Audit exemption: is yours a "small company"?
Meet two of three size criteria — revenue, assets, employees — and skip the statutory audit. What s205C actually requires, and what the exemption does not remove.
Does my Singapore company qualify for audit exemption as a small company?
A private company is exempt from statutory audit as a small company if it meets any two of three criteria for the financial year: revenue not more than S$10 million, total assets not more than S$10 million, and not more than 50 employees. If the company belongs to a group, the whole group must also qualify on a consolidated basis. The exemption removes the audit only — financial statements must still be prepared and records kept.
Since financial years beginning on or after 1 July 2015, Singapore has exempted "small companies" from statutory audit under s205C of the Companies Act 1967, with the size test set out in the Thirteenth Schedule. For a young company the saving is real — audit fees for even a simple entity run to several thousand dollars a year.
The two-of-three test
A company qualifies as a small company for a financial year if it is a private company and meets at least two of these three criteria:
- Revenue not more than S$10 million for the financial year;
- Total assets not more than S$10 million at the financial year end;
- Employees not more than 50 at the financial year end.
Two out of three is enough — a company with S$12 million of revenue can still qualify if its assets and headcount are under the limits. Public companies, listed or not, can never use the exemption.
The group test
If the company is part of a group, there is a second hurdle: the entire group must be a "small group", meeting two of the same three criteria on a consolidated basis. A modest Singapore subsidiary of a large foreign parent fails this test and must be audited, however small it is on its own.
Entering and leaving the regime
For its first two financial years, a new company qualifies in any year it meets the test. After that, a company is disqualified only when it fails the test for two consecutive financial years — so one strong year does not immediately bring the audit back.
What the exemption does not remove
Audit exemption lifts exactly one obligation: appointing an auditor and obtaining an audit report. Everything else stands:
- Accounting records must still be kept under s199 — see the record-keeping guide;
- Financial statements complying with the Accounting Standards must still be prepared and tabled (s201), and filed with the annual return unless exempt;
- The annual return still declares the company's audit status — leaving that field blank is one of the commonest causes of a rejected filing.
Shareholders with at least 5% of the votes can still require an audit, and lenders or investors often demand audited statements by contract regardless of the statutory position. Treat the exemption as a default you can use, not a ceiling on what stakeholders may ask of you.
Frequently asked questions
This guide is general information, not legal or tax advice. Confirm requirements with ACRA and IRAS, or speak to your corporate secretary.