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Answers · ACRA · Companies Act section 205C and the Thirteenth Schedule

Do I need an audit? The small company test

No audit if your company is a small company: a private company that, in each of the 2 financial years before this one, met at least 2 of these 3: revenue of S$10,000,000 or less, total assets of S$10,000,000 or less, 50 employees or fewer. Fail 2 of the 3 in both of those years and this year's statements must be audited.

Nothing is filed to claim it; the directors assess it each year. A company in a group passes only if the group passes on its consolidated figures too, and a company in its first or second year is tested on that year alone.

Thresholds from the rulebook, the rest checked by hand Edition YA-2027 · sources verified through 24 Jul 2026

The three tests, and what 2 of 3 means

Most small private companies need no statutory audit. The test looks back two financial years, and a company in a group has to pass it on the group's consolidated figures too. The three tests are quantitative and any 2 of them will do, so a company can be over one line, revenue usually, and still be small on the other two. The lines have stood since 1 Jul 2015.

TestMet if
Revenue for the financial yearS$10,000,000 or less
Total assetsS$10,000,000 or less
Number of employees50 or fewer

The test is applied to the financial year whose statements are in question, and it reads the 2 financial years before it, not the year itself. So the question for this year's accounts is what the company looked like in each of the last 2 years: 2 of 3 met in each of them, no audit. The current year's figures decide next year's answer.

The exemption is for private companies. A public company, and any subsidiary of one, is audited whatever its size. And it excuses the audit, not the accounts: the financial statements are still prepared, and filed unless the company is exempt from filing them, as the last section says.

Worked: two companies, two years each

The test, evaluated

This year's statements, tested on the 2 years before

Both companies close their books on 31 December, and the question is whether the statements for the year ending 31 Dec 2026 need an audit. That turns on the years ended 31 Dec 2024 and 31 Dec 2025.

CompanyYear endedRevenueTotal assetsEmployeesRevenue · assets · employees
Company Aa small trading company31 Dec 2024S$2,400,000S$900,0008met met met3 of 3
31 Dec 2025S$3,100,000S$1,200,00011met met met3 of 3
Company Bsales over the revenue line, the other two tests met31 Dec 2024S$12,500,000S$4,000,00030not met met met2 of 3
31 Dec 2025S$13,800,000S$4,600,00034not met met met2 of 3

Company A meets all 3 tests in both years, so it is a small company for the year ending 31 Dec 2026: no audit. Company B is over the revenue line in both years, S$12,500,000 and then S$13,800,000, and it does not matter: total assets and headcount are both under their lines in both years, 2 of 3, and it is a small company too. Neither files anything to say so.

Losing the exemption, and getting it back

A company that has qualified stays a small company until it fails the test for 2 consecutive financial years; one year over the lines does not cost it the exemption. A company that has lost it, or never had it, becomes small again only by meeting 2 of 3 in each of 2 consecutive years. So the exemption is lost after two failed years and regained after two met ones, and the audit lands on the statements for the year after the second of each.

Worked

Company C over eight years

Company C had been a small company for years. In the year ended 31 Dec 2021 its revenue reached S$14,000,000, its assets S$12,000,000 and its staff 60, and it stayed there for a second year, then sold a division and shrank back under every line. The verdict in each row is the test run on the 2 years before that row, and the last row is this year's statements.

Year endedRevenueTotal assetsEmployeesTestsThis year's statements
31 Dec 2019S$6,000,000S$5,000,00040met3 of 3Small company: no audittaken as given; the years before are not shown
31 Dec 2020S$8,000,000S$7,000,00045met3 of 3Small company: no audittaken as given; the years before are not shown
31 Dec 2021S$14,000,000S$12,000,00060failed0 of 3Small company: no audit2019 met, 2020 met
31 Dec 2022S$15,000,000S$13,000,00065failed0 of 3Small company: no audit2020 met, 2021 failed
31 Dec 2023S$9,000,000S$8,000,00048met3 of 3Audit required2021 failed, 2022 failed
31 Dec 2024S$9,500,000S$8,500,00049met3 of 3Audit required2022 failed, 2023 met
31 Dec 2025S$9,800,000S$9,000,00050met3 of 3Small company: no audit2023 met, 2024 met
31 Dec 2026this year's statementsSmall company: no audit31 Dec 2024 and 31 Dec 2025 both met

The year ended 31 Dec 2022 is the one people get wrong: the company had just failed every test in 2021, and its 2022 statements are still unaudited, because 2020 was met. The first audit is for 2023, after two failed years. The year ended 31 Dec 2024 shows the return trip: 2023 was met, but 2022 was not, so 2024 is audited as well, and the exemption returns for 2025. The last row sits exactly on the employee line, 50 people, and 50 or fewer is met.

