In the Singapore business landscape of 2026, transparency is the gold standard. However, for many small to medium-sized enterprises (SMEs), a full-scale statutory audit can be a significant financial and administrative drain. The Accounting and Corporate Regulatory Authority (ACRA) recognizes this, providing an “Audit Exemption” framework designed to reduce the regulatory burden on smaller players.
At Hallmark Corporate Services, we often help founders determine if they can legally skip the audit to reinvest those professional fees back into growth. Here is the definitive guide to knowing where your company stands.
1. The “Small Company” Concept
The most common way to qualify for an audit exemption is by meeting the criteria of a “Small Company.” This is determined by the “10-10-50” rule.
To be exempt from an audit for a given financial year, a private company must satisfy at least two of the following three criteria for the immediate past two consecutive financial years:
- Total Annual Revenue: Does not exceed S$10 million.
- Total Assets: Do not exceed S$10 million at the end of the financial year.
- Number of Employees: Does not exceed 50 full-time employees at the end of the financial year.
2. The “Small Group” Trap
If your company is part of a group (e.g., a subsidiary of a foreign parent or a holding company with its own subsidiaries), you cannot look at your local numbers in isolation.
To qualify for an exemption, the entire group must meet the “Small Group” requirements. This means the consolidated total revenue, consolidated total assets, and the total number of employees across all entities must still satisfy at least two of the three criteria mentioned above.
Note: If your parent company is a massive multinational, your Singapore subsidiary will likely require an audit even if its local revenue is zero.
3. Dormant Companies
Under Section 205B of the Companies Act, dormant companies are generally exempt from audit requirements.
- A company is considered dormant if there have been no accounting transactions during the financial year.
- Specific “non-significant” transactions—such as appointing a company secretary or paying ACRA filing fees—do not break your dormant status.
4. Audit vs. Accounting: Don’t Confuse the Two
A common misconception in 2026 is that an “Audit Exemption” means an “Accounting Exemption.” This is strictly false. Even if you are exempt from a statutory audit, you are still legally required to:
- Maintain Proper Records: Keep accounting books that explain your transactions and financial position.
- Prepare Unaudited Financial Statements: These must comply with the Singapore Financial Reporting Standards (SFRS) and include a Directors’ Statement.
- File Annual Returns: Submit your financial highlights (often in XBRL format) to ACRA on time.
5. Why Some Exempt Companies Choose a Voluntary Audit
Despite qualifying for an exemption, many Singaporean firms opt for a voluntary audit in 2026 for strategic reasons:
- Fundraising: Venture capitalists and investors often demand audited accounts as part of their due diligence.
- Banking: Many financial institutions require audited reports before approving significant business loans.
- Grant Claims: Certain government grants, such as the Enterprise Development Grant (EDG), require an independent auditor’s verification of project costs.
Conclusion: Making the Right Choice for 2026
Deciding between an audit and an exemption is a balance of cost-saving versus credibility. While the “10-10-50” rule provides a clear path to savings, the decision to remain unaudited should be reviewed annually as your business scales.At Hallmark Corporate Services, we do ACRA compliance and SFRS-compliant bookkeeping. Whether you need a statutory audit or help preparing high-quality unaudited financial statements, we ensure your corporate governance remains flawless. Are you unsure if your group structure disqualifies you from the audit exemption? Would you like a 2026 Compliance Review to assess your company’s audit status?