Singapore Company Audit Exemption 2026: Does Your Small Company Qualify?

Not every Singapore company is required to have its financial statements audited each year. For thousands of small businesses, the small company audit exemption under the Companies Act 1967 removes the mandatory audit requirement — saving directors significant time and cost without compromising their core compliance obligations. But qualifying is not automatic, and changes may be on the horizon following the Accounting and Corporate Regulatory Authority’s (ACRA) review of the audit exemption framework in early 2026.

This guide explains who qualifies, what the exemption covers (and does not cover), and what directors and company secretaries need to know in 2026.

What Is the Audit Exemption for Singapore Companies?

Under Section 205B of the Companies Act, a company that qualifies as a “small company” is exempt from the requirement to have its financial statements audited. The rationale is straightforward: mandatory audits impose significant compliance costs that are disproportionate for very small businesses with limited turnover and assets.

Before 2015, the exemption was limited to exempt private companies (EPCs) — private companies with no more than 20 shareholders, all of whom are individuals. The Companies (Amendment) Act 2014 broadened the exemption to all private companies that meet the “small company” criteria, whether or not they are EPCs.

The Small Company Criteria: Does Your Company Qualify?

To qualify as a small company for audit exemption purposes, a company must:

1. Be a private company in the financial year concerned; and
2. Meet at least two of the following three quantitative criteria for the immediate past two consecutive financial years:
   • Total annual revenue of S$10 million or less;
   • Total assets of S$10 million or less; and
   • Number of employees of 50 or fewer.

Meeting two out of three criteria in each of the two most recent financial years is sufficient. There is no requirement to meet all three.

Example: Does ABC Pte Ltd Qualify?

Small Groups: Additional Rules for Subsidiaries

If your company is a member of a group of companies — that is, if it has a parent company or subsidiaries — the rules are slightly more complex. A company within a group qualifies for the small company exemption only if both:

• The company itself meets the small company criteria; and
• The entire group qualifies as a “small group” under Section 205C of the Companies Act — meaning the group as a whole (on a consolidated basis) meets at least two of the same three quantitative criteria for two consecutive financial years.

This prevents large corporate groups from sheltering individual subsidiaries behind the audit exemption while the parent and group as a whole are well above the thresholds.

Who Cannot Claim the Audit Exemption?

Certain categories of companies are excluded from the small company audit exemption regardless of their size. These include:

• Listed companies and their subsidiaries;
• Publicly accountable entities — broadly, companies that hold assets on behalf of members of the public in a fiduciary capacity (e.g. banks, insurance companies, finance companies, fund managers);
• Charities and societies governed by the Charities Act; and
• Companies that were public companies at any point in the financial year in question.

If you are unsure whether your company’s activities make it a “publicly accountable entity,” seek advice from your auditor or corporate secretary before assuming audit exemption applies.

ACRA’s 2026 Review: May the Thresholds Change?

In March 2026, ACRA announced that it was conducting targeted industry consultations to review the audit exemption framework, with a view to reducing compliance costs for small companies. The review is examining whether the current S$10 million thresholds for revenue and assets remain appropriate, and whether the employee headcount threshold should be adjusted. Stakeholders from the accounting, legal, and business communities were invited to provide feedback.

While no changes have been finalised at the time of writing, the review signals that the thresholds may increase — potentially exempting more companies from the audit requirement. Directors and company secretaries should monitor ACRA announcements for updates before the next financial year-end planning cycle.

What Audit Exemption Does Not Mean

A common misconception is that qualifying for audit exemption reduces a company’s compliance obligations significantly. In fact, audit exemption is narrowly scoped. Even if your company is exempt from audit, it must still:

• Prepare financial statements in accordance with the Singapore Financial Reporting Standards (SFRS) or SFRS for Small Entities, as applicable;
• Hold an Annual General Meeting (AGM) and table the financial statements to shareholders (unless the company has validly dispensed with AGMs under Section 175A of the Companies Act);
• File the Annual Return with ACRA, including the financial statements (unaudited), within the applicable deadline — 7 months from the financial year end for most private companies;
• File Estimated Chargeable Income (ECI) with IRAS within 3 months of the financial year end;
• File the corporate income tax return by 30 November each year; and
• Comply with XBRL filing requirements if applicable — see ACRA’s XBRL guide for whether your company needs to file tagged financial data.

Directors should also note that proper accounting records must be kept under Section 199 of the Companies Act, whether or not the company is audited. The absence of an audit does not reduce the obligation to maintain accurate books.

For a full picture of all annual compliance deadlines, refer to the Singapore Company Compliance Calendar 2026.

Transition Rules: New Companies and the First Two Financial Years

A newly incorporated company cannot have two consecutive financial years of data when it is first set up. ACRA addresses this through a transition rule: a company qualifies as a small company from its first financial year if it meets at least two of the three criteria for that year alone. From the third financial year onwards, the standard two-consecutive-year test applies.

Voluntary Audit: Can You Choose to Be Audited Even If Exempt?

Yes. The small company audit exemption is permissive, not mandatory. A company that qualifies as a small company may still choose to have its accounts voluntarily audited, and many do — particularly if they are seeking bank financing, bidding for government contracts, or preparing for an eventual sale or investment. Lenders and institutional investors routinely prefer or require audited financial statements, and a voluntary audit can significantly strengthen a company’s credibility.

Practical Steps for Directors and Company Secretaries

To manage the audit exemption correctly, directors and company secretaries should take the following steps each financial year:

1. Check eligibility annually. The small company test is applied year by year. A company that qualified in FY2025 may not qualify in FY2026 if its revenue or assets have grown beyond the thresholds.
2. Document the assessment. Keep a record (such as a board resolution or a note in the company’s files) confirming that the directors have assessed the company’s eligibility and concluded that it qualifies for the exemption.
3. Instruct the bookkeeper or accountant. If no auditor will be engaged, the company’s accountant should prepare the financial statements for tabling at the AGM and for filing with ACRA.
4. Prepare for XBRL. Confirm whether your company is required to file its financial statements in XBRL format. Many small companies are exempt from full XBRL, but the rules can be complex. See ACRA’s XBRL exemption guide for details.
5. Review bank requirements. If your company has outstanding loans or is seeking new financing, check your facility agreements. Some loan covenants require audited accounts regardless of ACRA exemption.

For legal advice on whether your company qualifies for audit exemption and the implications for your compliance obligations, speaking with a qualified professional is advisable.

Beyond compliance, sound financial planning and investment decisions are equally important for business owners navigating growth and corporate governance challenges.

For the latest Singapore business news and regulatory updates, there are useful resources for directors and company secretaries.

Conclusion

The small company audit exemption offers meaningful cost savings for qualifying Singapore companies, but it carries important responsibilities: financial statements must still be prepared and filed, the AGM must still be held, and proper records must be maintained. With ACRA’s 2026 review underway, directors should also watch for potential changes to the qualifying thresholds that could affect their planning going forward.

At Raffles Corporate Services, we assist Singapore companies with their full range of annual compliance obligations — from financial statement preparation and XBRL filing to annual return filing and corporate secretarial maintenance. Whether you are audit-exempt or not, we ensure your company stays fully compliant with ACRA and IRAS requirements.

To speak with the team at Raffles Corporate Services, you can email [email protected] or call, SMS, or WhatsApp +65 8501 7133. We are happy to assist with any queries.

— The Editorial Team, Raffles Corporate Services