The other way to lose it is to stop being a private company. A company that ceases to be private at any time in a financial year is not a small company for that year, whatever its figures.

A new company: the first and second year

A company in its first or second financial year has no 2-year record to read, so the look-back does not apply yet. It is a small company for that year if it meets 2 of the 3 tests for that financial year itself. From the third year the ordinary rule takes over and reads the two years behind it. See every filing in a new company's first year, dated.

In a group: the test is passed twice

A company that is part of a group is a small company only if it passes on its own figures and the group passes as well: the whole group, foreign entities included, assessed on the holding company's consolidated financial statements, meeting at least 2 of the 3 tests on a consolidated basis for the same 2 preceding financial years. Whether the company is in a group is decided by the accounting standards, not by who owns the shares in the ordinary sense.

The group test overrides the individual one. A subsidiary that would be small on its own is audited if the consolidated group is over the lines, and a holding company that is small on its own statements is audited if the group it consolidates is not.

What the exemption does not remove

Audit exemption dispenses with the auditor and the auditor's report, nothing else. The financial statements are still prepared for every financial year, and the directors may prepare them themselves; ACRA's own guidance is that engaging an accounting firm is optional and the directors stay responsible either way. They still go to the members, and they still go to ACRA with the Annual Return unless the company is exempt from filing them, as the next paragraph says.

The accounts go up with the Annual Return in a structured format, not as a PDF, unless you are one of the classes that may still file a PDF. Simplified XBRL needs both conditions: revenue of S$500,000 or less and total assets of S$500,000 or less for the year; otherwise it is Full XBRL. That is a different and much lower line than the audit test, so a small company on the audit test, under S$10,000,000, is usually filing Full XBRL. A solvent exempt private company need not file the statements at all, though it prepares them; ACRA's page on who needs to file, in the sources, defines the class. See what records a company must keep, and for how long.

ACRA is reviewing these thresholds and has said it is considering raising the revenue and assets lines. Its consultation closed on 17 Apr 2026; no decision had been published when the rulebook was last checked, and the figures on this page are the ones in force at the date under the answer. When ACRA decides, the rulebook changes and this page is rebuilt from it.

Do it in Simpler Tax

The two figures the test reads are on the ledger

Simpler Tax does not answer the audit question for you: the headcount and the group are facts only you hold. What it gives you is the two figures the test reads from the books, revenue for the year on the profit and loss and total assets on the balance sheet, computed from the posted entries for each financial year, and an Atlas of the company's ACRA, IRAS, CPF and other obligations that lists this exemption with the question it turns on. Simpler Tax files nothing.

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Questions people ask

Do I apply to ACRA for audit exemption?

No. Self-assessed each financial year, nothing is filed to claim it. The directors assess the test when they prepare the year's financial statements, and if it is met the statements go to the members unaudited, and to ACRA unless the company is exempt from filing them.

My revenue is over S$10,000,000. Do I need an audit?

Not on revenue alone. The test is any 2 of the 3, so a company over the revenue line with total assets of S$10,000,000 or less and 50 employees or fewer is still a small company, as Company B in the worked table is. An audit follows only when 2 of the 3 were failed in each of the 2 preceding financial years.

We had one bad year. Have we lost the exemption?

Not yet. A small company keeps the exemption until it fails the test for 2 consecutive financial years; one year over the lines, with the year before it met, leaves the company small. Two in a row and the next year's statements are audited.

How do we get the exemption back?

By meeting 2 of the 3 tests in each of 2 consecutive financial years again. One good year after two bad ones is not enough; the statements for the year after it are still audited, and the exemption returns for the year after that.

Does a new company need an audit in its first year?

Not if it is small on that year's own figures. A company in its first or second financial year has no 2-year record, so it qualifies by meeting 2 of the 3 tests for that financial year alone.

Our company is a subsidiary. Does the test change?

The company must pass it twice: on its own figures, and again on the group's consolidated figures, for the same 2 preceding financial years. A small subsidiary of a large group is audited; so is any company that was a public company at any point in the year, and every subsidiary of one.

Does audit exemption mean I do not have to prepare or file financial statements?

No. The statements are still prepared, still go to the members, and still go to ACRA with the Annual Return, in XBRL unless the company is exempt from filing them. Only the auditor's report is dispensed with.

Sources

Statutory figures on this page are read from the Simpler Tax rulebook at build time, edition YA-2027, every source last checked 24 Jul 2026. The rulebook entries named below are the ones this page was computed from; the IRAS pages are what they were verified against.