Does my Singapore company need an audit? The “small company” exemption explained (with ACRA’s 2026 review)
Audit fees are an annual cost many Singapore companies do not need to pay. Under the “small company” regime, a large majority of private companies are exempt from having their financial statements audited. This guide sets out exactly who qualifies, the consolidated test for groups, the separate dormant-company exemption, who still must be audited — and what ACRA’s 2026 review may change. This is the working version of what we tell clients when they ask whether they need an auditor.
What “audit exemption” actually means (and what it does not)
Audit exemption means a company is not required to have its financial statements audited — it does not mean the company is excused from preparing financial statements. The statutory basis is Section 205C read with the Thirteenth Schedule of the Companies Act, which exempts a “small company” from the audit requirement. The exemption applies to private companies only.
Even when exempt, a company must still keep proper accounting records and prepare financial statements in accordance with the prescribed accounting standards (the Singapore Financial Reporting Standards, or SFRS). Audit exemption also does not change a company’s financial-statement filing requirements. In short: no auditor, but the books and the accounts still have to be done properly.
The small company test: 2 of 3, over the past 2 financial years
A private company qualifies as a “small company” if it meets at least 2 of 3 quantitative criteria. After the initial years, those criteria must have been met for the immediate past two consecutive financial years — it is a backward-looking test, not a single-year snapshot.
The small company framework applies to financial years beginning on or after 1 July 2015, introduced by the Companies (Amendment) Act 2014. A company ceases to be a small company if it stops being a private company at any time during a financial year, or if it does not meet at least 2 of the 3 criteria for the immediate past two consecutive financial years.
The three criteria: revenue, total assets and headcount
The three tests are revenue, total assets and employee headcount — and your company needs to satisfy any two of them. The two financial thresholds are equal and separate (S$10 million each), not a single combined figure.
| Criterion | Threshold to satisfy |
|---|---|
| Total annual revenue | S$10 million or less |
| Total assets | S$10 million or less |
| Number of employees | 50 or fewer |
Because only two of the three must be met, a company can, for example, exceed 50 employees yet still qualify if both its revenue and total assets are S$10 million or less. Each financial year is tested on its own figures, then read across the two-year window.
Newly incorporated companies and the first financial years
A newly incorporated private company qualifies if it meets at least 2 of the 3 criteria in its current (first) financial year — there is no two-year track record to look back on yet. If it did not qualify in the first year, the same test is simply applied again for the second year.
This matters for founders budgeting their first-year compliance costs: most genuinely new private companies fall comfortably within the thresholds and are exempt from audit from day one, provided they still prepare SFRS-compliant accounts. If you are still at the planning stage, see our note on company incorporation in Singapore.
If you are part of a group: the “small group” test
A company within a group qualifies for exemption only if it is a small company in its own right and the whole group is a “small group”. The group is a small group when it meets at least 2 of the same 3 criteria on a consolidated basis for the immediate past two consecutive financial years.
Critically, all entities in the group are counted, including foreign entities. Where consolidated financial statements are prepared, the consolidated figures are used; where they are not, total assets and revenue are aggregated across all members of the group. So an otherwise-small Singapore subsidiary of a large overseas group will usually fail the small group test and need an audit — a common trap for inbound businesses.
The dormant company exemption (Section 205B)
A dormant company is separately exempt from audit under Section 205B of the Companies Act. A company is dormant for a period in which no accounting transaction occurs (certain transactions are disregarded under section 205B(3)).
Two points are worth flagging. First, the dormant exemption is not limited to private companies — it can apply to other company structures that are genuinely dormant, unlike the small company exemption. Second, a dormant company must still prepare financial statements in compliance with SFRS; it simply need not have them audited. Dormant is not the same as doing nothing.
ACRA’s 2026 review: what is proposed, and its current status
On 26 February 2026 ACRA announced a review titled “Reducing Compliance Costs for Small Companies: Review of Audit Exemption Framework.” As at the date of this article, this is a review only — nothing has been enacted or come into force, and the existing S$10 million revenue, S$10 million assets and 50-employee criteria remain the law.
- What is being considered (proposed only): whether to raise the total annual revenue and total assets thresholds, and whether subsidiaries could qualify for exemption independently under certain conditions. ACRA has not published specific new threshold figures.
- Consultation: targeted industry consultations ran from March 2026, and stakeholders could submit feedback via a short survey by 17 April 2026. That deadline has passed, and outcomes were still pending at the time of writing.
- Effective date: there is no commencement or effective date for any change, because no change has been made. The 26 February 2026 date is the announcement of a review, not a law change.
Treat any “higher thresholds” or “independent subsidiary exemption” you read about as proposed, not current law. We will update this page if and when ACRA enacts changes.
Who still needs a statutory audit
If your company is not a qualifying small company or small group, it must have its financial statements audited. The clearest cases are:
- Public companies — the small company exemption applies only to private companies, so a public company must be audited regardless of size.
- Private companies that fail the test — any private company that does not satisfy the small company or small group criteria must be audited.
- Companies whose members require it — under section 205C(2) of the Companies Act, members holding at least 5% in nominal value of the company’s total issued share capital (or any class of it) — or, where the company has no share capital, at least 5% in number of the members — can give notice requiring an audit even where the company otherwise qualifies.
Exempt from audit still means you must keep records and file
Audit exemption removes the auditor — it does not remove your filing and record-keeping duties. An exempt company must still keep proper accounting records, prepare SFRS-compliant financial statements, hold its accounts to the same standard, and meet its ACRA filing obligations. Audit exemption does not change those filing requirements at all.
In practice this is where exempt companies most often slip — assuming “no audit” means “no accounts.” It does not. Keeping clean, standards-compliant books is part of the deal and is exactly the work covered by ongoing corporate secretarial services in Singapore.
What to do if you are unsure whether you qualify
If you are not certain, the practical step is to test your last two financial years against the three criteria — and, if you sit in a group, run the same test on a consolidated basis including overseas members. Borderline cases (a company hovering at S$10 million, a fast-growing subsidiary, or a recently de-grouped entity) are where a qualification check pays for itself.
Asprin is a registered corporate service provider (CSP). A named specialist can confirm your audit-exemption status, flag the year you may lose it, and make sure your statutory records and accounts are in order. Talk to Asprin for a same-business-day review.
Sources and further reading
- ACRA — Audit exemptions (small company and dormant company)
- ACRA — More details on the small company concept for audit exemption
- ACRA — Reducing Compliance Costs for Small Companies: Review of Audit Exemption Framework (26 Feb 2026)
- Asprin — Corporate secretarial services
- Asprin — ACRA annual return guide
Confirm your audit-exemption status
We check your last two financial years against the small company criteria, flag any group or dormant issues, and keep your statutory records in order.