Banks also tend to place greater confidence in audited financial data when evaluating loan applications. Even before reaching the legal audit threshold, voluntarily opting for an audit demonstrates corporate responsibility and foresight.

4. Real-World Example From Small Company to Audit Requirement

Take the case of a local food-tech startup. In its early days, the company generated only a few million dollars in annual revenue, comfortably meeting the exemption criteria for small companies. However, within just two years, the company successfully expanded into overseas markets and saw its revenue jump to S$12 million.

At this point, management realized that the company no longer qualified for audit exemption and was legally required to hire an auditing firm for its annual audit. This transition prompted the company to establish more formalized financial procedures and pay closer attention to internal controls. Although the short-term workload increased, it laid a solid foundation for future plans such as an initial public offering IPO.

5. How to Prepare for Upcoming Audit Requirements

For companies approaching or already surpassing the S$10 million revenue threshold, proactive preparation is essential. Here are some recommended steps

1. Regular Financial Review Monitor your financial status to determine if you're nearing the audit threshold and plan accordingly.

2. Establish Robust Financial Systems Ensure accurate record-keeping and clean financial data to facilitate the audit process.

3. Select a Suitable Audit Firm Choose a reputable and experienced accounting firm that understands your industry.

4. Train Your Finance Team Enhance internal understanding of the audit process and improve team cooperation during audits.

6. Conclusion

In summary, whether a Singapore company needs to undergo an audit is not solely determined by revenue. It depends on a combination of financial and structural indicators. When annual revenue exceeds S$10 million, most companies lose their small company exemption and must comply with mandatory audit requirements.

This is not merely a legal obligation-it is also a sign of business maturity and readiness for higher-level development. Through audits, companies not only fulfill legal responsibilities but also improve internal management efficiency and strengthen their competitiveness in the market.