Audit Exemption in Singapore: Does Your Company Qualify as a "Small Company"?
Not every company incorporated in Singapore is required to have its financial statements audited each year. Since the introduction of the "small company" concept, many SMEs qualify for audit exemption, which saves cost and time. But it's worth understanding exactly how the test works, because outgrowing it can catch business owners by surprise.
What Audit Exemption Actually Means
Audit exemption means your company is not legally required to engage an external auditor to review and certify your financial statements. It does not mean you're excused from preparing financial statements altogether: you still need properly prepared, unaudited financial statements for your annual filing with ACRA and your tax filing with IRAS. The exemption simply removes the requirement to have those statements independently audited.
The "Small Company" Concept
A private company qualifies as a "small company," and is therefore exempt from audit, if it meets at least two of the following three criteria for each of the immediate past two consecutive financial years:
- Total annual revenue of not more than S$10 million
- Total assets of not more than S$10 million
- Number of employees of not more than 50
Meeting just two of the three is enough: a company doesn't need to satisfy all three criteria simultaneously.
If Your Company Is Part of a Group
The test gets an extra layer if your company belongs to a group of companies (i.e. it's a parent or subsidiary). In that case:
- The company itself must qualify as a small company, and
- The entire group must qualify as a "small group," meeting at least two of the three thresholds above on a consolidated basis, for both of the immediate past two consecutive financial years
This matters for business owners running related entities across Singapore and overseas jurisdictions: a company that looks small on its own can still require audit if the wider group doesn't meet the thresholds.
Newly Incorporated Companies
A newly incorporated company is treated as a small company for its first financial year, provided it meets at least two of the three criteria for that year alone (the two-year lookback naturally doesn't apply yet since there's no prior year to reference).
This single-year concession also extends to the second financial year: if your company doesn't qualify in year one, it can still qualify in year two based on that year alone. The full two-consecutive-year test only starts to apply from the third financial year onward.
What Happens If You Outgrow the Exemption
The criteria are assessed on the immediate past two consecutive financial years, which means a single strong year doesn't immediately trigger an audit requirement, but two consecutive years of exceeding the thresholds does. This is worth watching closely if your business is scaling quickly, hiring, or has just closed a large contract that pushes revenue or assets past the threshold. It's a good idea to review your numbers against the criteria at each financial year-end, not just when preparing your annual filing.
Should You Get Audited Anyway, Even If Exempt?
Some exempt companies choose a voluntary audit regardless, commonly because:
- A bank, investor, or landlord requires audited statements as a condition of financing or a lease
- The company wants an independent check on internal controls before a fundraising round or exit
- Shareholders holding at least 5% of the company's shares (or 5% of members, for a company without share capital) require it by written notice no later than one month before the financial year-end, a right they retain even if the company otherwise qualifies for exemption
Dormant Companies Are a Separate Category
It's worth noting that "dormant company" exemption is a different concept from the small company exemption, with its own criteria (broadly, a company with no accounting transactions during the financial year). If your company is dormant rather than simply small, different rules may apply, which is worth checking separately.
A note on currency: the S$10 million revenue and asset thresholds and the 50-employee headcount threshold reflect current Singapore law as of August 2026. ACRA has an active public consultation underway on raising these thresholds, so it's worth confirming the figures still apply at the time you rely on them.
Not sure whether your company still qualifies?
Get in touch with our team. We can help you check where you stand, and whether a voluntary audit makes sense for where your business is headed.