A statutory audit ensures businesses follow financial rules and keep clear records. It checks company accounts, confirms legal compliance, and builds trust with investors.
In Singapore, many companies must complete audits, and knowing the legal steps helps businesses avoid trouble and stay on track.
This guide explains audit rules, when audits are needed, and how to pick a skilled audit firm.
1. What is a Statutory Audit?
A statutory audit studies a company's money records to check if they follow rules and laws. Governments demand these audits to guard people like shareholders, creditors, and the public. In Singapore, the Companies Act orders some companies to do these audits. They help businesses act honestly and stay clear, which builds trust in the market.
A regulatory audit is not the same as a financial audit. Both check money records, but a regulatory audit follows the law, and a financial audit might just help the company manage better. A regulatory audit keeps companies honest for the government, while a financial audit helps bosses inside the company.
Why Are Statutory Audits Important?
● Keeps finances clear – Checks records for mistakes.
● Stops fraud – Catches errors or false reports.
● Builds trust – Assures investors and partners.
● Meets legal needs – Follows Singapore’s financial laws.
● Improves money management – Finds risks and suggests fixes.
Companies that require audits must hire licensed auditors for proper reviews.
2. Why Do Companies Need a Statutory Audit?
A legal audit checks if a company tells the truth about its money. It stops cheating, bad management, and mistakes. Audits help investors, banks, and partners trust the company. Companies that show honest money records can get more investors, borrow money easily, and make good business friends.
Without audits, companies might lie about their money to pay fewer taxes or trick others. A legal audit keeps them honest and makes them answer for their choices. If companies don't follow audit rules, they can face fines, lose their good name, or face legal trouble.
Which Businesses Need a Statutory Audit?
Not all businesses must complete audits. Some small companies can skip audits if they meet specific conditions.
A Company Must Get a Statutory Audit If It:
● Earns more than SGD 10 million a year.
● Owns assets worth over SGD 10 million.
● Employs more than 50 people.
If a company meets at least two of these conditions for two years in a row, it must complete an audit.
3. Legal Rules for Statutory Audits in Singapore
Many laws control how statutory audits work. Companies must follow these rules to avoid penalties.
Main Laws That Apply to Statutory Audits:
● Companies Act (Cap. 50) – States which businesses must get audited.
● Singapore Financial Reporting Standards (SFRS) – Ensures financial reports use the right format.
● Accounting and Corporate Regulatory Authority (ACRA) Rules – Oversees company records and reporting.
● Income Tax Act – Makes sure businesses pay correct taxes.
Auditors follow these laws when checking financial statements.
4. How Does a Statutory Audit Work?
An auditor, who is not part of the company, looks at the company's papers like balance sheets, money reports, and cash lists. The auditor checks if these papers follow money rules. If they find mistakes or tricks, they tell the right people. Audits usually have four steps: planning, testing, checking, and telling.
● Planning: The auditor learns about the company, its job, and how it controls its money. This helps spot places that could have mistakes.
● Testing: The auditor checks if the money records are right. They look at deals and money counts. They may ask workers questions or watch how things work.
● Checking: The auditor sees if the company follows money rules and laws.
● Telling: The auditor writes a report about what they found. If the company follows the rules, they write an “okay report.” If there are problems, they give a “needs fixing” or “big problems” report.
This step-by-step process ensures a complete and clear audit.
5. Choosing the Right Audit Firm in Singapore
Many businesses seek professional auditors to handle their statutory audits. Picking the right firm guarantees smooth and accurate financial checks.
How to Select a Skilled Audit Firm?
● Check for ACRA Approval – Ensure the firm is legally registered.
● Review Industry Knowledge – Choose auditors familiar with your business type.
● Read Client Reviews – Find out if past clients were satisfied.
● Understand Costs – Compare fees before hiring.
● Ask About Compliance Rules – Ensure auditors follow Singapore’s reporting standards.
A trusted audit firm protects businesses from money risks and legal problems.
6. Choosing an Audit Firm in Singapore
Picking a good audit firm makes the audit go well. The right firm guides the company through the audit smoothly and helps avoid mistakes. Companies should feel comfortable asking questions and getting help during the process. An audit firm that understands the business can find problems early and give smart advice to fix them. Here are some known audit firms in Singapore:
List of audit firms in Singapore:
● Tn Corporate Management (TNPL)
● PricewaterhouseCoopers (PwC)
● Deloitte
● Ernst & Young (EY)
● KPMG
● RSM Singapore
7. Common Audit Mistakes Businesses Must Avoid
Many companies face trouble during audits due to poor record-keeping.
Mistakes to Avoid:
● Messy Financial Records – Missing documents cause delays.
● Skipping Compliance Deadlines – Late reports lead to fines.
● Hiring Unqualified Auditors – Unlicensed firms may provide false results.
● Ignoring Auditor Feedback – Not fixing issues weakens financial control.
Preparing early and choosing a strong audit team prevents these mistakes.
8. How Statutory Audits Strengthen Businesses
Statutory audits do more than meet legal rules—they also help businesses improve finances and operations.
Benefits of a Strong Audit:
● Spots financial risks – Finds and fixes hidden money issues.
● Grows investor confidence – Shows a business is honest and stable.
● Sharpens financial planning – Helps businesses make smarter decisions.
● Prepares businesses for expansion – Ensures compliance for future growth.
A proper audit makes businesses more transparent and reliable.
9. How Much Does a Statutory Audit Cost in Singapore?
The cost of an audit depends on company size, revenue, and complexity.
Estimated Audit Fees:
● Small Companies: SGD 2,000 – SGD 5,000
● Medium-Sized Companies: SGD 5,000 – SGD 20,000
● Large Corporations: SGD 20,000+
Audit fees vary based on company operations and reporting needs.
Conclusion
Statutory audits keep companies honest and trusted. Companies must know their duties to follow the rules. Working with a good audit firm makes audits easier and better. A good audit keeps a company's name safe, supports fair business, and follows the law. In Singapore, knowing and following audit rules helps a company grow and earn trust in the market.