Most private companies in Singapore qualify for audit exemption if they meet at least two of three tests for two consecutive financial years: revenue of S$10 million or less, total assets of S$10 million or less, and 50 employees or fewer. Companies in a group must also check the group’s consolidated figures. Newly incorporated companies follow a simplified version of this test in their first year.

TL;DR:

  • Companies must meet at least two of three thresholds—revenue of S$10 million or less, assets of S$10 million or less, and 50 or fewer employees—for two consecutive years to qualify for audit exemption.
  • Group assessments require both individual company qualifying status and consolidated group figures meeting the same thresholds for two years, including subsidiaries outside Singapore.
  • The two-year look-back and group test are the main pitfalls that can cause sudden loss of exemption, even if current-year figures are below thresholds.
  • Exemption only removes the audit requirement but does not affect filing, reporting, or directors’ responsibilities for financial accuracy.
  • Companies should maintain signed financial statements, headcount, and group data for at least five years to ensure compliance and prepare for possible ACRA queries.
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What is the audit exemption criteria in Singapore?

A company qualifies as a small company under ACRA’s small company concept when it meets at least two of these three thresholds 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
  • 50 or fewer employees at financial year end

Pro Tip: Pull these figures from your properly prepared financial statements, not from management accounts. ACRA’s guidance is clear that the numbers must reflect Singapore accounting standards, and using rough internal figures is a common reason companies miscalculate their own eligibility.

Revenue and assets come straight from your income statement and balance sheet; you may find it helpful to compare financial statements locally for accounting & legal teams to ensure accuracy. Employee count is usually taken as the headcount on your payroll at the last day of the financial year, including full-time staff but generally excluding contractors and interns who are not on formal employment terms.

The two-year requirement matters more than most directors realise. You cannot simply look at the current year in isolation. A company must satisfy the two-of-three test in both the current financial year and the year before it. If your company is less than two years old, ACRA assesses you against the current financial year only, and the two-year look-back applies once you have accounts for a second consecutive year.

Two-year audit exemption eligibility timeline

How does the group test affect subsidiaries?

If your private company belongs to a group, qualifying is not just about your own numbers. Under the group test, you need both of these conditions satisfied:

  • Your company individually meets the small company criteria on its own accounts.
  • The entire group, on a consolidated basis, meets at least two of the three thresholds for both of the past two consecutive financial years.

This consolidated test pulls in every entity under the same ultimate holding company, including entities incorporated outside Singapore. A small local subsidiary can lose exemption purely because a large overseas parent inflates the group’s consolidated revenue or assets.

Consider a Singapore subsidiary with S$3 million revenue and 20 staff. On its own, it clears the small company thresholds easily. But if its foreign parent group reports consolidated revenue of S$40 million, the subsidiary fails the group test and must be audited, regardless of how small it looks on paper.

What does audit exemption actually cover?

Audit exemption removes only the requirement for an independent statutory audit. It does not touch your other obligations. Directors of exempt companies must still handle these:

  1. Prepare full financial statements under proper Singapore accounting standards, whether or not an auditor signs off on them.
  2. File the annual return through Bizfile, Singapore’s official corporate filing portal, within the statutory deadline.
  3. Submit financial statements in XBRL format where ACRA’s filing requirements apply to your company type.
  4. Lodge your corporate tax return, Form C or Form C-S, with unaudited accounts attached where relevant.

Directors remain personally responsible for the accuracy of unaudited statements.

When do companies lose audit exemption?

Exemption is not permanent. Several events can pull a company back into mandatory audit territory:

  • The company stops being a private company, for example after converting to a public company.
  • It fails the two-of-three test for either of the two most recent financial years.
  • It joins a group whose consolidated figures breach the thresholds.
  • Shareholders formally request an audit under their statutory right.

Assess eligibility at every financial year end, not just when preparing tax filings. Keep signed financial statements, headcount records, and group consolidation workings on file for at least five years.

Pro Tip: Set a simple internal control, a one-page annual checklist signed by a director confirming the two-of-three test result. It costs nothing and gives you a clear paper trail if ACRA ever queries your exemption status.

Practical year-end checklist and two worked examples

Run through this before signing off your financial statements:

  1. Confirm the company was a private company throughout the financial year.
  2. Pull final revenue, total assets, and employee headcount from signed financial statements.
  3. Compare this year’s figures and last year’s figures against the S$10 million and 50-employee thresholds.
  4. If part of a group, obtain the parent’s consolidated figures and repeat the test at group level.
  5. Document the conclusion in board minutes or a signed checklist for directors’ records.

Example 1: Stand-alone private company. Revenue S$6 million, assets S$4 million, 30 employees, both years. It clears all three thresholds, so exemption applies without needing the group test at all.

