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, 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.

Who Cannot Claim the Audit Exemption?

Certain categories of companies are excluded regardless of their size:

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

ACRA’s 2026 Review: May the Thresholds Change?

In March 2026, ACRA announced targeted industry consultations to review the audit exemption framework, examining whether the current S$10 million thresholds for revenue and assets remain appropriate, and whether the employee headcount threshold should be adjusted. While no changes have been finalised at the time of writing, the review signals that thresholds may increase — potentially exempting more companies. Directors and company secretaries should monitor ACRA announcements for updates.

What Audit Exemption Does Not Mean

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

• Prepare financial statements in accordance with Singapore Financial Reporting Standards;
• Hold an Annual General Meeting (AGM) and table the financial statements — see the AGM Requirements 2026 Guide;
• File the Annual Return with ACRA within 7 months of the financial year end — see the Annual Return filing guide;
• File Estimated Chargeable Income (ECI) with IRAS within 3 months of year end;
• File the corporate income tax return by 30 November — see the Corporate Tax 2026 Guide; and
• Comply with XBRL filing requirements if applicable — see the XBRL Guide.

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

Transition Rules: New Companies

A newly incorporated company cannot have two consecutive financial years of data at the outset. ACRA’s transition rule provides that 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 exemption is permissive, not mandatory. A qualifying company may still choose to have its accounts voluntarily audited — and many do when seeking bank financing, bidding for government contracts, or preparing for a sale or investment. Lenders and institutional investors routinely prefer or require audited financial statements.

Practical Steps for Directors and Company Secretaries

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 revenue or assets have grown.
2. Document the assessment. Keep a board resolution or written note confirming the directors have assessed and confirmed eligibility.
3. Instruct the accountant. If no auditor is engaged, the accountant should prepare unaudited financial statements for the AGM and ACRA filing.
4. Check XBRL requirements. Confirm whether your company must file financial data in XBRL format.
5. Review bank covenants. Some loan agreements require audited accounts regardless of ACRA exemption.

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

Beyond compliance, sound financial planning and investment decisions are equally important for business owners managing company governance and personal wealth.

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, AGMs must be held, and proper records maintained. With ACRA’s 2026 review underway, directors should also watch for potential threshold changes affecting their planning.

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.

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