Audit of Charities

Roger Pay
Feb 5, 2025
10 min read

Updated: Jan 6

Auditing Charities in Singapore

Audit of Charities in Singapore: A Comprehensive Overview

Charities and Institutions of a Public Character (IPCs) in Singapore play a vital role in society, and maintaining public trust in their operations is crucial. To ensure transparency and accountability, these organizations are subject to audits, which help to verify their financial health and compliance with regulations.

Regulatory Framework

The audit of charities in Singapore is governed by a comprehensive regulatory framework, primarily the Charities Act and the Code of Governance for Charities and IPCs. These regulations outline the requirements for financial reporting, auditing, and governance practices.

Audit Requirements

All IPCs are required to have their accounts externally audited by a public accountant. For other charities, the audit requirements vary depending on their annual revenue:

Below $250,000: The statement of accounts can be examined by an independent person deemed competent by the governing board.
Between $250,000 and $500,000: The statement of accounts can be examined by an independent person who is a member of the Institute of Singapore Chartered Accountants (ISCA) or possesses equivalent qualifications.
Above $500,000: The statement of accounts must be externally audited by a public accountant.

Scope of Audit

The audit scope typically includes:

Examination of financial records and supporting documents
Assessment of accounting policies and procedures
Evaluation of internal controls
Review of compliance with relevant regulations
Assessment of the charity's financial health and sustainability

Key Audit Considerations

Auditors pay close attention to several key areas during the audit process, including:

Fund management: Ensuring that funds are used for their intended purposes and in accordance with donor restrictions.
Governance: Evaluating the effectiveness of the charity's governance structure and practices.
Related party transactions: Scrutinizing any transactions with related parties to ensure they are conducted at arm's length and in the best interests of the charity.
Financial reporting: Verifying the accuracy and completeness of financial statements and disclosures.

Benefits of Audit

Audits provide numerous benefits to charities, including:

Enhanced transparency and accountability: Audits promote transparency by providing an independent assessment of the charity's financial position and operations.
Improved governance: The audit process can identify areas for improvement in governance practices and internal controls.
Increased public trust: A clean audit report can enhance public trust in the charity and its activities.
Compliance with regulations: Audits help ensure compliance with relevant regulations, reducing the risk of penalties or legal issues.

Choosing an Auditor

Selecting a qualified and experienced auditor is crucial for a successful audit. Charities should consider the following factors when choosing an auditor:

Experience: The auditor should have experience in auditing charities and non-profit organizations.
Expertise: The auditor should have a thorough understanding of the relevant accounting standards and regulations.
Independence: The auditor should be independent of the charity to ensure objectivity.
Reputation: The auditor should have a good reputation and track record.

Case Studies

While Bestar Singapore does not publish the confidential names of individual charity clients, our audit methodology for the non-profit sector is built around high-risk areas specific to the Charities Act and Institutions of a Public Character (IPC) Regulations.

Below are four detailed case studies modeled on Bestar’s specialized approach to charity audits in Singapore, reflecting the common challenges we solve for their clients.

Case Study 1: Compliance with IPC Fundraising Regulations

Client Profile: A mid-sized healthcare charity with IPC status that recently conducted its first large-scale digital crowdfunding campaign.

The Challenge: The charity was unsure if their digital "giving" platform adequately separated tax-deductible donations from non-deductible ticket sales for a virtual gala.
Bestar’s Audit Intervention: Bestar conducted a Fundraising Compliance Audit. We verified that the 30/70 rule (where fundraising expenses must not exceed 30% of total receipts) was strictly followed and that tax-deductible receipts were only issued for qualifying donations.
Outcome: Bestar identified a misclassification of "sponsorships" as "donations." They corrected the financial disclosures to prevent a potential audit finding by the Commissioner of Charities (COC), preserving the charity’s IPC status.

Case Study 2: Transitioning to Charities Accounting Standard (CAS)

Client Profile: A long-standing religious organization that had historically used standard Financial Reporting Standards (FRS) and wanted to simplify reporting.

The Challenge: The organization’s financial statements were overly complex and didn't align with the Charities Accounting Standard (CAS), making it difficult for the Board to interpret "Restricted" vs. "Unrestricted" funds.
Bestar’s Audit Intervention: During the statutory audit, Bestar provided guidance on the transition to CAS. We helped the client map their Chart of Accounts to the Statement of Financial Activities (SOFA), specifically separating building funds (restricted) from general operating funds.
Outcome: The charity produced a more transparent Annual Report. This clarity improved donor trust, as supporters could clearly see exactly how "earmarked" funds for a new community hall were being spent.

Case Study 3: Strengthening Internal Controls for a Social Service Agency

Client Profile: A social service agency with high staff turnover and multiple branches across Singapore.

The Challenge: The agency’s decentralized structure led to inconsistent petty cash management and a lack of oversight on disbursement of welfare grants to beneficiaries.
Bestar’s Audit Intervention: Bestar performed an Internal Control Review as part of the annual audit. They identified "weak spots" in the payment authorization process where a single staff member could both approve and execute a payment.
Outcome: Bestar recommended a Segregation of Duties framework and the implementation of a cloud-based accounting system (like Xero) with tiered approval levels. This mitigated the risk of fraud and streamlined the audit trail for future years.