Example 2: Singapore subsidiary in a foreign group. The local entity alone shows S$2 million revenue and 12 staff, comfortably within limits. Its foreign parent group, however, reports consolidated assets of S$25 million. The subsidiary fails the group test under section 205C of the Companies Act and needs an audit.

Practical year-end checklist and two worked examples — overview diagram

What is ACRA’s 2026 review of audit exemption?

ACRA opened a 2026 review of the audit exemption framework, consulting on whether to raise the revenue and asset thresholds.

  • Average company size has grown since the current thresholds were set in 2015, prompting the review.
  • If thresholds rise, more companies will qualify, but current rules apply until changes are formally passed into law.
  • Keep your existing records and checklist process running as usual, and revisit your assessment once ACRA confirms any changes.

Common pitfalls seen, and how to address them

Some companies use unaudited management accounts instead of proper financial statements when running the eligibility test, which produces the wrong answer. Others miss the group test entirely because a foreign parent’s numbers were never consolidated. Three fixes help immediately: reconcile figures to signed statements, confirm your group structure annually, and set a fixed year-end review date. Bizsquare’s accounting and bookkeeping services keep these records audit-ready year round.

The two-year look-back is where most companies slip up

Everyone focuses on the S$10 million revenue figure because it is the easiest number to remember. That is the wrong place to focus. The real risk sits in the two-year look-back and the group test, neither of which gets nearly enough attention in general compliance guidance.

A company can be well within every threshold this year and still fail exemption because last year’s figures do not hold up, or because a group restructuring pulled in a bigger parent entity nobody flagged internally. Conventional advice treats audit exemption as a one-time checkbox. It is not. It is an annual reassessment, and directors who treat it as a “set and forget” decision are the ones who get caught out.

If you take one thing from this article, prioritise building a repeatable year-end habit over memorising the thresholds. The numbers are easy to look up. Tracking them consistently across two years, and across a group structure, is where the real compliance work happens.

— Vandro

How professional services can help with audit-exemption readiness

Working out whether your company qualifies for audit exemption gets harder once foreign shareholders, group structures, or multiple financial years enter the picture. Accounting firms provide practical alternatives to guessing their way through the two-of-three test alone.

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This readiness can be supported through three concrete services:

  • Accounting and bookkeeping, keeping your financial statements audit ready and correctly prepared under Singapore accounting standards.
  • Corporate secretary services, handling annual returns, XBRL filing, and the documentation ACRA expects to see.
  • Outsourced CFO support, useful when group consolidation or subsidiary structures complicate your exemption assessment.

If your business needs a straightforward year end review or you are setting up a new entity and want the compliance groundwork done properly from day one, Bizsquare’s company incorporation and compliance service is a sensible place to start. Book a readiness review before your next financial year end closes.

This article is general information, not a substitute for advice from a qualified financial advisor. Consult a qualified financial professional about your own circumstances before acting on anything here.

Sources

FAQ

Who is exempt from an audit in Singapore?

A private company is exempt if it meets at least two of three tests, revenue up to S$10 million, assets up to S$10 million, and 50 employees or fewer, for two consecutive financial years.

Is audit mandatory in Singapore for all companies?

No. Audit is mandatory only for companies that fail the small company test, belong to a group that fails the consolidated test, or are public companies.

What are the requirements for audit exemption under Singapore regulations?

The company must be private throughout the financial year and satisfy the two-of-three quantitative test for two consecutive years, as set out under section 205C of the Companies Act.

Which companies are exempted from audit?

Small private companies meeting the revenue, asset, and employee thresholds, along with small groups meeting the consolidated version of the same test, are exempted.

How does the group test work for subsidiaries?

The subsidiary must qualify individually, and the whole group must meet two of three thresholds on a consolidated basis, for two consecutive financial years.

Does audit exemption remove the need to file financial statements?

No. Exempt companies still must prepare full financial statements, file annual returns through Bizfile, and submit XBRL data where required.

Can shareholders force a company to get audited anyway?

Yes.

How are newly incorporated companies assessed?

New companies are tested against the current financial year only until they build up two consecutive years of accounts, after which the standard look-back applies.

What happens if a company fails the test after previously qualifying?

It loses exemption and must appoint an auditor for that financial year, and directors should update their records immediately once this is identified.

Is Form C filing different for audit-exempt companies?

Exempt companies file Form C or Form C-S with unaudited financial statements attached, alongside the standard corporate tax filing deadlines.

Will ACRA’s 2026 review change the exemption thresholds?

Possibly. ACRA is consulting on raising the revenue and asset thresholds, but current figures remain in force until any changes are formally passed.

What records should a company keep to prove eligibility?

Keep signed financial statements, headcount records, and group consolidation workings for at least five years in case ACRA queries your exemption status.

Can Bizsquare help assess whether my company qualifies?

Yes. Bizsquare’s accounting and corporate secretary services help verify your figures, structure your records correctly, and support annual eligibility reviews.