Do I Need an Audit? The “Small Company” Exemption Explained (2025/2026 Guide)
For many new directors, the word “Audit” sounds expensive. And it is. A full statutory audit in Singapore can cost anywhere from S$3,000 to S$10,000+ depending on complexity.
The good news? Most private companies in Singapore do NOT need an audit.
ACRA (Accounting and Corporate Regulatory Authority) has a scheme called the “Small Company Concept” that exempts eligible startups and SMEs from this costly requirement.
In this guide, we break down the criteria to help you save money while staying compliant.
1. The “Small Company” Criteria (The 10-10-50 Rule)
To qualify as a “Small Company” and be exempt from audit, your company must meet at least 2 out of the following 3 criteria for the past two consecutive financial years:
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Revenue: Total annual revenue is less than S$10 million.
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Assets: Total assets are less than S$10 million.
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Employees: Total number of full-time employees is less than 50.
Example:
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Revenue: $2M (Pass)
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Assets: $15M (Fail)
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Employees: 10 (Pass)
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Result: You have 2 passes. You are EXEMPT from audit.
2. What If I Have a Corporate Shareholder? (The Group Audit Trap)
This is where it gets tricky.
If your company is part of a Group (e.g., you are a subsidiary of a foreign parent company, or you own other subsidiaries), you must look at the Consolidated (Group) Figures.
To be exempt, the entire group must meet the 10-10-50 criteria combined.
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Scenario: Your Singapore startup earns $0. But your parent company in Japan earns $100M.
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Result: You fail the Group Revenue test. You might need an audit unless you qualify under specific subsidiary exemptions.
3. If I Don’t Need an Audit, Do I Still Need Accounts?
YES.
“Audit Exemption” does not mean “Accounting Exemption.”
Even if you are exempt from an audit, you are still required by law (Companies Act) to prepare Unaudited Financial Statements (UFS).
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These must comply with Singapore Financial Reporting Standards (SFRS).
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They must include a Directors’ Statement, Balance Sheet, Profit & Loss, and Notes to the Accounts.
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They must be tabled at your AGM (Annual General Meeting).
4. When Should You Voluntarily Audit?
Sometimes, even if you are exempt, you might choose to do an audit:
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Investors: VCs usually demand audited accounts before investing.
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Selling the Business: A buyer will trust audited numbers more than management accounts.
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Banks: For large loans, banks may require audited reports.
Conclusion: Don’t Pay for What You Don’t Need
If you are a typical SME, do not let anyone sell you an audit package you don’t need. Focus on keeping clean Unaudited Financial Statements.
At Excellence Singapore, our Accounting Team specializes in preparing SFRS-compliant Unaudited Reports for AGMs, ensuring you meet ACRA’s requirements without the heavy price tag of an external auditor.
Unsure if you qualify for exemption?
