Singapore Audit Exemption Rules Explained: 2025 Guide
An audit requirement refers to the statutory obligation for certain companies to have their annual financial statements audited by an independent public accountant. In Singapore, mandatory audits primarily apply to larger companies due to their scale of operations, public interest considerations, or regulatory oversight.
Most Singapore SMEs qualify for audit exemption. In line with Singapore’s business-friendly policies, they are allowed to prepare unaudited financial statements, significantly reducing their compliance costs and administrative workload.
This guide explains the eligibility criteria for audit exemption in Singapore, the benefits of audit exemption, how to determine or declare audit-exempt status, and when an audit is still required.
Table of Contents
Key Takeaways
Most Singapore SMEs qualify for audit exemption if they meet the small company criteria, small group criteria, or are dormant.
To qualify as a small company, a business must satisfy at least two of three thresholds: revenue ≤ S$10 million, total assets ≤ S$10 million, and ≤ 50 employees.
Audit-exempt companies can file unaudited financial statements, significantly reducing compliance costs and administrative workload.
Audit exemption removes only the audit requirement. Companies must still prepare financial statements, hold an AGM, file the Annual Return, and submit tax filings.
What Is Audit Exemption in Singapore?
Audit exemption is a provision under Singapore’s Companies Act that allows eligible companies to prepare unaudited annual financial statements instead of undergoing a full statutory audit. When a company qualifies, it is not required to appoint an auditor or have its annual accounts reviewed by a public accountant.
The purpose of audit exemption is to ensure that regulatory requirements remain proportionate to the size and complexity of a business. Smaller companies typically pose lower financial reporting risks, so the law provides flexibility to reduce compliance costs without compromising transparency.
A company that is audit-exempt must still prepare proper financial statements, hold an AGM (unless exempted), file an Annual Return with ACRA and tax returns with IRAS. The exemption only removes the obligation to audit the accounts, it does not remove the obligation to maintain accurate records or meet annual filing requirements.
Audit Exemption Eligibility Criteria
Under the Companies Act, a Singapore company may be exempt from audit if it falls into one of the qualifying categories. The most common pathways are:
- Meeting the small company criteria,
- Qualifying as part of a small group, or
- Being recognised as a dormant company.
Each category is described below.
Small Company Criteria
It is a private limited company during the financial year; and
It meets at least 2 of the following 3 criteria for the immediately past two consecutive financial years:
- Total annual revenue: ≤ S$10 million
- Total assets: ≤ S$10 million
- Number of employees: ≤ 50
Small Group Criteria
The individual company qualifies as a small company; and
The entire group qualifies as a small group.
A group qualifies as a small group if it meets at least 2 of the following 3 criteria on a consolidated basis for the immediately past two consecutive financial years:
- Consolidated revenue: ≤ S$10 million
- Consolidated total assets: ≤ S$10 million
- Consolidated employees: ≤ 50
If the group fails these thresholds, all companies within that group will generally lose audit exemption, even if individual entities are small.
Dormant Company Criteria
A company may also be exempt from audit if it is dormant, meaning it has no accounting transactions during the financial year. In practice, this means the company has not generated revenue, incurred expenses, or conducted any financial activity other than those specifically permitted by the Companies Act, such as paying fees for maintaining its registered office.
Dormant companies are exempt from audit as long as they remain dormant throughout the financial year.
Dormant companies must still maintain proper records and prepare financial statements unless they also qualify for filing exemptions under separate provisions.
Summary of Audit Exemption Thresholds
Benefits of Audit Exemption for Companies
Cost Savings
Reduced Compliance Burden and Time
Greater Privacy of Financial Information
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How to Declare Audit Exemption Status
Step 1
Verify Eligibility
Step 2
Prepare Annual Financial Statements
Step 3
Declare Status in the Annual Return
When Audit Exemption Does Not Apply
Failure to Meet Small Company, Small Group, or Dormant Criteria
Audit exemption is lost once the eligibility criteria are no longer met for the required period.
For small companies and companies within a group, this includes situations where the company ceases to be a private limited company, no longer qualifies as a small company based on the size thresholds, or where the entire group fails to meet the small-group criteria.
For dormant companies, audit exemption is lost when the company becomes active and begins having accounting transactions during the financial year.
Public Interest or Regulated Entities
Certain entities are required to be audited regardless of size, including:
- Public companies and subsidiaries of public companies
- Banks, finance companies, and insurance companies licensed under the Banking Act or Insurance Act
- Companies licensed under the Securities and Futures Act or Financial Advisers Act
- Charities and Institutions of a Public Character (IPCs) with gross annual receipts or expenditure exceeding S$50,000 (unless specifically exempted by the Commissioner of Charities)
Shareholder Resolution Requiring an Audit
Direction by ACRA, Liquidator, or Court
Audit exemption can be overridden if:
- ACRA suspects the accounts are misleading or directors have breached their duties and directs the company to appoint an auditor (very rare for compliant SMEs).
- A liquidator is appointed during winding-up proceedings and requires audited accounts to verify assets and liabilities.
- A court orders an audit in the course of legal proceedings (e.g., shareholder disputes, oppression actions, or judicial management).
Voluntary Appointment of Auditor
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Founder, KATZION TECHNOLOGY SOLUTIONS PTE. LTD.Ongoing Obligations for Audit-Exempt Companies
Audit exemption removes only the requirement to have financial statements audited. All other statutory duties under the Companies Act remain unchanged. Audit-exempt companies must continue to fulfil the following obligations each financial year:
- Prepare financial statements
- Hold an Annual General Meeting (AGM)
- File the Annual Return with ACRA
- Submit corporate tax filings to IRAS
For full details on Singapore’s annual compliance requirements, refer to our comprehensive Annual Compliance Guide.
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