Singapore Audit vs Compilation vs Review Engagement: Which Does Your Company Need?

When a Singapore company needs its financial statements prepared or verified, three distinct engagements are available: an audit, a review engagement, and a compilation. Each differs fundamentally in scope, assurance level, cost, and who can sign off. Choosing the wrong engagement type is a compliance risk. Choosing the right one — but over-buying — is an unnecessary cost. This guide explains each engagement and helps you determine which applies to your Singapore company.

The Three Levels of Financial Statement Assurance

Think of audit, review, and compilation as a descending staircase of assurance:

• Audit — highest assurance. The auditor provides a positive opinion: “In our opinion, the financial statements present fairly, in all material respects…”
• Review Engagement — limited assurance. The accountant provides a negative assurance: “Nothing has come to our attention that causes us to believe the financial statements do not present fairly…”
• Compilation — no assurance. The accountant compiles the financial statements from management-provided information without verifying or testing it.

When Does Singapore Law Require an Audit?

Under the Companies Act, all Singapore-incorporated companies are subject to statutory audit requirements unless they qualify for an exemption. The key exemption categories are:

Small Company Audit Exemption

A Singapore private company qualifies as a “small company” and is exempt from statutory audit if it meets at least two of three criteria for the immediate past two financial years:

• Annual revenue of not more than S$10 million
• Total assets of not more than S$10 million
• No more than 50 employees

A company that newly incorporates qualifies as small for its first two financial years if it meets the size criteria at the end of those years. ACRA provides guidance on how the criteria are applied.

Dormant Company Exemption

A company that has been dormant throughout the financial year and from the end of the previous financial year is exempt from audit, provided it meets the small company or small group criteria and has no significant transactions during the period.

Subsidiary in a Small Group

A private company that is part of a “small group” (where the consolidated group meets two of the three size thresholds above) also qualifies for audit exemption, provided the subsidiary itself meets the small company definition.

When Companies Still Need Audits Despite Being Small

Qualifying for the statutory audit exemption does not always mean you should forego an audit. Several situations make an audit necessary or highly advisable even for small companies:

• Bank financing requirements — many Singapore banks require audited financials as part of their SME loan covenants. If you rely on bank credit, check your facility agreement before dropping the audit.
• Shareholder agreements — some shareholder agreements require audited accounts regardless of statutory exemption.
• Government grants and tenders — certain grants (including larger EDG projects) and government tender submissions require audited or reviewed financials.
• Investor-backed companies — venture capital or private equity investors almost always require audited financial statements as a condition of investment.
• Parent company requirements — if the Singapore company is a subsidiary of a foreign parent, the parent’s own audit requirements may require that the Singapore subsidiary is also audited.

What a Review Engagement Covers

A review engagement sits between a full audit and a compilation. The accountant performs analytical procedures and makes inquiries of management, but does not verify individual transactions in detail or test internal controls. The result is a “limited assurance” report — the accountant states that nothing has come to their attention suggesting the financials are materially misstated.

Review engagements are appropriate when:

• A company wants more comfort than a compilation provides, but a full audit is not required and the cost is a constraint
• A lender or investor is comfortable with limited rather than reasonable assurance
• A company is preparing for an audit in a future year and wants a “dry run” without the full cost

In Singapore, review engagements are less commonly requested than audits or compilations, but they can be a practical middle ground. Note that a review engagement cannot substitute for a statutory audit where one is required by law or contract.

What a Compilation Covers

A compilation engagement involves an accountant compiling financial statements from information provided by management. The accountant does not perform verification, testing, or analytical procedures. The compilation report clearly states that no assurance is provided.

Compilations are typically appropriate for:

• Small companies exempt from statutory audit that need financial statements for internal purposes
• Dormant or holding companies with minimal activity
• Companies that need financial statements for purposes such as GST registration, bank account opening, or routine government filings that do not specifically require audited accounts

For accounting services purposes, a compilation is the lowest-cost option for producing SFRS-compliant financial statements, but it provides no independent verification that the numbers are correct.

Qualified Practitioners: Who Can Perform Each Engagement

In Singapore, statutory audits can only be performed by a Public Accountant registered with ACRA. Public Accountants must be members of the Institute of Singapore Chartered Accountants (ISCA) and hold a practicing certificate from ACRA.

Review engagements and compilations can be performed by a broader range of qualified accountants, including members of ISCA who are not registered Public Accountants. However, the person signing off must meet minimum professional standards under Singapore Standards on Related Services (SSRS) for compilations and Singapore Standards on Review Engagements (SSRE) for reviews.

If your auditor or accountant is not ACRA-registered, they cannot sign an audit report. Verify the credentials of your service provider before engagement.

Cost and Timing Differences

As a general guide for a Singapore SME with S$1–5 million in revenue:

• Statutory audit: S$3,000–S$15,000+ depending on complexity, transaction volume, and whether there are group consolidation requirements
• Review engagement: S$1,500–S$5,000
• Compilation: S$800–S$3,000

Audits also take longer — typically 4–8 weeks from receipt of books (depending on the quality of your records and the auditor’s schedule). Compilations can be turned around in 1–2 weeks if accounts are well-maintained.

Choosing the Right Engagement for Your Company

The decision tree is straightforward:

1. Is a statutory audit legally required? Check your company size against the small company criteria.
2. Are you contractually required to audit? Check your bank facility letters, shareholder agreements, and any grant conditions.
3. If no audit is required, do your stakeholders (investors, lenders, business partners) require independent assurance? If so, consider a review engagement.
4. If none of the above apply, a compilation is usually sufficient for routine compliance filing with ACRA and IRAS.

For companies approaching the small company thresholds or recently disqualified from audit exemption, advance planning with your accounting adviser is essential to avoid a compliance gap.

Last updated: June 2026. Refer to the ACRA website and the Companies Act for the most current audit exemption criteria.