Having your company’s financial statements audited, assures you and other directors that the business is running in accordance with the information they are receiving, and helps reduce the scope for fraud and poor accounting.
It provides assurance to shareholders, especially if they are not directors closely involved in the business, that the financial statements are true and fair.
Having the company’s accounts audited early may be advantageous if a company is growing and likely to exceed the turnover threshold in the near future, in order to avoid having to revisit the previous years’ figures, once the threshold has been reached.
It also enhance the credibility and reliability of the figures being submitted to prospective purchasers. If an owner manager is planning on selling in the next 3 years, it may be beneficial to carry out regular audits.
In Singapore, all companies are required to be audited unless they qualifies as a small company.
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 consecutive financial years:
(i) total annual revenue ≤ $10m;
(ii) total assets ≤ $10m;
(iii) 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.