A company needs to appoint an external Auditor under the Act within six months from its date of incorporation, unless the Company is exempt from doing so.
Most companies are Exempt Private Limited which means that most companies do not need to appoint an auditor nowadays.
You will need to appoint an Auditor on a compulsory basis for your Company if any of the following occurs:
- Your annual turnover exceeds S$5M
- You have more than 20 shareholders in your Company
- You have at least one corporate shareholder
What Does an Auditor do?
To be clear, an Auditor is not an Accountant or Bookkeeper for your Company. An auditor is someone who checks on the accounts of the Company to provide an independent opinion on the accounts. Therefore, you will still need to engage an accountant and tax agent to assist in your bookkeeping and tax matters.
Things to Note When you appoint an Auditor
Time management in terms of your accounts preparation is of essence here. For an exempt company that does not require audit, the company can potentially have up to 6 months to finalize its accounts.
If you are not exempt from audit, you will not be afforded the same luxury of time. An audit process can sometimes take weeks or months, based on the resource capacity of the auditor you engaged as well as the quality of your own accounts. It is therefore very crucial for you to start the bookkeeping process during the year and set a timeline for the accounts to be finalized before submitting the records for audit. With a better grasp of when your accounts will be completed, you can then safely request for an audit window with your auditor to audit your accounts without compromising your filing deadlines.
How much does Auditor charge?
Audit fees vary across audit firms. In our opinion, audit fees are based on the following factors:
- Reputation of Auditor
- Expected Resource Utilization to complete your Audit (ex: how long will it take, how many audit staff will be used)
- Assessed Risk of your Accounts
- Internal Control System of your Company
