Currently, a company is exempted from having its accounts audited if it is an exempt private company with annual revenue of S$5 million or less. This approach is being replaced by a new small company concept which will determine exemption from statutory audit. Notably, a company no longer needs to be an exempt private company to be exempted from audit. The audit exemption is applicable for financial years beginning on or after the change in law (1 July 2015).

A company qualifies as a small company if:

(1)	It’s a private company in the financial year; and
(2)	It meets at least 2 of 3 following criteria for immediate past two consecutive financial years:
	(a)	Total annual revenue ≤ S$10 million;
	(b)	Total assets ≤ S$10 million;
	(c)	No of employees ≤ 50.

For a company which is part of a group:
(a)    the company must qualify as a small company; and
(b)    entire group must be a “small group”

For a group to be a small group, it must meet at least 2 of the 3 quantitative criteria on a consolidated basis for the immediate past two consecutive financial years.

Companies are still required to maintain proper accounting records, prepare and present financial statements in compliance with the Act and the Singapore Financial Reporting Standards (SFRS). In short you are required to prepare directors’ report, statement of financial position, statement of comprehensive income, statement of changes in equity, cash flow statement and notes to financial statements. Everything is the same with the exception of the audit report.

The Inland Revenue Authority of Singapore (IRAS) had also issued a circular advising corporate tax payers to file their tax returns accompanied by unaudited financial statements that they fully comply with the Singapore Financial Reporting Standards. IRAS may reject the tax returns lodged if it did not complied with SFRS. Penalties may be payable if the subsequently reviewed accounts are not prepared on time.

The preparation of the financial statement or compilation without any audit report saves both time and money.

Companies which have audit exemption can have their auditors review their financial statements instead. This provides more assurance to other users of the financial statements compared to compilation alone. In the report, the auditors will review the financial statement and a negative opinion. They will specifically state that this does not amount to an audit, and nothing had come to their attention to believe that the financial statement are not presented fairly.

Review provides more assurance for companies with audit exemption compared to compilation. You must evaluate the cost and benefits of compilation with review or audit.