Companies in Singapore Which Must Be Audited
Companies in Singapore are audited based on the Companies Act which was most recently amended in 2014. The 2014 amendment updated the audit exemption criteria for all Singapore-based companies. It also introduced the concept of small companies. A company is considered to be a small company if its total annual revenue is S$10 million or less, its total assets over a specific financial year are S$10 million or less, and it does not have more than 50 full-time employees at the end of a specific financial year. The amended version of the Companies Act came into effect starting from July 1, 2015; this version is in effect to this day.
Before the Companies Act was amended, an exempt private company with an annual turnover which did not exceed S$5 million, had 20 shareholders or fewer, and no corporate shareholders was not required to have any of its accounts audited. However, the 2014 amendment changed this fact; such companies must now be audited.
Of course, before your company based in Singapore can be audited, you will need to own one. Fortunately for you, we at Paul Hype Page & Co are able to assist you in this matter. Our incorporation team will provide you with high-quality services in order to best facilitate the setup of your Singapore company. Once it has been incorporated, you may run the new Singapore-based company in any way which you deem to be suitable.
Consequences of a Lack of Auditing
Companies which are not audited are exposed to various risks with regard to finances, profits, security, and various other matters. Companies may choose to use internal audits conducted by their own employees or external audits which are conducted by third-party auditors. However, regardless of the method which is used, all audits of a company are intended to provide an objective perspective of the company’s business operations so as to correct any problems, deficiencies, or other weaknesses. For this reason, one of the more evident consequences faced by an unaudited company is that of reduced business performances because those in charge of the company would not know the ways in which the company is underperforming.
A company’s policies related to audits and audit reports are also of great importance. Among the management’s primary responsibilities regarding company audits is the development of policies to address problems discovered by an audit. Audit reports provide recommendations with regard to the correction of such problems and also state the possible consequences of a lack of action taken to correct such problems. Due to the fact that such problems may carry legal repercussions, the failure to act on such recommendations found in an audit report is a grave error that may place the company in much trouble. Failure to act on audit report recommendations which have legal implications may cause some to choose to file lawsuits or press criminal charges against the company, especially if the related problems recur or even worsen with the passage of time.
How to Respond to an Audit
Not every business must comply with the recommendations put forward by an auditing team, whether the auditors be internal or external. However, regardless of whether the company complies with the recommendations, it must nevertheless address the concerns stated in the audit report. For this reason, any problems mentioned by an audit which are accompanied by suggestions may be solved by using an alternative but unmentioned method if the management of the company deems such an approach to be suitable. However, a company must always ensure that it remains legally compliant, and it can do this through the use of the information provided by audits.
Appeal to Authorities (If Necessary)
Certain audits are more authoritative than others, depending on the status of those conducting the audit. Audits conducted by people or organizations with more authority rarely receive objections or appeals from the company which was audited. Recommendations which accompany such audits are also difficult to amend.
However, some companies may have a lack of resources required to fulfill the recommendation. Such companies may appeal this recommendation; when doing so, they should also request an extension if necessary. Despite this fact, this does not give the company the right to ignore such recommendations because the more authoritative auditors might also monitor the status of the implementation of the recommendations. If such is the case, failure to comply with the recommendations may be regarded as a breach of conduct protocol on the company’s part and place the company at risk of severe punishments.
The results of external audits may sometimes be released to the public. This may be done with or without the consent of the audited company. Companies which are subject to open audits are especially recommended to comply with proposals stated in the audit report because the general public will know more about the details of the company in question.