Compilation and Audit

All Companies registered under the Singapore Companies Act are required to table at the Annual General Meeting either Audited or Unaudited Financial Statements.

What is an audit?

An audit is a very thorough examination of the financial records for your business, which determines if the information correctly reflects the financial position at the given time.

An audit is a much more critical, systematic process that requires detailed testing such as examining your business’ accounting records and looking through financial statements. The auditor may even interview employees within your company to survey internal controls.

As a result, the results of an audit lead to the highest level of assurance that can be provided.

What is a compilation?

A compilation is a basic summary of your company’s financial statements written by a CPA using data provided by your company.

Unlike a review or an audit, this method provides no assurance. There are no tests performed, and the auditor does not examine any internal controls.

During a compilation, an accountant will review and inquire about your business’ financial statements, but will not compare them to any of their expectations. This means that they cannot provide any opinion or assurance.

A morsel of treats

Appointment of auditor

205.—(1)  The directors of a company must, within 3 months after incorporation of the company, appoint an accounting entity or accounting entities to be the auditor or auditors of the company, and any auditor or auditors so appointed hold office, subject to this section, until the conclusion of the first annual general meeting.

Small company exempt from audit requirements

205C.—(1)  a company that is a small company in respect of a financial year is exempt from audit requirements for that financial year.

A company is a small company from a financial year if —

(a)  it is a private company throughout the financial year; and

(b)  it satisfies any 2 of the following criteria for each of the 2 financial years immediately preceding the financial year:

(i)    the revenue of the company for each financial year does not exceed $10 million;

(ii)   the value of the company’s total assets at the end of each financial year does not exceed $10 million;

(iii)  it has at the end of each financial year not more than 50 employees.

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