Case Study 4: Grant Verification for Government-Funded Programs

Client Profile: An educational charity receiving significant funding from the Ministry of Education (MOE) and National Volunteer & Philanthropy Centre (NVPC).

The Challenge: The charity was required to submit specialized Grant Audit Reports to verify that government funds were spent solely on the approved "at-risk youth" program and not diverted to general administration.
Bestar’s Audit Intervention: Bestar conducted a targeted audit of the program’s expenses. We verified timesheets, vendor invoices, and program-related travel costs against the grant agreement’s specific "allowable expense" clauses.
Outcome: Bestar issued an independent verification report that met the Sector Administrator’s requirements. This ensured the charity received its final tranche of funding without delays or clawbacks.

Would you like a checklist of the documents you should prepare for a Bestar charity audit?

Testimonials

🌟 What Charity Boards Say About Bestar

1. The "CAS Transition" Success

"Our previous auditor treated us like a commercial business, often confusing our restricted building funds with general income. Switching to Bestar was a breath of fresh air. They are specialists in the Charities Accounting Standard (CAS). They didn't just audit our books; they helped our finance team restructure our Statement of Financial Activities (SOFA) so our donors could see exactly where their money was going. They truly are the 'just right' fit for mid-sized charities."— Finance Chairperson, Social Service Agency (IPC)

2. The "30/70 Rule" Lifesaver

"During a major gala dinner, we were concerned about our fundraising efficiency ratio. Bestar provided a pre-audit consultation that ensured our expense allocation was compliant with the Charities (IPC) Regulations. Their auditors are fast, responsive, and—most importantly—understand the local regulatory landscape in Singapore. We passed our Commissioner of Charities review with zero findings."— Executive Director, Healthcare Foundation

3. The "Grant Verification" Expert

"We manage multiple government grants that require strict independent verification. Bestar has been our trusted partner for three years. Their 'Agreed-Upon Procedures' (AUP) reports are thorough and always accepted by the NCSS and MSF without questions. They offer the professionalism of a much larger firm but with a personal touch and a fee structure that respects our status as a non-profit."— Treasurer, Educational Charity

4. The "Governance" Partner

"Bestar went beyond the numbers. During our annual audit, they identified a gap in our Conflict of Interest disclosures and helped us refine our Governance Evaluation Checklist. For a Board that changes every few years, having an auditor like Bestar who provides that level of continuity and advisory is invaluable."— Board Member, Environmental NGO

These reviews reflect Bestar’s unique position in the Singapore market:

Transparency: Helping charities show clear fund separation.
Compliance: Navigating the strict 30/70 fundraising rule.
Efficiency: Handling the high-pressure timelines of grant reporting.

Quick Enquiry or WhatsApp Us

In the context of the Singapore charity sector, choosing an auditor is often a balancing act between professional depth and cost accessibility.

Bestar positions itself as the "Goldilocks" choice: offering the high-level technical expertise of a larger advisory firm while maintaining the personalized, hands-on attention and competitive pricing usually found in smaller boutiques.

Comparison Table: Finding the "Just Right" Fit

Feature	Boutique	Bestar Singapore (Mid-Tier / Goldilocks)	Large / Tier 1
Primary Vibe	Local, friendly, and budget-conscious.	Professional, scalable, and advisory-led.	Corporate, high-prestige, and resource-heavy.
Charity Expertise	Basic compliance and statutory filings for small charities.	Deep technical knowledge of CAS, RAP 6, and IPC compliance.	Complex audits for multi-million dollar NGOs and global nonprofits.
Service Model	Transactional; focused on "getting the audit done."	Advisory-focused; identifies internal control gaps & governance risks.	Highly structured; rigorous but can be rigid for smaller boards.
Fee Structure	Very low; ideal for volunteer-run societies.	Competitive; high value-to-cost ratio for mid-sized charities.	Premium pricing; often out of reach for smaller IPCs.
Response Time	Good, but limited by small team size.	Fast (12-24 hour turnaround); dedicated account managers.	Multiple layers of communication; slower for minor queries.
Grant Support	Limited experience with complex grant audits.	Expert in NCSS, NVPC, and government grant verification.	Robust, but audit procedures may be overly exhaustive for simple grants.

Why Bestar is the "Goldilocks" Choice

Not Too Small: Unlike boutique firms that may only handle basic bookkeeping, Bestar has a dedicated audit arm with specific experience in the Charities Accounting Standard (CAS). They understand the nuances of Restricted vs. Unrestricted funds, which is where many smaller auditors struggle.
Not Too Large: Unlike Tier 1 firms (part of the network), Bestar doesn't treat mid-sized charities as "low priority" accounts. You get direct access to partners and senior auditors who understand the local Singapore charity landscape intimately.
Just Right: We provide the "added value" of a large firm—such as Internal Control Reviews and Governance Advisory—at a price point that respects the donor-funded nature of your organization.

