Statutory Audits

Statutory Audits | Bestar

Statutory Audits

In Singapore, most companies are required to undergo a statutory audit on a yearly basis. This is an external audit performed by a licensed public accountant to verify the accuracy of a company's financial statements and ensure compliance with regulations.

Here's a breakdown of statutory audits in Singapore:

Who Needs a Statutory Audit?

• Generally, all private limited companies must have their financials audited annually.

• However, some companies are exempt if they qualify as "Small Companies" or "Small Groups" under the Companies Act.

Small Company Exemption Criteria:

A company qualifies for a statutory audit exemption if it meets at least two of the following three criteria for two consecutive financial years:

• Total annual revenue of S$10 million or less

• Total assets of S$10 million or less

• Number of full-time employees is 50 or less

Importance of Statutory Audits

Statutory audits provide several benefits:

• Increased transparency and credibility of financial statements

• Early detection of errors or fraud

• Improved corporate governance

More Information on Statutory Audits in Singapore

Here's a deeper dive into statutory audits in Singapore:

The Process of a Statutory Audit:

• Appointing an Auditor: Companies must appoint a qualified public accountant as their auditor within three months of incorporation. ACRA maintains a list of approved auditors.

• Planning and Scoping: The auditor will discuss the audit process with the company and determine the scope of work based on the company's size and complexity.

• Testing Procedures: The auditor will perform various tests on the company's financial records, such as reviewing invoices, bank statements, and inventory counts.

• Management Representations: The auditor will obtain written confirmation from management regarding the accuracy of the financial statements and any significant matters.

• Audit Opinion:  After completing the audit procedures, the auditor will issue an audit opinion. This opinion states whether the financial statements present a fair and true view of the company's financial position and results of operations according to Singapore Financial Reporting Standards (SFRS). There are different types of audit opinions, with an unqualified opinion indicating the financial statements are fairly presented.

Additional Considerations:

• Timeline: The audit typically takes place after the company's financial year-end and before the Annual General Meeting (AGM).

• Costs: The cost of a statutory audit varies depending on the company's size, complexity, and the auditor's experience.

• Record Keeping: Companies are required to maintain proper accounting records for at least five years after the financial year-end to facilitate audits.

Benefits Beyond Compliance:

• Improved Financial Controls: The audit process can identify weaknesses in a company's internal controls and lead to improvements in financial management.

• Increased Investor Confidence: An unqualified audit opinion can enhance investor confidence in the company's financial health.

• Early Detection of Issues: Audits can help identify potential financial problems early on, allowing companies to take corrective action.

Resources for Further Research:

For more information on statutory audits in Singapore, you can refer to the following resources from the Accounting and Corporate Regulatory Authority (ACRA) of Singapore and other reliable sources:

• ACRA: [companies act singapore audit exemption ON Accounting and Corporate Regulatory Authority acra.gov.sg]

• Audit and Compliance in Singapore: [audit and compliance requirements in singapore ON Bestar Asia bestar-asia.com]

• Singapore Institute of Certified Public Accountants (SICPA): https://www.sicpa.com/

• ACRA Filing Requirements: https://www.acra.gov.sg/how-to-guides/filing-annual-returns-ars

How Bestar can Help

Bestar, a public accounting firm in Singapore, can assist with statutory audits in several ways:

• Planning and Risk Assessment: Bestar can help businesses identify and assess potential risks associated with their financial statements. This helps ensure a smooth audit process and reduces the chance of unexpected issues arising.

• Conducting the Audit: Bestar's experienced auditors will conduct a comprehensive audit of your company's financial statements, adhering to Singapore Standards on Auditing (SSAs). This involves reviewing financial records, testing internal controls, and obtaining audit evidence.

• Reporting and Communication: Following the audit, Bestar will prepare a detailed audit report outlining their findings and recommendations. This report is crucial for shareholders, creditors, and other stakeholders to assess the accuracy and fairness of your financial statements.

• Internal Controls Evaluation: Bestar can assess the effectiveness of your company's internal controls. Strong internal controls help mitigate fraud risks and ensure accurate financial reporting. Bestar can identify areas for improvement and suggest recommendations to strengthen your internal control framework.

• Representation before ACRA: The Accounting and Corporate Regulatory Authority (ACRA) is the Singaporean authority that oversees business registration and compliance. If necessary, Bestar can represent your company before ACRA during the audit process.

Additional Benefits of Working with Bestar for Statutory Audits

• Expertise in Singaporean Accounting Standards: Bestar's accounting team possesses in-depth knowledge of Singaporean accounting standards and regulations. This ensures we conduct audits that comply with local requirements.

• Compliance with Companies Act: Bestar can help you ensure your company adheres to the Companies Act and other relevant legislation in Singapore.

• Improved Financial Reporting: Through the audit process, Bestar can provide valuable insights and recommendations to improve your company's financial reporting processes, leading to more accurate and transparent financial statements.

Overall, Bestar is a qualified accounting firm that can assist Singaporean companies with their statutory audit requirements.

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