Understanding Statutory Audit Requirements in Singapore: A Guide for Business Owners

Running a business in Singapore comes with many responsibilities—from meeting customer expectations to managing finances and complying with local regulations. One key compliance area that many business owners must address is statutory audits.

But what exactly is a statutory audit? Who needs to do it? And why is it important?

In this guide, we break down the essentials of statutory audit requirements in Singapore, explain who needs one, and highlight why choosing the right audit firm matters for your long-term business success.

What Is a Statutory Audit?

A statutory audit is an independent examination of a company’s financial statements, conducted by a qualified auditor, to determine whether the financial reports give a true and fair view of the company’s financial performance and position.

In Singapore, statutory audits are mandated under the Companies Act, meaning certain businesses are legally required to have their financial statements audited annually.

The key objectives of a statutory audit are to:

• Ensure compliance with the Singapore Financial Reporting Standards (SFRS);

• Detect material misstatements due to error or fraud;

• Provide assurance to shareholders, creditors, and regulators about the accuracy of financial information.

Who Needs a Statutory Audit in Singapore?

Not every business in Singapore is required to undergo an audit. The audit exemption applies to small companies, provided they meet specific criteria. According to the Companies Act (Section 205C), a company is considered a small company if it is:

• A private company throughout the financial year; and

• It meets at least two out of the following three criteria for the past two consecutive financial years:

  1. Total annual revenue ≤ S$10 million

  2. Total assets ≤ S$10 million

  3. Number of employees ≤ 50

If a company is part of a group, then the entire group must also qualify as a small group (i.e., on a consolidated basis, the group must meet two of the three thresholds above).

If your business does not qualify as a small company, you are required to appoint an auditor within 3 months of incorporation and have your financial statements audited annually.

When Is a Statutory Audit Required?

Here are some common scenarios where a statutory audit is required in Singapore:

• Revenue or total assets exceed S$10 million

• Employee count exceeds 50

• Company is preparing for IPO, acquisition, or fundraising

• Company is part of a group that does not qualify as a small group

• Mandated by regulators, investors, or banks even if the company is technically exempt

• Non-profit organisations (e.g. IPCs, societies) and companies receiving grants may also require audits as part of compliance

Why Statutory Audits Matter for Businesses

Even if your business qualifies for audit exemption, there are strong reasons why undergoing a voluntary audit can be beneficial.

1. Transparency and Accountability

Audited financial statements increase trust and accountability with shareholders, directors, banks, and potential investors.

2. Better Financial Management

The audit process often uncovers accounting or operational inefficiencies that can be addressed to improve profitability and reduce risks.

3. Facilitates Business Expansion

Businesses looking to scale, acquire funding, or explore partnerships will often be asked to provide audited financials to validate their track record.

4. Regulatory Confidence

Regulatory bodies such as ACRA and IRAS are more confident in audited businesses, which reduces the risk of penalties or audit reviews.

The Statutory Audit Process: What to Expect

If your company is required to conduct a statutory audit, here is a general overview of the process:

Step 1: Appoint an Auditor

Companies that do not qualify for audit exemption must appoint a licensed public accountant within 3 months of incorporation.

Step 2: Prepare Financial Statements

Ensure your accounts are complete and prepared in accordance with SFRS. This typically includes:

• Statement of Comprehensive Income

• Statement of Financial Position (Balance Sheet)

• Statement of Cash Flows

• Notes to the Financial Statements

Step 3: Audit Fieldwork

The auditor will conduct fieldwork, which includes verifying financial records, testing transactions, assessing internal controls, and identifying any discrepancies.

Step 4: Audit Report

Upon completion, the auditor will issue an Independent Auditor’s Report, stating whether the financial statements are true and fair.

Step 5: Filing with ACRA and IRAS

The audited financial statements must be included in the company’s annual return filed with ACRA, and may be used for corporate tax filing with IRAS.

Choosing the Right Audit Firm

Picking the right audit partner is crucial. A professional and experienced firm doesn’t just check boxes—they add value to your business by offering financial insights, improving compliance, and advising on best practices.

Look for:

• ACRA-registered Public Accountants

• Experience with your industry (F&B, tech, construction, etc.)

• Transparent pricing and timelines

• Responsiveness and attention to detail

• Advisory capabilities beyond basic compliance

Avoid:

• Firms that cut corners or rush through audits

• Unlicensed or unregulated providers

• One-size-fits-all approaches that overlook your business needs

Common Misconceptions About Statutory Audits

“I’m a small business, so I don’t need to worry.”

Even if you’re exempt today, you might not be tomorrow. Growth in revenue, assets, or team size can push you above the threshold.

“Audits are just an unnecessary cost.”

While audits come at a price, they often prevent costly mistakes, ensure regulatory peace of mind, and support better decision-making.

“We’ll only audit if we get into trouble.”

By then, it might be too late. Proactive audits help you avoid trouble, rather than respond to it.

Staying Prepared: Tips for Business Owners

• Keep accurate, up-to-date records throughout the year

• Use cloud accounting software like Xero or QuickBooks to ease reporting

• Engage a corporate secretary to track compliance deadlines

• Work with your auditor early—don’t wait until the last minute

• Treat audits as a strategic opportunity, not just a requirement

Final Thoughts: Make Statutory Audits Work for You

Statutory audits are more than a legal checkbox—they are a cornerstone of responsible business management in Singapore. Whether your company is required to conduct an audit or you’re considering one voluntarily, working with a trusted audit firm brings peace of mind and real business value.

By understanding the requirements, preparing properly, and choosing the right partner, you’ll not only meet your obligations—you’ll set your business up for sustainable growth.

Need help with your statutory audit?
At Koh & Lim Audit PAC, we assist Singapore SMEs with audit and assurance services tailored to your business needs. Whether you’re due for a statutory audit or planning ahead, we’re here to guide you every step of the way.

📞 Call us at +65 98638665
📍 Visit: 7500A Beach Road, #09-324 The Plaza, Singapore 199591
📧 Email: Tommyksh@kohlimaudit.sg
🌐 Website: https://kohlimaudit.sg