ACRA launched a formal review of Singapore’s audit exemption framework in February 2026 — the first since the current thresholds were set in 2015. The public consultation closed on 17 April 2026, and as of June 2026, no outcome has been published. For companies that are near the existing thresholds, or for directors managing their compliance workload, the wait is meaningful. This guide explains what the review covers, what is likely to change, and what practical steps you can take right now.

What the Current Audit Exemption Framework Provides

Under Section 205C of the Companies Act (Cap. 50), a Singapore-incorporated private company qualifies as a “small company” — and is therefore exempt from having its financial statements audited — if it meets at least two of the following three criteria for each of the two financial years immediately preceding the current financial year:

  • Total annual revenue does not exceed S$10 million
  • Total assets do not exceed S$10 million
  • Number of employees does not exceed 50

If the company is part of a group, there is an additional “small group” test: the group must also satisfy at least two of the same three criteria on a consolidated basis for the small company exemption to apply.

The audit exemption does not mean the company can ignore financial reporting. A small company must still prepare financial statements in accordance with the Singapore Financial Reporting Standards (SFRS for Small Entities or full SFRS), table financial statements at the AGM (or distribute them to members if the AGM is dispensed with), and file the annual return with ACRA within the statutory period.

What it saves is the cost and time of an independent statutory audit — typically S$3,000 to S$12,000 per year for an SME, depending on complexity.

Why ACRA Is Reviewing the Thresholds Now

The S$10 million revenue and asset thresholds have been unchanged since 1 July 2015 — over a decade. In that time, the average revenue and asset base of Singapore companies has grown substantially, meaning companies that were safely within the thresholds in 2015 may now find themselves near or above them simply due to inflation and business growth, without any change in their complexity or governance risk.

ACRA’s February 2026 announcement specifically cited the need to ensure the framework “remains fit for purpose” and to reduce compliance costs for small companies. Internationally, comparable jurisdictions have already raised their thresholds significantly. The United Kingdom’s revenue threshold is £10.2 million (approximately S$17.4 million), Australia’s is A$25 million (approximately S$21.8 million), and New Zealand’s is NZ$12 million (approximately S$11.1 million). Singapore’s S$10 million revenue threshold stands out as comparatively low, and an upward revision is widely anticipated.

For sound financial planning and investment decisions as a business owner, understanding how regulatory changes affect your compliance costs is an important part of long-term planning.

What ACRA’s Consultation Examined

The March–April 2026 consultation asked for feedback on two key areas.

The first was increasing the revenue and assets thresholds. ACRA invited views on whether the S$10 million figures should be raised, and if so, to what level. Industry bodies, accounting firms, and corporate service providers were able to submit feedback via a survey at ACRA’s website.

The second was a subsidiary audit exemption. ACRA is exploring whether subsidiaries within a group could qualify for audit exemption even when the consolidated group exceeds the thresholds — provided the subsidiary itself is small and its parent provides a guarantee of its liabilities. This mirrors the approach in several comparable jurisdictions.

As of June 2026, the consultation closed on 17 April 2026. ACRA has not yet published a consultation response. The outcome is expected in H2 2026.

What Is Likely to Change — and What Is Not

While we cannot pre-empt ACRA’s formal decision, the direction of travel is clear. Based on international precedent and the stated rationale of reducing compliance costs, the most likely outcome is a raise in the revenue and asset thresholds — probably to somewhere between S$15 million and S$25 million. Even a raise to S$15 million would bring Singapore closer to UK and Australian levels.

The employee threshold may be adjusted in line with any revenue/asset change, or may be left unchanged as a secondary filter. A subsidiary audit exemption regime, similar to the UK’s Section 479A model, is also under active consideration.

What is not likely to change is the fundamental two-out-of-three structure of the test, or the requirement for companies to prepare proper financial statements regardless of audit exemption status. The audit exemption has never been an exemption from financial reporting — only from the statutory audit requirement.

What Companies Should Do Right Now

While awaiting the consultation outcome, there are practical steps directors and finance teams should take depending on their company’s profile.

