Audit services are crucial in ensuring financial transparency and compliance for businesses in Singapore. With its robust regulatory framework and international alignment, Singapore has established itself as a global hub for high-quality auditing practices. This article will explore the audit framework in Singapore, the requirements for companies, and the benefits of engaging professional audit services. Whether you’re a business owner or an investor, understanding these aspects is vital to navigating Singapore’s business landscape.

What Are Audit and Assurance Services?

Audit and assurance services involve the systematic examination of a company’s financial statements to ensure their accuracy, reliability, and compliance with applicable laws and standards. Typically, licensed auditors or public accountants perform these services, assessing whether financial reports present a “true and fair view” of the company’s financial position.

Key components of audit services include:

• Statutory Audits

These are required by law for most companies to ensure compliance with financial reporting standards.

• Internal Audits

Focus on improving internal controls and operational efficiency.

• Forensic Audits

Investigate fraud, financial misconduct or disputes

• Information Systems (IS) Audits

Evaluates the integrity and security of IT systems and processes

• Specialised Audits

Tailored for specific needs, such as tax audits or compliance audits.

Key components of other assurance services include:

• Review Engagements

Professional review of the financial statements to provide limited assurance about the accuracy of the financial statements

• Agreed-upon Procedures (AUP)

The Auditor performs specific procedures agreed upon with the client and reports factual findings.

• Compilation of Financial Statements

Involves preparing financial statements based on client data without verifying it.

• Due Diligence Reviews

Assesses financial, legal, or operational risks of a target company; these services are often used in the mergers and acquisitions process.

Audit Framework in Singapore

Singapore’s audit framework operates under stringent regulations designed to uphold high standards of financial reporting. The key elements include:

1. Regulatory Authorities

• Accounting and Corporate Regulatory Authority (ACRA): Oversees the auditing profession and enforces compliance with auditing standards.
• Institute of Singapore Chartered Accountants (ISCA): Sets auditing standards and ethical requirements through its Auditing and Assurance Standards Committee (AASC).

2. Audit Standards

Singapore adopts the Singapore Standards on Auditing (SSA), which are closely aligned with the International Standards on Auditing (ISA). These standards ensure consistency, reliability, and transparency in the auditing process.

3. Audit Exemption Criteria

Under the Companies Act, certain small companies are exempt from statutory audits if they meet at least two of the following criteria for two consecutive years:

• Annual revenue ≤ SGD 10 million
• Total assets ≤ SGD 10 million
• Employees ≤ 50

Who Needs Audit Services in Singapore?

Most companies incorporated in Singapore are required to undergo statutory audits unless they qualify for exemptions as small or dormant companies.

In Singapore, many small companies qualify for audit exemption under the “small company” criteria, but some still choose to get audited voluntarily. Here’s why:

• Investor or Shareholder Requirements
• Bank Loan or Financing Requirements
• Supplier or Customer Confidence
• Potential Sale or IPO Readiness
• Parent Company or Group Consolidation
• Internal Management Use
• Overseas Operations

Small Companies

To qualify as a small company:

• It must be privately held.
• It must meet at least two of the three exemption criteria mentioned above.

Dormant Companies

Companies that have no significant accounting transactions during a financial year may also qualify for audit exemptions.

Why Are Audit Services Important?

Audit services provide several benefits beyond regulatory compliance:

1. Enhancing Stakeholder Confidence
   • Audited financial statements assure investors, creditors, and other stakeholders of the company’s financial health.
2. Improving Financial Management
   • Audits help identify inefficiencies and areas for improvement in financial management.
3. Facilitating Growth
   • Reliable financial reports are essential for securing funding, attracting investors, or planning mergers and acquisitions.
4. Ensuring Compliance
   • Statutory audits ensure adherence to local and international financial reporting standards.

Key Questions About Audit Practices in Singapore

What Is a Statutory Audit?

A statutory audit is a mandatory examination of a company’s financial statements by an independent auditor to ensure compliance with regulatory requirements.

What Are the Roles of Auditors?

Auditors are responsible for:

• Verifying the accuracy of financial statements.
• Ensuring compliance with accounting standards.
• Identifying discrepancies or fraudulent activities.

How Are Audit Fees Determined?

Audit fees are negotiable between the client and the audit firm. Factors influencing fees include company size, complexity of operations, and scope of the audit.

Comparison Table: Statutory vs Internal Audits

Recent Changes in Audit Regulations

Several updates have been made to Singapore’s audit landscape to enhance transparency:

• Mandatory Audits for Specific Entities: From March 2024, certain industries like Ship Repairers’ Protection & Indemnity (SRPS) require mandatory audits.
• Transfer Pricing Audits: Increased scrutiny on transfer pricing practices for fiscal years ending December 2021 and 2022.
• Alignment with IFRS: Fast-tracked implementation of new disclosure requirements for supplier finance arrangements.

How to Choose an Audit Firm in Singapore

Selecting the right audit firm is critical for achieving reliable outcomes. Consider these factors:

• Credentials: Ensure the firm is registered with ACRA.
• Experience: Look for expertise in your industry.
• Reputation: Check reviews or seek recommendations.
• Cost: Compare fees but prioritise quality over price.

DTL Accounting Group offers competitive audit fees without compromising on the highest professional quality. DTL’s audit services are tailored to meet the unique needs of your business. Visit dtl.sg for more details.

Conclusion

Audit services are indispensable for businesses operating in Singapore’s highly regulated environment. They not only ensure compliance but also enhance stakeholder confidence and operational efficiency. Whether you need statutory audits or specialised services, engaging a reputable firm can make all the difference.

If you’re looking for reliable audit services in Singapore that align with your business goals, explore our offerings. Let us help you achieve transparency and growth!