Does My Singapore Company Qualify for Audit Exemption? ACRA Small Company Rules Explained

The small company audit exemption

Many private companies in Singapore may be exempt from having their financial statements audited. However, audit exemption is not automatic simply because a company has limited activity, low revenue or few shareholders.

The company must satisfy the small-company requirements under the Companies Act and assess both its individual position and, where applicable, its group.

The small company test

According to ACRA, a company generally qualifies for audit exemption when:

• It is a private company throughout the relevant financial year.
• It satisfies at least two of the three quantitative criteria for the immediate past two consecutive financial years.

The three criteria are:

1. Total annual revenue of not more than S$10 million.
2. Total assets of not more than S$10 million.
3. Not more than 50 full-time employees at the end of the financial year.

The revenue and asset figures should be determined from financial statements prepared according to the applicable accounting standards.

What about a newly incorporated company?

A company that is less than two years old does not yet have two preceding financial years.

For its first financial year, a newly incorporated company may qualify if it is a private company and meets at least two of the three quantitative criteria in that financial year.

If it does not qualify in its first financial year, it may assess the same conditions again in its second financial year.

Additional test for companies within a group

A company belonging to a group must satisfy both the company-level and group-level tests.

This means:

• The Singapore company must qualify as a small company.
• The entire group, including foreign entities, must satisfy at least two of the three thresholds on a consolidated basis for the immediate past two consecutive financial years.

The group thresholds are consolidated annual revenue of not more than S$10 million, consolidated total assets of not more than S$10 million and not more than 50 employees across the group.

A subsidiary cannot rely only on its own figures if its wider group exceeds the relevant thresholds. Group membership is determined under the applicable accounting standards, even where consolidated financial statements are not prepared or filed.

Can a company with a corporate shareholder qualify?

Yes. A private company can qualify even if it has a corporate shareholder.

The current small-company exemption does not require the company to be an exempt private company. Nevertheless, a company with a corporate parent must assess whether it belongs to a group and apply the consolidated group test.

When does a company lose its exemption?

Once a company qualifies as a small company, it generally remains qualified until:

• It ceases to be a private company during a financial year.
• It fails to meet at least two of the three quantitative criteria for the immediate past two consecutive financial years.

A small group similarly remains qualified until it fails the group thresholds for two consecutive financial years.

Companies approaching the limits should monitor revenue, assets and employee numbers before the financial year closes.

Audit exemption does not mean no financial statements

An audit-exempt company may still need to:

• Maintain proper accounting records.
• Prepare financial statements that comply with Singapore accounting standards.
• Prepare a directors’ statement.
• Send financial statements to its members.
• Hold an AGM or follow the applicable AGM-exemption process.
• File an annual return.
• File financial statements with ACRA where required.

ACRA states that the small-company audit exemption does not, by itself, change a company’s financial-statement filing requirements.

A solvent exempt private company may qualify for a separate filing exemption. A qualifying dormant relevant company may be exempt from preparing and filing financial statements.

What about dormant companies?

Dormant companies may qualify for a separate audit exemption under section 205B of the Companies Act.

A dormant company should not automatically assume that it is also exempt from preparing or filing financial statements. The financial-reporting exemption for a dormant relevant company has separate requirements, including dormancy, listing status and the applicable S$500,000 substantial-assets test.

Can shareholders still request an audit?

Audit exemption does not always prevent shareholders from requiring an audit.

ACRA has stated that shareholders holding at least 5% of the company’s total issued shares retain the right to require an audit. Companies should also check their constitution and any shareholders’ agreement.

Other reasons an audit may still be required

Even when exempt under the Companies Act, a company may still require audited financial statements because of:

• Bank or lender requirements
• Shareholder or investor requirements
• Government grants or licences
• Regulatory or industry-specific requirements
• Customer or supplier contracts
• Group reporting instructions
• A proposed business sale or fundraising exercise
• Internal governance and assurance needs

The statutory exemption should therefore be considered separately from the company’s commercial obligations.

Has ACRA changed the S$10 million thresholds?

In February 2026, ACRA announced a review of Singapore’s audit-exemption framework. The review includes whether the revenue and asset thresholds should be increased and whether certain subsidiaries could qualify even if their group exceeds the thresholds.

The announcement was a review, not confirmation that the thresholds had changed. Companies should continue applying the prevailing criteria unless revised legislation or official guidance takes effect.

Practical assessment checklist

1. Was the company private throughout the financial year?
2. What were its revenue, total assets and full-time employee numbers?
3. Did it meet at least two criteria for the required two-year period?
4. Is the company newly incorporated?
5. Does it belong to a group under the accounting standards?
6. Does the entire group satisfy the consolidated thresholds?
7. Do shareholders, banks, regulators or contracts require an audit?
8. Must the company still prepare and file financial statements?
9. Has the assessment been documented for the annual return declaration?

How LN can assist

LN Corporate Services can assist with accounting records, preparation of financial statements, group-structure assessment and annual corporate-compliance requirements.

LN CO Assurance can assess the relevant audit requirements and, where an audit is required or voluntarily requested, discuss the appropriate audit engagement subject to client acceptance, independence and professional-ethics requirements.