How to Prepare for a Statutory Audit in Singapore: A Step-by-Step Guide

How to Prepare for a Statutory Audit in Singapore: A Step-by-Step Guide

If your company in Singapore is required to undergo a statutory audit, preparing properly can make the process much smoother, less stressful, and more efficient. A statutory audit is a mandatory, independent review of your company’s financial records, and it plays a crucial role in ensuring compliance with the Singapore Companies Act 1967 and Singapore Financial Reporting Standards (SFRS).

In this guide, we walk you through the step-by-step process of preparing for a statutory audit in Singapore. Whether you’re a small business owner, finance manager, or startup founder, this article will equip you with the knowledge to handle the audit confidently and effectively.

Step 1: Understand If Your Company Requires a Statutory Audit

Before diving into the preparation, it’s important to confirm whether your company actually requires a statutory audit.

Your company must be audited if it does not qualify as a small company under Singapore’s audit exemption rules.

To be exempt, your company must:

1. Be a private company; and

2. Meet at least two of the following criteria for the past two financial years:

   • Total annual revenue ≤ S$10 million

   • Total assets ≤ S$10 million

   • Total employees ≤ 50

If your company or your corporate group exceeds these thresholds, a statutory audit is mandatory.

Step 2: Appoint a Qualified Auditor

The Companies Act requires companies that need an audit to appoint an auditor within 3 months of incorporation.

When selecting an auditor, ensure they are:

• A public accountant registered with ACRA, or

• A Public Accounting Corporation (PAC) licensed to conduct statutory audits.

Choose an audit firm that understands your industry, has a strong reputation, and offers clear communication. Early engagement gives auditors time to understand your business and plan the audit timeline accordingly.

Step 3: Plan and Communicate Internally

Once you’ve appointed your auditors, start preparing your team for the audit. Communication is key to ensure timely and accurate information sharing.

Key things to do include:

• Inform your finance and accounting teams of the upcoming audit

• Assign responsibilities for gathering documents and responding to auditor queries

• Set internal deadlines to avoid last-minute delays

It’s also helpful to hold a kick-off meeting with your auditors to discuss timelines, expectations, and potential areas of focus for the audit.

Step 4: Organize Financial Records

One of the most time-consuming parts of an audit is collecting and verifying supporting documents. To stay audit-ready, keep your books in order throughout the year.

The following financial documents are typically required:

• General ledger and trial balance

• Income and expense breakdowns

• Balance sheet components (assets, liabilities, equity)

• Bank statements and reconciliations

• Sales and purchase invoices

• Contracts and agreements

• Payroll records and CPF contributions

• Fixed asset register

• Inventory reports (if applicable)

• GST returns and tax filings

Ensure that these documents are properly filed, clearly labeled, and accessible to the auditor.

Step 5: Prepare Your Financial Statements

Statutory audits are conducted on your financial statements, which must comply with SFRS. Most companies will prepare the following:

• Statement of financial position (Balance Sheet)

• Statement of profit or loss and other comprehensive income

• Statement of changes in equity

• Cash flow statement

• Notes to the accounts

If your company is part of a group, consolidated financial statements may be required. Work with your accountant or accounting firm to ensure the statements are accurate and ready for audit.

Step 6: Review Internal Controls and Processes

Auditors often assess the strength of your internal controls, especially if your company handles significant revenue or has multiple departments.

Review the following areas for potential weaknesses:

• Segregation of duties (e.g., who handles payments vs. approvals)

• Access control for accounting systems

• Documentation and approval processes

• Inventory and asset tracking

• IT controls and backup procedures

By identifying and addressing control gaps ahead of the audit, you reduce the chances of adverse audit findings.

Step 7: Ensure Tax and GST Compliance

Tax compliance is an important area of audit focus. Make sure your corporate tax, GST, and CPF filings are complete and accurate.

Be prepared to provide:

• Filed corporate income tax returns (Form C/C-S)

• GST F5 returns and supporting documents

• IRAS notices of assessment

• Tax computation and schedules

• CPF contribution records and reconciliations

Keep these organized and readily available to facilitate a smooth audit process.

Step 8: Conduct a Pre-Audit Self-Review

Before the auditor arrives, perform a pre-audit check internally or with your accounting service provider.

Here are a few things to review:

• Are all accounting entries up to date?

• Have all bank accounts been reconciled?

• Are there any unexplained variances or missing documents?

• Are your ledgers and trial balance aligned with your financial statements?

• Have intercompany balances and related party transactions been recorded correctly?

A self-review helps catch discrepancies early and minimizes auditor queries or delays.

Step 9: Facilitate the Auditor’s Work

When the audit begins, support the auditors with clear access to records and timely responses.

Best practices include:

• Assign a point of contact (usually the accountant or finance head)

• Provide auditors with workspace (if on-site) or secure remote access

• Respond to document requests promptly

• Clarify auditor queries honestly and accurately

• Avoid altering or backdating documents

The more cooperative and transparent your team is, the faster and smoother the audit will go.

Step 10: Address Audit Findings and Finalize the Audit Report

Once the audit work is complete, the auditor will issue an audit report, which may contain:

• A clean opinion (ideal)

• A qualified opinion (some concerns)

• An adverse opinion or disclaimer (serious issues)

Review the draft findings with your auditor and take action to resolve issues raised. Finalize the audited financial statements and obtain signed copies for submission to ACRA.

Step 11: Fulfil Filing and AGM Obligations

Post-audit, companies must fulfill the following obligations:

1. Hold the Annual General Meeting (AGM)

   • Present audited financial statements to shareholders

   • Must be held within 6 months of the financial year end (FYE)

2. File the Annual Return with ACRA

   • Submit within 7 months of FYE

   • Attach audited financial statements in XBRL format for most companies

Failure to meet these deadlines can lead to penalties and enforcement.

Conclusion

Preparing for a statutory audit in Singapore doesn’t have to be daunting. With the right planning, organization, and communication, your audit can be completed efficiently and without stress.

By understanding your obligations, maintaining accurate records, and working proactively with auditors, you not only ensure legal compliance but also gain valuable insights into your business’s financial health.

If you’re unsure about the process, it’s wise to work with a reliable accounting or audit firm that can guide you from start to finish. Preparation is everything—and it pays off in both compliance and confidence.

If you need help with statutory audit, visit https://kohlimaudit.sg/services_post/company-statutory-financial-audit-singapore/