What to Expect During a Non-Profit Audit in Singapore

Non-profit organisations (NPOs) in Singapore serve a critical function in society by addressing social, environmental, educational, and cultural needs. To maintain the trust of donors, regulators, and the public, non-profits must demonstrate sound financial management and compliance with regulations. One of the key mechanisms for ensuring this is an annual audit.

If your organisation is undergoing its first audit or preparing for a recurring one, understanding the process can reduce stress and ensure a smooth experience. This article provides a comprehensive overview of what to expect during a non-profit audit in Singapore—from planning and preparation to reporting and follow-up.

1. Understanding the Purpose of the Audit

An audit is an independent examination of your financial statements and internal control systems by a licensed public accountant. The goal is to express an opinion on whether the financial statements:

Are accurate
Provide a true and fair view of the organisation’s financial position
Comply with relevant financial reporting standards

In Singapore, this typically means compliance with the Charities Accounting Standard (CAS) or Singapore Financial Reporting Standards (FRS), depending on the entity type and size.

For charities and IPCs, the audit also ensures that donations and grants are used in accordance with donor intentions and relevant laws.

2. When Is an Audit Required?

An audit is mandatory for non-profits in Singapore under certain conditions:

Charities with gross annual income or expenditure above S$500,000
Institutions of a Public Character (IPCs) regardless of income
Companies Limited by Guarantee (CLGs) with annual revenue exceeding S$500,000
Societies that meet audit thresholds defined in their governing rules or constitution

Organisations below these thresholds may opt for a review engagement instead of a full audit, though many still choose to be audited to maintain donor confidence and meet grant requirements.

3. The Audit Process: Step-by-Step

Here is a general overview of what to expect during the non-profit audit process in Singapore:

Step 1: Engagement and Planning

The audit begins with a formal engagement letter from the audit firm, outlining:

The scope of the audit
Responsibilities of both the auditor and the non-profit
The timeframe and deliverables

The auditors will request background information such as the organisation’s constitution, internal policies, previous audits (if any), and a list of key contacts.

During this stage, auditors also perform risk assessments and decide which areas to focus on based on size, complexity, and internal control weaknesses.

Step 2: Document Request and Preparation

Your finance team will receive a prepared-by-client (PBC) list of documents required for audit. These usually include:

Trial balance and general ledger
Bank statements and reconciliations
Donation and grant records
Fixed asset register
Payroll records
Contracts, grant agreements, and donor letters
Board meeting minutes
Annual budget and variance analysis

Organising and providing these documents promptly is crucial for a smooth audit process.

Step 3: Fieldwork and Testing

The audit team will carry out substantive testing and compliance checks, either onsite or remotely. Their activities may include:

Verifying income and donation records
Reviewing expenditure and matching with supporting documents
Ensuring restricted funds are used according to conditions
Sampling transactions for accuracy and completeness
Testing the effectiveness of internal controls
Reviewing bank reconciliations and petty cash management
Verifying grant income and its utilisation

They may also request clarifications or explanations regarding unusual transactions or discrepancies.

For IPCs and grant-receiving charities, auditors may verify if your reporting aligns with funding conditions and whether governance procedures are properly followed.

Step 4: Drafting the Audit Report

After fieldwork, the auditor will prepare the draft audit report which includes:

The audit opinion
A set of audited financial statements
Notes to accounts
Comparative figures for the previous year

If there are any issues found—such as non-compliance, inadequate controls, or inconsistent records—these are flagged in a management letter. This document outlines observations and provides recommendations for improvement.

You will have the opportunity to review and respond before finalisation.

Step 5: Final Audit Opinion

The final audit report includes one of the following types of opinions:

Unqualified (Clean) Opinion: Financial statements are free from material misstatements.
Qualified Opinion: There are some issues, but they do not affect the overall fairness of the statements.
Adverse Opinion: Financial statements are materially misstated and misleading.
Disclaimer of Opinion: Auditors were unable to obtain sufficient evidence to express an opinion.

Non-profits aim for an unqualified opinion, which strengthens public and donor trust.

4. What Auditors Pay Special Attention To

For non-profit organisations, auditors may pay additional attention to:

Donation tracking and receipts – Are donations properly recorded and acknowledged?
Restricted vs unrestricted funds – Are fund allocations being adhered to?
Volunteer or in-kind contributions – Are these properly valued and disclosed?
Grant compliance – Are disbursed funds used according to grant agreements?
Fundraising events – Are proceeds accurately reported and expenses justified?
Governance – Is the Board overseeing finances and controls appropriately?

These areas are vital for ensuring that financial integrity aligns with mission delivery.

5. How to Prepare for a Smooth Audit

To ensure a smooth and successful audit experience, NPOs in Singapore should:

Maintain accurate and timely bookkeeping
Reconcile bank accounts monthly
Keep donor records and receipts organised
Implement proper segregation of duties
Review prior audit findings and address recommendations
Have your Board or Audit Committee involved in reviewing audit results

Using accounting software suited for non-profits and staying updated on the Charities Accounting Standard (CAS) also helps.

6. Post-Audit: Compliance and Reporting

After the audit, you may be required to:

Submit the audited financial statements to the Commissioner of Charities (COC) or Registry of Societies
Disclose the audit results on your website or annual report
File with the Accounting and Corporate Regulatory Authority (ACRA) if you are a CLG
Present the statements at your Annual General Meeting (AGM)

If your organisation receives government grants, you’ll also need to share the audited accounts with the relevant agencies.

Conclusion

An audit is a valuable opportunity—not just a compliance obligation—for non-profit organisations in Singapore. It reassures stakeholders, uncovers internal weaknesses, and supports your mission by demonstrating transparency and financial integrity.

Knowing what to expect allows you to prepare well and face the audit with confidence. With proper systems, timely documentation, and professional guidance, audits can become an annual process that adds lasting value to your non-profit’s governance and growth.

If you need help with your Non Profit Audit, visit https://kohlimaudit.sg/services_post/ngo-non-profit-charity-audit/