Do All Singapore Companies Require Audits? Key Points Explained

Do All Singapore Companies Need an Audit? A Comprehensive Analysis

As a globally renowned financial and business hub, Singapore places a strong emphasis on corporate governance and financial transparency. Many entrepreneurs who have registered or are planning to establish a company in Singapore often ask Do all Singapore companies need an audit? While this question may seem straightforward, the answer depends on multiple factors, including company size, industry, legal requirements, and the company’s stage of development.

This article provides a detailed analysis of the audit requirements for Singapore companies, incorporating recent developments to help readers better understand the issue.

1. Basic Audit Requirements Under the Singapore Companies Act

According to the Singapore Companies Act and regulations set by the Accounting and Corporate Regulatory Authority ACRA, all companies registered in Singapore must submit annual financial statements and file annual returns. However, whether an independent audit is mandatory depends on the specific circumstances of the company.

Under Section 201 of the Companies Act, only qualified small companies can be exempted from the audit requirement. To qualify for audit exemption, a company must meet all three of the following criteria

1. Annual revenue does not exceed SGD 10 million;

2. It is a private limited company Private Limited Company;

3. It has no more than 50 shareholders, all of whom are individuals not corporate entities.

If a company meets these conditions, it may be exempt from an audit. However, it is still required to prepare financial statements and submit them to ACRA. Once the company no longer meets these criteria-for example, if its annual revenue exceeds SGD 10 million or if it transitions into a public company e.g., by bringing in institutional investors or preparing for listing-it becomes subject to mandatory audit requirements.

2. Background and Impact of the Audit Exemption Policy

Since 2015, Singapore has implemented SME-friendly policies aimed at reducing compliance burdens for small businesses. As part of this initiative, ACRA introduced the audit exemption framework to support the growth of startups and small enterprises.

According to ACRA data as of 2025, approximately 80% of locally registered companies qualify as small companies and thus benefit from the audit exemption. This policy has significantly reduced compliance costs and improved operational efficiency.

However, audit exemption does not equate to reduced financial transparency. Singapore still requires companies to prepare financial statements in accordance with the Singapore Financial Reporting Standards FRS, ensuring accuracy and truthfulness. In addition, ACRA has strengthened its oversight and penalties for companies that submit false or misleading financial information.

3. Circumstances Where Audit Is Required Even for Small Companies

Even if a company qualifies as a small company, there are specific situations where an audit is still mandatory

1. Company Constitution explicitly requires an audit;

2. A resolution by the shareholders or board of directors mandates an audit;

3. The company operates in a regulated industry such as finance, healthcare, or education, where sector-specific regulators require audits;

4. The company plans to apply for certain government grants or participate in procurement projects that require audited financial statements;

5. The company intends to raise external capital or prepare for listing, as investors or stock exchanges typically require audited reports.

Additionally, if a company is flagged under ACRA’s Audit Trigger Mechanism, it may be required to undergo an audit. This mechanism helps identify companies that may pose financial risks, ensuring market fairness and transparency.

4. Recent Cases and Industry Developments

In March 2025, a Singapore-based tech startup was required to provide audited financial statements when applying for an innovation grant, even though its annual revenue was below SGD 10 million. This case illustrates that while audit exemption applies to most small companies, audits may still be necessary when applying for public funding or participating in government-supported programs.

In June 2025, the Monetary Authority of Singapore MAS issued new guidelines requiring all licensed financial institutions to undergo annual independent audits, regardless of their asset size. This move aims to strengthen financial system stability and mitigate potential risks.

5. How Can Companies Determine If an Audit Is Necessary?

To determine whether an audit is required, Singapore companies should consider the following factors

1. Legal Compliance Does the company meet the criteria for a qualified small company?

2. Corporate Governance Is an audit necessary to enhance financial transparency and credibility?

3. Business Development Does the company plan to raise capital, list publicly, or expand into international markets?

4. Industry Regulation Is the company subject to specific regulatory requirements in its industry?

5. Stakeholder Requirements Do investors, partners, or grant providers require audited financial statements?

It is highly recommended that business owners consult with a professional accounting firm shortly after the end of each financial year to assess whether an audit is needed, thereby avoiding compliance risks due to misunderstanding the regulations.

6. Conclusion

There is no one-size-fits-all answer to the question Do all Singapore companies need an audit? The requirement depends on a range of factors including company size, industry, legal status, and business needs.

The audit exemption policy has significantly eased compliance burdens for many SMEs, but it also places greater responsibility on business owners to maintain accurate financial records. In today’s environment of increasing emphasis on transparency and compliance, maintaining sound financial practices and reporting systems is essential for the long-term success of any company-whether or not it is subject to mandatory audit requirements.