Audit

What is audit?

Audit is the annual process of examining or inspective of the accounting records of a company to ensure that the accounting records are free from misstatements.

What type of company has to be audited?

A “small company” is exempt from auditing their financial statements. A company qualifies as a small company if: 

(a) it is a private company in the financial year in question; and 

(b) it meets at least 2 of 3 following criteria for immediate past two financial years: 

total annual revenue ≤ $10m;

total assets ≤ $10m;

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”

to qualify to the audit exemption.

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. 

Where a company has qualified as a small company, it continues to be a small company for subsequent financial years until it is disqualified. A small company is disqualified if: 

(a) it ceases to be a private company at any time during a financial year; or 

(b) it does not meet at least 2 of the 3 the quantitative criteria for the immediate past two consecutive financial years. 

Where a group has qualified as a small group, it continues to be a small group for subsequent financial years until it does not meet at least 2 of the 3 the quantitative criteria for the immediate past two consecutive financial years. 

More information about audit from ACRA website.

When should a company appoint auditor?

Every company must appoint an auditor within 3 months of incorporation, unless it is exempted from audit requirements under relevant sections of the Companies Act. 

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