Audit Requirements

Complete Guide to Audit Requirements and Standards in Singapore

Understand audit requirements, auditor appointment, audit opinions, and compliance with Singapore Financial Reporting Standards (SFRS) and International Standards on Auditing (ISA).

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Audit Key Information

S$10M
Large Co. Threshold
SFRS
Reporting Standards
ISA
Auditing Standards
ACRA
Regulator
Audit Overview

What is an Audit?

An audit is an independent examination of a company's financial statements by a qualified auditor to provide reasonable assurance that the financial statements are free from material misstatement and comply with applicable accounting standards.

Independent Assurance

Provides independent verification of financial statement accuracy

Regulatory Compliance

Ensures compliance with Singapore Companies Act and SFRS

Stakeholder Confidence

Enhances confidence among investors, creditors, and regulators

Business Improvement

Identifies areas for improving internal controls and processes

Legal Requirements

Audit Requirements and Exemptions

Who must be audited and who may be exempt under Singapore law

Singapore audit requirements depend on company type and size. Public and listed companies must always be audited, while private companies may qualify for exemption if they meet small company or small group criteria.

Must Be Audited

Companies that must have annual audits with no exemptions

Public companies (regardless of size)
Listed companies and their subsidiaries
Banks and finance companies
Insurance companies
Companies licensed under Securities and Futures Act
Companies that are trustees of collective investment schemes

May Be Exempt

Private companies that may qualify for audit exemption

Private limited companies qualifying as 'small company'
Companies in a 'small group' (group-wide assessment)
Companies whose constitution does not require audit
Companies where shareholders have not demanded audit

Small Company/Group Qualification

A company or group qualifies as 'small' if it meets ALL of the following criteria (assessed at group level where applicable):

≤ S$10 million
Revenue Test
Total revenue does not exceed S$10 million
≤ S$10 million
Assets Test
Total assets do not exceed S$10 million
≤ 50 employees
Employees Test
Number of employees does not exceed 50

For companies in a group, these criteria are assessed at the GROUP LEVEL (consolidated figures)

If ANY company in the group fails to meet the criteria, the ENTIRE group loses exemption eligibility

Auditor Appointment

Auditor Appointment and Change

Requirements and authorities for appointing and changing auditors

The appointment and removal of auditors involves specific procedures and authorities depending on the circumstances and timing.

Initial Appointment Process

1
Directors identify qualified Public Accountant
2
Board passes resolution to recommend auditor
3
Shareholders approve appointment at AGM or by resolution
4
Auditor accepts appointment in writing
5
File appointment with ACRA within prescribed timeframe

Who Can Change Auditors

Shareholders

Primary authority to appoint and remove auditors

Circumstances
  • At Annual General Meeting (AGM)
  • By ordinary resolution at any time
  • When 5% or more shareholders demand audit change
  • When shareholders are dissatisfied with auditor performance
Process
Requires ordinary resolution (simple majority) of shareholders

Board of Directors

Limited authority in specific circumstances

Circumstances
  • Filling casual vacancy (auditor resignation/death)
  • Appointing first auditor before first AGM
  • Emergency situations requiring immediate action
  • When auditor becomes disqualified or loses independence
Process
Directors' resolution valid until next AGM, then shareholders must confirm

Key Considerations for Auditor Changes

Ensure smooth handover of audit files and working papers
Consider timing to minimize disruption to audit cycles
Maintain auditor independence and avoid conflicts of interest
Evaluate cost, expertise, and service quality factors
Consider stakeholder perceptions and market confidence
Comply with any mandatory rotation requirements if applicable
Audit Opinions

Audit Opinions

Understanding different types of audit opinions and their implications

Auditors express their professional opinion on financial statements through standardized opinion types, each with specific meanings and implications for stakeholders.

Unqualified Opinion

Clean opinion indicating financial statements are fairly presented

Implications

  • Financial statements comply with applicable accounting standards
  • No material misstatements identified during audit
  • Sufficient appropriate audit evidence obtained
  • Strongest form of assurance for stakeholders
Example Wording
"In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as at 31 December 2024..."

Qualified Opinion

Opinion with reservations due to specific issues or limitations

Implications

  • Material but not pervasive misstatements identified
  • Disagreement with management on accounting treatment
  • Scope limitations preventing full audit procedures
  • Financial statements are fairly presented except for specific matters
Example Wording
"In our opinion, except for the effects of the matter described in the Basis for Qualified Opinion section..."

Adverse Opinion

Opinion that financial statements are materially misstated

Implications

  • Material and pervasive misstatements identified
  • Financial statements do not comply with accounting standards
  • Serious concerns about financial reporting reliability
  • Significant impact on stakeholder confidence
Example Wording
"In our opinion, because of the significance of the matters described in the Basis for Adverse Opinion section, the financial statements do not present fairly..."

Disclaimer of Opinion

Auditor unable to express an opinion due to limitations

Implications

  • Insufficient appropriate audit evidence obtained
  • Pervasive scope limitations encountered
  • Unable to form opinion on financial statements
  • Significant uncertainty about financial position
Example Wording
"We do not express an opinion on the financial statements because of the significance of the matters described in the Basis for Disclaimer of Opinion section..."

Frequently Asked Questions

Can small companies be exempted from audit requirements?
Yes, small companies meeting certain criteria (revenue below S$10 million) can qualify for audit exemption. However, they must still prepare and file financial statements.

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