Reducing Compliance Costs for Small Companies: Review of Audit Exemption Framework

The Accounting and Corporate Regulatory Authority (ACRA) is reviewing Singapore's audit exemption framework to reduce compliance costs for small companies. As part of this review, industry consultations will be conducted to gather stakeholders’ views.

Current Audit Exemption Framework

2 Under the current audit exemption framework, private companies qualify for audit exemption if they meet at least two of the following three criteria for each of the two financial years immediately preceding the current financial year:

a) Total annual revenue ≤ $10 million;

b) Total assets ≤ $10 million;

c) Total number of employees ≤ 50.

3 Private companies belonging to a group (i.e. subsidiaries) qualify for audit exemption if the entire group meets at least two of the three criteria in paragraph 2 on a consolidated group basis.

4 Since the introduction of the framework in 2015, companies’ average total assets and revenue have grown. Other jurisdictions such as Australia, the United Kingdom, New Zealand and Malaysia have also raised their revenue and asset audit exemption thresholds in recent years.

5 In light of business growth and international regulatory updates, ACRA is conducting a review of the audit exemption framework to ensure that it remains fit for purpose.

Scope of Review

6 ACRA will launch consultations on the following:

a) Review increasing the total annual revenue and assets thresholds under which companies or groups qualify for audit exemption.

b) Explore whether subsidiaries may qualify for audit exemption under specific conditions, even if the group does not meet the audit exemption thresholds on a consolidated basis.

7 Notwithstanding any changes which arise from the review, companies must continue to keep proper accounting records and prepare financial statements in accordance with prescribed accounting standards, and shareholders will retain the right to require an audit if they hold at least 5% of the total issued shares of the company.

Industry Consultation

8 ACRA will be conducting targeted industry consultations on the proposed changes from March 2026.

9 Through the consultations, ACRA seeks to develop an audit exemption framework that strikes a balance between ensuring adequate corporate governance oversight and reducing compliance costs.