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Auditing in Singapore is a critical aspect of the financial reporting process. The essential object of audits is to provide an independent assessment of the accuracy and reliability of the company’s financial statement and to ensure that the company is complying with relevant accounting standards and regulations. It is mandatory to comply with the rules governed by the Companies Act. Auditing in Singapore is carried out to ensure that the record presented in the financial statement is true and accurate. As per the companies act, every company must hire an auditor to conduct an audit.
Auditing in Singapore is regulated by the Accounting and Corporate Regulatory Authority (ACRA) and the Institute of Singapore Charted Accountants (ISCA). However, the regular auditing in Singapore in the business comes under the ACRA’s compliance.
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A business must follow the regulation of ACRA at the time of doing an audit. The following factors need to be taken into account while conducting audits in Singapore:
The entity must select an auditor per the Singapore Companies Act requirements. If the business is to conduct audits in Singapore, these criteria must be met. The ACRA’s regulations must be governed while hiring an auditor. Companies that are exempt from this obligation do not require to appoint an auditor.
Auditors must diligently carry out audits. Additionally, the auditors have to adhere to the ACRA auditing requirements. However, auditors must also adhere to international auditing standards like IFRS and GAAP. In addition, the auditors are in charge of examining the financial statements. In the meantime, at the Annual General Meeting (AGM), the auditors present the financial accounts to conduct an audit.
Every entity must do an audit; some are exempted from doing audits. The following organisations are not permitted to conduct audits:
According to the Singapore Companies Act, every company must submit an audit report within a specific time frame. The Government of Singapore and the ACRA have exempted certain corporations from submitting audits report after the modification made in 2014. Singapore does not require audits if a company is categorised as a small business. On July 1, 2015, this amendment became effective. As a result, this will apply to all businesses that meet the criteria for small businesses. The following conditions must be met.
Therefore, a corporation is exempt from audits in Singapore if it meets the requirements above.
Group businesses are considered to be a component of the parent company under the Singapore Businesses Act. The parent company (holding company) and the subsidiaries are group companies under the Singapore Companies Act. However, the regulation impacts the parent company and its subsidiaries. As per the law, group companies are also liable to be exempted from carrying out audits in Singapore if the parent company and its subsidiaries would satisfy the following requirements:
Group corporations will also be free from specific requirements under the Singapore Corporations Act.
A corporation is dormant under the Singapore Companies Act if there isn’t a transaction between the companies. The action is a financial or accounting transaction. A firm must meet the following requirements to be dormant:
The primary governing body for audits in Singapore is the Accounting and Corporate Governing Authority (ACRA). In Singapore, audits must be conducted by all entities. The Singapore Companies Act also governs routine audits. In Singapore, certain businesses are excused from undertaking audits. For this purpose, they must meet the eligibility requirements. The Singapore Companies Act was amended to exempt small businesses from doing audits under the Companies (Amendment) Act of 2014.
Understanding whether audits are necessary before an entity register with the ACRA is critical. There are some entities for whom doing an audit is required. For performing audits in Singapore, the following procedures are necessary:
The organisation or entity must first comprehend the need for an audit. To determine if they belong under exempted entities, they must consult with the ACRA. The audit is optional if they fall under the category of exempted entities.
The auditor must carry out the duties per the ACRA’s requirement. The following duties have to be carried out by the auditor:
Accounting standards are known as Singapore Financial Reporting Standards (SFRS) in Singapore. All companies with financial periods starting on or after January 1 2003, must comply with SFRS.
A dormant account is one of the primary principles of Singapore accounting standards. Financial statements are prepared based on accounting. They have recorded the accounting details and reports in the financial statements. Financial statements were prepared on time and informed the users about their past transactions involving payment and cash receipts.
Singapore’s comprehensive set of accounting standards contains about 41 standards, such as FRS 1. Each standard provides a specific topic, such as presenting financial statements, revenue recognition, accounting for inventories, etc.
Furthermore, since the SFRS for SE came into force on January 1, 2011, an entity must have satisfied the requirements for the preceding two years to be eligible for the streamlined SFRS. Once it crosses the size criterion for two successive reporting periods, a business that meets the requirements may abide by the rules. In these circumstances, the business must adhere to the whole SFRS.
If a subsidiary of a holding company that adopts the complete SFRS satisfies the requirements, it may adopt the SFRS for SMEs.
Thus, the streamlined SFRS for small organisations will be perfect for startups and businesses struggling with Singapore’s financial standards.
Both accounting and auditing requirements are essential for securing the integrity of financial reporting and ensuring stakeholders have access to reliable financial information. Companies are required to comply with accounting and auditing standards, regulations, and laws to promote transparency and accountability.
Read our Article: All you need to know about Audits in Singapore
Minakshi Bindhani has completed LL.M. with a specialization in Criminal Law from Madhusudan Law University, Cuttack, Odisha. She is more inclined toward legal research and writing and have prior experience in Civil and Criminal litigation and content writing.
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