Does your Singapore company need an audit?
A practical guide to the Singapore small company audit exemption for foreign-owned groups: the two-of-three test, the group test that catches most subsidiaries, where exempt private companies fit, and what exemption does not remove. Figures below are from ACRA, verified July 2026; the current ACRA criteria always govern.
The exemption in one table.
The starting point
Singapore company law starts from the position that a company's financial statements are audited each year. The Companies Act then exempts a qualifying small company from that requirement, and since the small company regime took effect, for financial years beginning on or after 1 July 2015, the question of whether your Singapore entity needs an audit has come down to one quantitative test.
The two-of-three test
A company qualifies as a small company if it is a private company in the financial year and meets at least two of these three criteria for the immediate past two consecutive financial years.
| Criterion | Threshold | Test |
|---|---|---|
| Revenue | S$10m or less | Meet at least two of the three criteria for the immediate past two consecutive financial years. Private companies only. Group companies are also tested on the consolidated group figures. |
| Total assets | S$10m or less | |
| Employees | 50 or fewer |
Source: ACRA small company audit exemption criteria, verified July 2026. Current ACRA criteria govern.
Three features of the test deserve emphasis, because each one changes answers in practice. First, it is a two-of-three test, so a company can exceed one threshold comfortably and still qualify. Second, it looks backwards over two consecutive financial years, so a single unusual year does not move a company in or out of exemption on its own. Third, it is available to private companies only; a public company is audited regardless of size.
The thresholds are quantitative and leave little room for argument. The judgement questions live elsewhere: in the group test, in transitional years, and in whether an exemption that is technically available is actually worth taking.
Work through it in order.
The test reads cleanly but is applied in a sequence, and the sequence matters. Taken in order, four questions settle almost every case.
Step 1: is the company a private company?
If the entity is a public company, the analysis ends here: the exemption is available to private companies only, and the financial statements are audited. Most foreign-owned Singapore subsidiaries are private companies limited by shares, so most readers continue to step 2.
Step 2: does it meet two of the three criteria?
Check revenue, total assets, and employee count against the thresholds in the table above, for the immediate past two consecutive financial years. The company needs to satisfy at least two of the three criteria in each of those years. A company that fails two criteria in either year does not qualify.
Step 3: is the company part of a group?
This is the step that decides the question for most foreign-owned entities, and it is the one most often missed. A company that belongs to a group must qualify twice over: the company itself must meet the small company criteria, and the entire group, including foreign entities, must meet at least two of the same quantitative criteria for the immediate past two consecutive financial years, assessed on the consolidated group figures.
The consequence is blunt. A Singapore subsidiary with modest local revenue, a small balance sheet, and a handful of staff will still require a statutory audit if it sits inside an international group whose consolidated figures exceed the thresholds, which describes nearly every multinational group we act for. If your Singapore entity is consolidated into a parent of any size, the working assumption should be that an audit is required, and the exemption analysis exists to confirm it rather than to escape it.
Step 4: is the company newly incorporated?
A company less than two years old has no two-year history to look back on. It qualifies if it is a private company and meets the criteria in the current financial year. Once two consecutive financial years exist, the standard look-back test applies from then on.
Staying qualified, and falling out
Qualification is not permanent. A company remains a small company in subsequent years unless it ceases to be a private company at any time during a financial year, or fails to meet at least two of the three criteria for the immediate past two consecutive financial years. Growth is therefore the usual exit: a company that crosses two thresholds and stays there for two years takes on an audit obligation, and it is far better to see that coming at planning time than to discover it at filing time. Where the records have not been kept to an auditable standard in the exempt years, the first audit after exemption is the demanding one.
Where the EPC fits now.
Older guidance, and older instincts, tie Singapore audit exemption to exempt private company status, and the term still circulates in group structuring conversations. It is worth being precise about what it now means.
An exempt private company is a private company with at most 20 members in which no corporation holds a beneficial interest in its shares. Under the regime that preceded the small company test, audit exemption ran through that status. It no longer does. ACRA's current position is explicit: a company does not need to be an exempt private company to qualify for audit exemption, and a company with corporate shareholders can qualify if it meets the small company criteria.
That change is what opened the exemption to foreign-owned structures in the first place. A wholly owned Singapore subsidiary can never be an exempt private company, because its shares are held by a corporate parent, but it can qualify as a small company, subject always to the group test in step 3 above. EPC status continues to matter for other Companies Act purposes, but audit exemption is not decided by it.
