Do I Need an Audit? The “Small Company” Exemption Explained (2025/2026 Guide)

Last Updated: June 2026

Most private companies in Singapore do not need a statutory audit. Under the Companies Act, a private company is exempt from audit if it qualifies as a “small company”, and a private company qualifies as a small company when it meets at least 2 of 3 thresholds (revenue of S$10 million or less, total assets of S$10 million or less, and 50 or fewer employees) for the immediate past two consecutive financial years, per ACRA. If your company is part of a group, the whole group must also pass the same test on a consolidated basis. So before you budget for an audit, the first job is to check whether you actually need one.

Key Takeaways

• A private company is exempt from a statutory audit if it qualifies as a “small company”, which means meeting at least 2 of 3 criteria: revenue of S$10 million or less, total assets of S$10 million or less, and 50 or fewer employees, for the last 2 financial years.
• The test runs over the immediate past two consecutive financial years, so a single good (or bad) year does not change your status on its own.
• If your company belongs to a group, the entire group (including foreign entities) must also pass 2 of 3 of the same thresholds on a consolidated basis to be a “small group”.
• Dormant companies are separately exempt from audit under the Companies Act, regardless of size.
• Audit exemption does not remove your duty to prepare proper unaudited financial statements and file your annual return on time.
• Public companies, their subsidiaries, and certain regulated entities must be audited even if they look small on paper.

Why do audit rules matter in Singapore?

A statutory audit is an independent check, by a registered public accountant, that your financial statements give a true and fair view. It protects shareholders, lenders, and regulators relying on your numbers. Because an audit costs money and management time, Singapore law deliberately exempts smaller private companies that pose lower risk, while keeping the requirement for larger or public-facing companies.

The framework that does this is the “small company” audit exemption, which applies to financial years beginning on or after 1 July 2015. Getting your status right matters: assume wrongly that you are exempt and you can miss a filing obligation, while paying for an audit you never needed wastes cash a growing business would rather keep. Keeping clean books year-round, ideally with a good accounting firm, makes this assessment far easier.

Which companies are required to be audited?

The starting point in the Companies Act is that every company must have its accounts audited unless it is exempt. In practice, the main route to exemption is the small company concept, so the real question for most businesses is whether they qualify. A statutory audit stays mandatory, regardless of size, for entities such as:

• Public companies and subsidiaries of public companies.
• Companies limited by guarantee that do not separately qualify for exemption.
• Companies regulated by the Monetary Authority of Singapore (MAS), such as licensed financial institutions, where audit is required under their own regulatory regime.
• Any company whose members holding at least 5% of voting shares formally request an audit.

Even when you are legally exempt, a lender, investor, or grant body may contractually require audited statements, which is a separate commercial decision covered later in this guide.

What is the “Small Company” audit exemption? (the 2 of 3 test)

This is the section most business owners are searching for, so here is the rule in full. A private company is a “small company”, and therefore exempt from audit, if it meets at least 2 of the following 3 quantitative criteria for the immediate past two consecutive financial years, according to ACRA:

• Total annual revenue of S$10 million or less.
• Total assets of S$10 million or less (measured at the end of the financial year).
• Number of employees of 50 or fewer (full-time employees at the end of the financial year).

Two points trip people up. First, you only need 2 of the 3, not all three, so a company can be asset-heavy but still qualify if revenue and headcount are within limits. Second, the test looks back over two consecutive financial years, so a single spike does not instantly disqualify you, and a single dip does not instantly exempt you.

A quick worked example. Say a company reports S$2 million in revenue (pass), S$15 million in total assets (fail), and 10 employees (pass). It meets 2 of the 3 criteria, so it qualifies as a small company and is exempt from audit, provided it also met 2 of 3 in the prior year.

For a newly incorporated company that has not yet completed two financial years, ACRA applies the test to the available period, so a genuinely small start-up is not forced into an audit just because it has no two-year track record. Once you qualify, you stay qualified in later years unless you stop being a private company, or you fail to meet at least 2 of 3 criteria for the two most recent financial years. Mapping this against your financial year-end keeps the assessment clean.

What if my company is part of a group? (the small group test)

If your company is part of a group, qualifying on your own is not enough. To be exempt, the company must be a small company, and the group it belongs to must qualify as a “small group”. A group is a small group when it meets at least 2 of the same 3 criteria (S$10 million revenue, S$10 million assets, 50 employees) on a consolidated basis over the immediate past two consecutive financial years, as ACRA sets out. The consolidated figures include all entities in the group, foreign ones included.

This is where many subsidiaries get caught. A small Singapore subsidiary might post just S$1 million in local revenue, but if its overseas parent group consolidates well above S$10 million in revenue and assets, the group fails the test and the subsidiary must be audited despite looking tiny on its own. If your company has a corporate shareholder or sits inside a larger structure, run the numbers at group level before assuming you are exempt.

Are dormant companies exempt from audit?

