Q4. My company’s transactions are few (or none). Is there a need for an annual audit?
Under the Companies Act, dormant and small exempt private companies that have an annual turnover of S$5 million or less need not have their accounts audited annually. However, you may note that audit fees are generally lower for companies that have fewer transactions.
Q5. Can I do a review instead of an audit?
Review engagements are becoming more common. Many companies see a review as a cost-effective alternative to an audit.
There is a significant difference between an audit and a review; the level of assurance provided by a review engagement is substantially lower than the level of assurance provided by an audit engagement. A review engagement differs from an audit engagement in the following aspects:
Audit engagements provide a high level of positive assurance, often expressed in ‘true and fair” terms; review engagements only provide a moderate level of assurance, often expressed as ‘negative’ assurance and reviewers commonly state that nothing has come to their attention to indicate that the information reported on has not been ‘properly prepared’.
Audit engagements require the auditor to assess the accounting and internal control systems, to perform detailed tests of control and substantive procedures, and to corroborate explanations received; review engagements rely substantially on analytical procedures and reviewers are not required to assess the accounting and internal control system or to corroborate explanations received.