For a group planner the practical reading is this: ignore the EPC label when assessing audit obligations, and run the small company test, including the group limb, on the current figures. Where the label does appear in an old board minute or a corporate services checklist as the basis for not auditing, that position deserves a fresh look against the current criteria.
What exemption does not remove.
Audit exemption is narrower than it sounds. It removes the requirement for an audit opinion, and nothing else. ACRA is explicit that the small company criteria do not change a company's financial statement filing requirements, and the rest of the compliance calendar continues exactly as before.
An audit-exempt company must still prepare financial statements under the applicable Singapore financial reporting framework, hold its annual general meeting where required, file its annual return with ACRA, and meet its tax filing obligations with IRAS. The bookkeeping, the accounting judgements, and the filing deadlines all survive the exemption; what disappears is the independent opinion on top of them. A company that treats exemption as permission to let the records drift is storing up a difficult first audit, an uncomfortable due diligence, or both.
When a voluntary audit still makes sense
Qualifying for exemption and taking it are different decisions, and for foreign-owned entities they frequently part company. The common reasons to commission an audit voluntarily are practical ones: the parent's group auditor needs audited component figures or a reporting pack it can rely on, a bank has made audited statements a lending condition, the board or the shareholders simply want the assurance, or a sale or restructuring is on the horizon and clean audited history makes the numbers defensible. Where the entity holds regulated status or incentive conditions, the reporting obligations attached to those can decide the question on their own.
The cost of a right-sized audit of a small, well-kept entity is usually modest against the cost of reconstructing credibility when an unaudited number turns out to be wrong. That is not an argument that every exempt company should be audited; it is an argument that the decision should be made deliberately, by someone who has seen both outcomes.
Where Medora comes in
The firm's statutory audit practice is built around foreign-owned Singapore entities, so exemption assessments here are done with the group dimension in view from the start: the consolidated figures, the parent's reporting framework, and what the group auditor will ask for. Where the entity is a fund or holding vehicle connected to the firm's family office practice, the audit question is settled at structure design rather than discovered at the first filing. And where no audit is required, we say so plainly; the assessment costs a conversation, and the answer is sometimes that you should not buy anything from us this year.
For definitions of the terms used on this page, see the Medora glossary, or return to the Audit and Assurance practice overview.
Audit exemption, asked directly.
What is the audit exemption threshold in Singapore?
A Singapore private company qualifies as a small company, and is exempt from statutory audit, if it meets at least two of these three criteria 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, or 50 employees or fewer. A company that belongs to a group must also qualify on a consolidated group basis.
The exemption applies to private companies only, and the financial statements must still be prepared and filed. Figures per ACRA at the time of writing; the current ACRA criteria always govern.
Is an exempt private company automatically exempt from audit?
No. Audit exemption in Singapore now turns on the small company test, not on exempt private company status. An exempt private company is a private company with at most 20 members in which no corporation holds a beneficial interest in its shares, and under the older regime that status carried the exemption.
Under the current criteria a company does not need to be an exempt private company to qualify, and a company with corporate shareholders can qualify if it meets the small company criteria. Per ACRA, verified July 2026.
Does audit exemption remove the need to prepare and file financial statements?
No. ACRA is explicit that the small company criteria do not change a company's financial statement filing requirements. An audit-exempt company must still prepare financial statements under the applicable Singapore financial reporting framework, hold its annual general meeting where required, file its annual return with ACRA, and meet its tax filing obligations with IRAS.
Exemption removes the audit opinion, not the reporting.
How does the audit exemption group test work?
A company that is part of a group must qualify twice over: the company itself must meet at least two of the three small company criteria, and the entire group, including foreign entities, must meet at least two of the same criteria on a consolidated basis for the immediate past two consecutive financial years.
In practice this is the test that catches foreign-owned Singapore subsidiaries: a modest local entity inside a large international group will usually fail the group limb and therefore requires an audit. Per ACRA, verified July 2026.
Can a newly incorporated Singapore company qualify for audit exemption?
Yes. A newly incorporated company that is less than two years old qualifies if it is a private company and meets the criteria in the current financial year, since it has no two-year history to look back on. Once two consecutive financial years exist, the standard look-back test applies. Per ACRA, verified July 2026.