Yes. Separately from the small company rules, a dormant company is exempt from audit under the Companies Act, and this exemption is not limited to private companies. A company is dormant when it has had no accounting transaction during the financial year (certain administrative items, such as appointing the company secretary or paying statutory fees, are disregarded).

Dormancy can also reduce your filing load. A dormant relevant company may be exempt from preparing and filing financial statements if it meets all the conditions in the Companies Act, including that its total assets did not exceed S$500,000 at any time during the year and it is not a listed company or a subsidiary of one, per ACRA’s filing requirements. A dormant company can also often qualify for a tax filing waiver, which we cover in our dormant company tax filing guide.

If I do not need an audit, do I still need accounts?

Yes, and this is the most common misunderstanding. Audit exemption removes the audit, not the accounting. Every company must still prepare proper financial statements that comply with the Singapore Financial Reporting Standards (SFRS), they are simply “unaudited financial statements” rather than audited ones. These typically include the directors’ statement, the statement of financial position (balance sheet), the income statement (profit and loss), and the related notes.

You also still need to present these statements to shareholders and meet your annual obligations. That means holding an annual general meeting where required, filing your annual return with ACRA, and, for most companies, filing financial statements in XBRL format. Skipping these because you are audit-exempt is exactly how directors end up with an ACRA late penalty. Strong day-to-day accounting and compliance habits keep all of this on track.

When should you voluntarily get an audit anyway?

Being exempt is permission to skip an audit, not an instruction to. Some companies choose to audit voluntarily because a stakeholder asks for the assurance. Common triggers include:

• Raising investment, where venture capital or private equity investors require audited accounts as a condition of funding.
• Applying for a sizeable bank loan or credit facility, where the lender wants audited statements.
• Selling the business, where a buyer’s due diligence is smoother and your valuation more defensible with audited numbers.
• Bidding for certain contracts or grants that specify audited financials.

If none of these apply, most small companies are better off putting that budget into clean monthly bookkeeping and timely filing. If you are weighing the cost, our roundup of the best accounting firms in Singapore is a useful starting point, and a quick conversation with a professional can confirm whether an audit genuinely adds value for you.

Audit and filing timeline at a glance

Whether or not you are audited, the annual cycle still has hard deadlines. For a private company, financial statements must generally be sent to members within 5 months after the financial year-end, the annual general meeting (where one is required) held within 6 months, and the annual return filed with ACRA within 7 months after the financial year-end for non-listed companies.

Missing these can trigger penalties and, for repeat lapses, action against directors. Aligning your tax position with your year of assessment 2026 obligations at the same time avoids a last-minute scramble. If you have just incorporated, our guide on how to register a company in Singapore sets out the compliance calendar from day one.

Frequently Asked Questions

Does every company in Singapore need an audit?

No. Most private companies are exempt because they qualify as a small company, meeting at least 2 of 3 thresholds (revenue of S$10 million or less, total assets of S$10 million or less, and 50 or fewer employees) over the last two financial years. Public companies, their subsidiaries, and certain regulated entities still need an audit.

What are the small company audit exemption criteria?

A private company qualifies as a small company if it meets at least 2 of these 3 criteria for the immediate past two consecutive financial years: total annual revenue of S$10 million or less, total assets of S$10 million or less, and 50 or fewer employees. Meeting 2 of the 3 is enough.

How does the small group rule work?

If a company is part of a group, both the company and the group must qualify. The group is a small group when it meets at least 2 of the same 3 criteria (revenue, assets, employees) on a consolidated basis, including foreign entities, over the last two financial years. A small local subsidiary of a large overseas group will usually fail this test.

Are dormant companies exempt from audit?

Yes. A dormant company, one with no accounting transaction during the financial year, is exempt from audit under the Companies Act, and this is not limited to private companies. A dormant company may also be exempt from preparing and filing financial statements if it meets the additional conditions, such as keeping total assets at or below S$500,000.

If my company is audit-exempt, do I still need financial statements?

Yes. Exemption removes the audit, not the accounts. You must still prepare unaudited financial statements that comply with the Singapore Financial Reporting Standards, present them to shareholders, hold an AGM where required, and file your annual return with ACRA on time.

When is it worth getting an audit voluntarily?

Consider a voluntary audit when a key stakeholder asks for it: investors raising a funding round, banks reviewing a large loan, a buyer running due diligence on an acquisition, or a grant or tender that requires audited statements. Otherwise, exempt companies usually get more value from clean bookkeeping and timely filing.

Talk to us about your audit and compliance

Working out whether your company needs an audit, especially inside a group structure or after a year of fast growth, is easier with a second pair of eyes on the numbers. The team at Excellence Singapore can confirm your audit exemption status, prepare compliant unaudited financial statements, handle your XBRL filing and annual return, and coordinate an audit if you genuinely need one. Reach out and we will help you stay compliant without paying for work you do not need.