The short answer: a Singapore private company is exempt from statutory audit if it qualifies as a small company — meeting at least two of three quantitative criteria (revenue, assets, employees) for the immediate past two financial years — and, if it is part of a group, the entire group also qualifies as a small group.
What is an audit, and why does it matter?
A statutory audit is an independent examination of a company's financial statements to provide reasonable assurance that they give a true and fair view of the company's position and performance. A good audit provides:
- Credibility with stakeholders — banks, investors, customers and business partners.
- Assurance that financial records are accurate and complete.
- Compliance with statutory and regulatory requirements.
An audit also has a cost — professional fees, preparation time, and the administrative effort of supporting the audit team. That is exactly why the audit exemption was introduced: to lift the burden where the benefit no longer outweighs the cost.
What is a "small company" in Singapore?
Under the Singapore Companies Act, a private company qualifies as a small company — and is therefore exempt from statutory audit — if it meets at least two of the following three criteria for the immediate past two financial years:
- Total annual revenue of no more than S$10 million.
- Total assets of no more than S$10 million.
- Number of employees of no more than 50.
If your company is a private company and meets the test for two consecutive financial years, you are generally exempt from the audit requirement for the next financial year.
What about group companies?
If your company is part of a group, the rules are slightly stricter. To qualify for audit exemption, both the company and the entire group must be small. The group qualifies as a small group if, on a consolidated basis, it meets at least two of the same three thresholds (revenue, assets, employees) for the immediate past two financial years.
The practical implication is that even if your individual entity looks small, you may still require an audit if the group as a whole exceeds the thresholds.
When an audit is still required
Even when a company qualifies as a small company under the Companies Act, there are situations where an audit may still be necessary:
1. Shareholder requirements
Some shareholders — particularly minority shareholders, institutional investors, or family shareholders not involved in day-to-day operations — may require audited financial statements for transparency and governance purposes. The Companies Act also allows shareholders representing at least 5% of issued shares to require an audit.
2. Bank or investor requests
Lenders and investors often request audited accounts as part of financing, due diligence or covenant compliance. In practice, the decision is rarely "are we required to be audited?" and more often "do our key counterparties expect us to be audited?".
3. Regulatory or licensing requirements
Certain industries and licences — for example, financial services, charities, fund management, and some MAS-regulated businesses — mandate audits regardless of company size. If your business operates under a specific licensing regime, always check the regulator's audit requirement first.
Benefits of being audit-exempt
For companies that genuinely qualify, the audit exemption can deliver real benefits:
- Cost savings on audit fees.
- Reduced administrative burden on the finance team and the founder.
- Faster financial reporting cycles, with fewer external dependencies.
The exemption is designed to let small businesses focus more time and money on running and growing the business — not on a compliance step that no longer matches their stage.
But should you skip an audit?
Just because you can skip an audit does not always mean you should. A voluntary audit can still add meaningful value by:
- Identifying financial irregularities and weaknesses early.
- Strengthening internal controls and accounting discipline.
- Improving credibility with banks, investors, customers and counterparties.
For growing businesses — particularly those planning to raise funding, secure financing, or scale into new markets — a voluntary audit is sometimes a deliberate strategic choice rather than a compliance obligation.
Common mistakes to avoid
A few patterns we see when companies self-assess their audit position:
- Assuming the exemption applies automatically without checking the criteria each financial year.
- Ignoring the group-level test when the company is part of a larger group.
- Failing to maintain proper accounting records on the assumption that being audit-exempt also means being record-keeping-light.
- Confusing the audit exemption with filing exemptions — they are different rules.
One point worth underlining: even audit-exempt companies are still required to prepare financial statements in compliance with Singapore Financial Reporting Standards (SFRS or SFRS for Small Entities), and to file the relevant documents with ACRA and IRAS. Audit exemption removes the audit — not the obligation to keep proper books and file proper accounts.
The bottom line
The Singapore audit exemption is designed to ease the compliance burden on small businesses — but eligibility depends on specific criteria, and the decision to skip an audit should be made carefully and reviewed every year. Understanding where your company sits today helps you stay compliant, avoid unnecessary costs, and make a deliberate choice about how much external assurance the business actually needs.
At Chua and Lee Associates, we help Singapore SMEs assess their audit requirements, prepare financial statements, and deliver statutory and voluntary audits when they add value. To learn more about how we work with our clients, see our Audit services and Accounting services.