If Your Company Is Currently Just Above S$10 Million

Do not assume that any threshold changes will apply retroactively. Any revisions will have an effective date — likely 1 July 2027 or later. Until then, you remain subject to the current framework.

Assess whether your audit is adding genuine value. If your company genuinely needs the audit for bank lending, investor confidence, or government tender purposes, you may wish to continue auditing even if you become exempt. Review your cost-benefit position with your company secretary and accountant, and start planning for a possible switch from statutory audit to compilation or review engagement if thresholds rise.

Maintain clean books regardless. Whether audited or not, ACRA and IRAS expect properly prepared financial statements. If legal advice on your compliance obligations is needed, seek it early rather than after a problem arises.

If Your Company Is Comfortably Below S$10 Million

You are already exempt and will remain so under any likely outcome of the review. Your focus should be on maintaining that status — specifically on the two-year test. If revenue or assets are trending upward, be aware of the trajectory so you are not caught off guard.

If You Are Part of a Group

The group test is important. The exemption applies to a small company that is part of a group only if the group is also a “small group” — i.e., meets the two-out-of-three criteria on a consolidated basis. If the parent group is large, the subsidiary does not currently qualify for audit exemption regardless of its own size.

If ACRA introduces a subsidiary guarantee regime, this would change. Start identifying which subsidiaries in your group could potentially benefit, and assess whether the holding company would be willing to provide the statutory guarantee.

Voluntary Audits: Why Some Companies Keep Them

Even where the exemption applies — or is expected to apply after a threshold increase — there are strong reasons to continue voluntary auditing. Most Singapore banks require audited accounts when assessing lending facilities, particularly for facilities above S$500,000. Some government procurement and grant applications require audited financials to demonstrate financial standing. Where there are multiple unrelated shareholders, an audit provides independent assurance. And if you intend to sell the business or bring in investors, having a clean audit trail significantly reduces due diligence friction.

The audit exemption is a right, not an obligation. The question is always whether exercising it is in the company’s best interests.

ACRA Compliance Obligations That Remain Regardless

It is worth emphasising that the audit exemption affects only the statutory audit requirement. All other ACRA compliance obligations remain fully in force: annual return filing (within 7 months of financial year end for private companies), financial statements preparation to SFRS standards, director and officer particulars maintenance, confirmation statement filings, and UBO (beneficial owner) register maintenance.

For a full picture of what is due and when, refer to our Singapore Company Compliance Calendar, which covers all key ACRA and IRAS deadlines.

Directors should also be aware of recent changes under the Corporate and Accounting Laws Amendment Act 2025 (CALA 2025), which commenced on 6 May 2026 and introduced significantly higher penalties for directors who fail to meet statutory obligations. Maximum fines for certain breaches have risen from S$5,000 to S$20,000. This makes staying on top of your compliance calendar more important than ever.

Understanding the full role of your company secretary under the Companies Act will help you set the right expectations around compliance monitoring and regulatory alerts.

What to Watch For

Monitor ACRA’s news announcements page for the consultation response, expected in H2 2026. Any changes to the audit exemption thresholds will require amendments to the Companies Act and will typically come with a transitional period. Assuming an announcement in late 2026, any new thresholds might take effect from 1 July 2027 or the first financial year beginning on or after the effective date.

For more background on the current audit exemption criteria and the small company definition, see our detailed article on Singapore Company Audit Exemption 2026. For the latest Singapore business news and regulatory updates, there are useful resources for directors and business owners.

Conclusion

The ACRA audit exemption review is a significant development for thousands of Singapore SMEs. The thresholds that determine whether your company needs a statutory audit have not moved since 2015, and the direction of the review strongly suggests they will rise. But the outcome has not been published, the effective date is unknown, and the current framework applies fully in the interim.

The practical takeaway is straightforward: continue meeting your current audit and compliance obligations, assess your position relative to the likely new thresholds, and plan for a possible change in your compliance structure — without acting prematurely on an announcement that has not yet been made. Our XBRL Filing with ACRA guide provides additional context on related financial reporting requirements that sit alongside the audit framework.

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