- As a part of the recent amendments in the Singapore Companies Act, a significant number of companies that previously required audit will no longer do so
- The change takes effect for the financial year starting on or after the 1st of July
2015.
| Previous Audit Provisions |
New Provisions |
| All non-dormant companies that either had a corporate shareholder, had more than 20 shareholders or its Annual Revenue > SGD 5M required an audit. |
All Private companies that meets the definition of “Small Company “and are part of “Small Group” in each of immediate past 2 financial year are exempt from audit. |
- Dormant companies were exempt from this requirement.
Criteria for Audit Exemption to Small Companies and Small Groups in Singapore
| If not part of a group (small company) |
Criteria:
– Revenue < SGD 10M
– Assets < SGD 10M
– Employees < 50 |
Must satisfy any 2 out of the following 3 conditions for the past 2 years. |
| If part of a group (small company) |
| The company itself must be a small company (as per above points) |
Entire group must be a “small group” on consolidated basis |
|
Entire group satisfy any 2 out of the 3 criterias for past 2 years. |
Transitional Provisions for existing companies
Illustration
Assumption:
a) The company is a private company throughout the period
b) The company’s FY.2015 commences on or after the 1st of July 2015
Two scenarios to illustrate transitional provisions
| Scenario 1 |
FY 2015 |
FY 2016 |
FY 2017 |
FY 2018 |
FY 2019 |
FY 2020 |
| Meets Quantitative Criteria |
Yes |
No |
`Yes |
No |
No |
Yes |
| Qualifies as a “Small Company” |
Yes |
Yes |
Yes |
Yes |
Yes |
No |
| Remarks |
FY 2015 is the first financial year after the commencement of the “small company” criteria, the company qualifies as a small company. |
As the company already qualified as “small company” in FY 2015, it continues to be a “small company” despite not meeting the quantitative criteria in FY 2016. It will only be disqualified when it fails to meet the criteria for 2 consecutive financial years preceding FY 2016 |
The company already qualified as a small company in FY 2015 and it is not disqualified. |
As the company already qualified as a “small company” in FY 2015, it continues to be a “small company” despite not meeting the criteria in current FY and for one of the two preceding FYs |
Although the company meets the criteria in Current FY but not in the preceding 2 FY’s, hence it is disqualified. |
Two scenarios to illustrate transitional provisions
| Scenario 2 |
FY 2015 |
FY 2016 |
FY 2017 |
FY 2018 |
FY 2019 |
FY 2020 |
| Meets Quantitativ e Criteria |
No |
Yes |
Yes |
No |
No |
Yes |
| Qualifies as a “Small Company” |
No |
Yes |
Yes |
Yes |
Yes |
No |
| Remarks |
FY 2015 is the first financial year after the commencement of the “small company” criteria, the company does not qualify as a small company as it does not meet the quantitative criteria in FY 2015. |
FY 2016 is the second FY after the commencement of the “small company” criteria, the company qualifies as a small company as it is a private company and meets the quantitative criteria. In FY 2016. |
The company already qualified as a small company in FY 2016 and it is not disqualified. |
As the company already qualified as a “small company” in FY 2016, it continues to be a “small company” despite not meeting the quantitative criteria in current FY and for one of the two preceding FYs |
Although the company meets the quantitative criteria in Current FY, it is disqualified as it fails to meet the quantitative criteria for two consecutive financial years preceding FY 2020. |
Application of criteria to new companies incorporated on or after 01st Jul 2015
- A new company incorporated on or after 1st Jul 2015 can qualify as a “small company” if it is a private company and meets the quantitative criteria in its first or second FY after incorporation.
- The illustration for this scenario is similar to that for the transitional provisions for existing companies above.
