Under the amended law it is not mandatory for dormant companies and small exempt private companies whose annual turnover is S$5 million and below to have their accounts audited.
However, all companies must continue to maintain proper accounting records and prepare “true and fair” financial statements that comply with the Financial Reporting Standards (FRS) that are prescribed by the Council on Corporate Disclosure and Governance (CCDG). Additionally, under Section 205C of the Singapore Companies Act, the Registry of Companies and Business may require a company exempt from audit requirements to lodge audited accounts.
Q2. Why do companies have audits?
Companies invest in an audit for a number of reasons. Larger companies are required to do so by law, but many would do so anyway even if there were no statutory obligation – as in the USA. An independent audit is crucial to good corporate governance and essential to an effective internal financial control function.
Above all, an audit adds credibility to information provided to shareholders. It provides assurance to investors and other providers of finance who are able to make their decisions in a safe environment, with confidence. Safety and confidence reduce the cost of capital and make companies competitive and profitable.
