Most Singapore companies do not need a statutory audit. The exemption is wider than many directors assume, and companies engage auditors every year without establishing first whether they were required to.
This sets out how the test actually works, where it is commonly misread, and what to do if you are close to a threshold.
The two conditions
A company is exempt from statutory audit as a small company if both apply:
- It is a private company in the financial year, and
- It meets at least two of three quantitative criteria for the two immediately preceding financial years.
The three criteria are total annual revenue, total assets, and number of employees. ACRA sets and publishes the figures, and they are currently under review — more on that below.
Four things directors get wrong
1. Reading it as all three
You need two of the three, not all three. A company well over on revenue can still qualify if its assets and headcount are within the limits. This is the most common misreading, and it causes companies to engage an auditor they did not need.
2. Testing a single year
The test runs across the two immediately preceding financial years. One year above a threshold does not remove the exemption on its own, and one year below does not create it.
3. Ignoring the group
This is the expensive one. A company inside a group qualifies only if the company itself meets the criteria and the whole group qualifies as a small group on consolidated figures.
A small Singapore subsidiary of a large overseas parent will frequently fail this even though its own numbers are modest. Directors who test only the local entity reach the wrong answer.
4. Assuming exemption means no audit
Statutory exemption removes the obligation under the Companies Act. It does not remove an audit required by a bank facility, a shareholder agreement, a grant condition, a landlord, or a parent company’s group auditor. Check your agreements before concluding you need nothing.
What exemption does not remove
An exempt company still prepares financial statements, still files its annual return with ACRA, and still files with IRAS. The exemption removes the audit, not the accounts.
ACRA is reviewing the thresholds
On 26 February 2026 ACRA announced a review of the audit exemption framework, noting that company revenues and asset values have grown considerably since the current thresholds were set. Targeted industry consultation began in March 2026, with feedback collected to 17 April 2026.
Two things are under consideration: increasing the revenue and asset thresholds, and whether subsidiaries might qualify even where the group does not. That second point matters for exactly the companies caught by the group test described above.
No outcome has been announced, and the current criteria remain in force. We will update this piece when ACRA publishes its conclusions.
If you are close to a threshold
Establish the position early rather than at year end. Three things worth doing:
- Test both preceding financial years, not the current one
- If there is a group, run the consolidated figures as well as your own
- Check facility agreements and shareholder agreements for an audit requirement that is independent of the statute
If the answer is that you are exempt and nothing contractual requires an audit, that is worth knowing before you commission one.
Where to check
ACRA publishes the current criteria and is the authoritative source. We deliberately do not restate the figures in our own words here, because they change — which is precisely the point this review is making.
If you would like the position checked against your actual accounts, including the two-year test and your group where one applies, we can do that.