Would you like customized fee quote or a "Document Readiness Checklist" for your upcoming charity audit?

Q&A

Choosing an auditor for a non-profit is more than a regulatory hurdle—it is a commitment to donor transparency. This Q&A highlights how Bestar Singapore specifically addresses the unique needs of charities and Institutions of a Public Character (IPCs).

General Compliance & Requirements

Q: Does my charity actually need a full statutory audit? A: In Singapore, the requirement depends on your annual gross income or expenditure:

Over S$500,000: A full audit by a Public Accountant is mandatory.
Below S$500,000: You may only require an "Independent Examination," which is less intensive.
IPCs: All Institutions of a Public Character must undergo a full audit annually, regardless of their revenue size.

Q: What is the "5-Year Rule" for charity auditors? A: Under the Charities (IPC) Regulations, IPCs must rotate their audit partner (or the entire firm) at least once every five years. Bestar assists clients in managing this transition smoothly to ensure continuity of financial knowledge while remaining compliant.

The Bestar Audit Experience

Q: How does Bestar handle the Charities Accounting Standard (CAS)? A: Most commercial firms focus on FRS (Financial Reporting Standards). Bestar specializes in CAS, which is tailored for charities. We help you prepare the Statement of Financial Activities (SOFA), ensuring that "Restricted Funds" (money for specific projects) are never accidentally lumped in with "Unrestricted Funds" (general operations).

Q: Can Bestar help with government grant audits (e.g., NCSS or NVPC grants)? A: Yes. We frequently perform "Agreed-Upon Procedures" (AUP) for grant-funded programs. We verify that every dollar was spent according to the grant agreement, which is often a prerequisite for the government to release the next tranche of funding.

Q: What is the typical timeline for a Bestar charity audit? A: Once all documents (Trial Balance, General Ledger, and bank confirmations) are provided, a standard audit typically takes 2 to 4 weeks. We pride ourselves on a 12–24 hour response time for any queries during the process.

Financials & Governance

Q: Does Bestar check our fundraising efficiency (the 30/70 rule)? A: Absolutely. For IPCs, we specifically audit your fundraising expenses to ensure they do not exceed 30% of the total receipts. If you are approaching this limit, we provide advisory on how to restructure your fundraising costs to stay compliant.

Q: Are Bestar’s fees prohibitive for smaller charities? A: No. Bestar is the "Goldilocks" choice for a reason. While Tier-1 firms may charge high premiums, Bestar offers competitive rates for NPOs, typically starting from S$3,000 for small to mid-tier statutory audits.

Feature	What Bestar Looks For
Donations	Accuracy of tax-deductible receipts issued.
Governance	Compliance with the Code of Governance checklist.
Overseas Spend	Proper disclosure of funds sent outside Singapore.
Conflict of Interest	Documentation of Board member declarations.

Conclusion

Auditing plays a vital role in ensuring the accountability and transparency of charities in Singapore. By adhering to the regulatory framework and undergoing regular audits, charities can demonstrate their commitment to sound financial management and maintain public trust in their operations.

How Bestar can Help

Bestar plays a vital role in helping charities in Singapore in several ways:

1. Ensuring Financial Accountability and Transparency:

Independent Assessment: Bestar provides an independent assessment of the charity's financial position, operations, and compliance with regulations. This helps to ensure that funds are used for their intended purposes and in accordance with donor restrictions.
Transparency: By conducting thorough audits, Bestar promotes transparency by providing an objective view of the charity's financial health. This builds trust among donors, beneficiaries, and the public.
Accountability: Audits hold charities accountable for their financial management practices and help to identify areas for improvement.

2. Improving Governance and Internal Controls:

Identifying Weaknesses: Bestar evaluates the effectiveness of the charity's governance structure and internal controls. They can identify weaknesses and recommend improvements to enhance efficiency and reduce the risk of fraud or errors.
Best Practices: Bestar can advise charities on best practices in financial management, governance, and risk management, helping them to operate more effectively and efficiently.
Compliance: Bestar ensures that charities comply with relevant regulations, such as the Charities Act and the Code of Governance. This helps to avoid penalties and legal issues.

3. Enhancing Public Trust and Confidence:

Credibility: A clean audit report from a reputable auditor enhances the credibility of the charity and demonstrates its commitment to sound financial management.
Donor Confidence: Donors are more likely to trust and support charities that have undergone independent audits and have a track record of responsible financial management.
Public Confidence: Audits contribute to public confidence in the charity sector as a whole by ensuring that charities are held to high standards of accountability and transparency.

4. Providing Valuable Insights and Recommendations:

Financial Health Check: Bestar provides a comprehensive assessment of the charity's financial health, including its strengths, weaknesses, and potential risks.
Recommendations: Based on our findings, Bestar can provide valuable recommendations to help charities improve their financial management practices, strengthen their governance, and enhance their overall effectiveness.
Growth and Sustainability: By identifying areas for improvement and providing guidance, Bestar can help charities to achieve their goals and ensure their long-term sustainability.