Deciding between an audit, a review or a compilation is a common question for Singapore companies. The choice affects costs, timelines and the level of assurance your stakeholders receive. This article—Audit vs Review vs Compilation: What Level of Assurance Do You Need?—explains the practical differences and the regulatory context in Singapore.
The article title Audit vs Review vs Compilation: What Level of Assurance Do You Need? is used to guide Singapore directors, finance teams and company secretaries on when each form of engagement is appropriate, what the Companies Act and ACRA require, and when IRAS, banks or investors may demand higher assurance.
Who this applies to
This guide is relevant to:
- Private companies and public companies incorporated in Singapore.
- Directors, corporate secretaries and finance teams preparing Financial Statements and annual submissions on ACRA BizFile+.
- Start-ups, SMEs, multinational branches and non-resident entities that submit documents to IRAS or seek external financing.
- Stakeholders such as banks, investors, grant providers and regulators who review financial information.
Key rules and requirements in Singapore
Understanding the regulatory baseline helps you choose the correct level of assurance.
- Companies Act and audit obligation: Under the Companies Act, private companies may be exempt from audit if they qualify as a “small company” (meeting two of three thresholds for two consecutive financial years: total annual revenue ≤ SGD 10 million, total assets ≤ SGD 10 million, and ≤ 50 employees). Public companies and companies that do not meet the small company test generally require an audit.
- ACRA filings: Annual returns and, where applicable, audited Financial Statements or abbreviated financial information are filed via ACRA BizFile+.
- IRAS and tax submissions: IRAS requires accurate tax computations and supporting schedules filed via IRAS myTax Portal. IRAS does not automatically require audited accounts for every company, but audited accounts are commonly used to support tax positions and loan covenants.
- GST: GST registration (mandatory above the SGD 1 million turnover threshold) may bring additional documentary requirements; GST audits can arise from IRAS enquiries.
- Third-party requirements: Banks, investors, grant providers or counterparties may require audited or reviewed accounts irrespective of Companies Act exemptions. Employment Pass or S Pass applications sometimes require the company’s audited accounts for background checks.
- Standards and assurance levels: An audit provides reasonable assurance and is the most extensive engagement. A review provides limited (negative) assurance and is less extensive. A compilation involves preparing Financial Statements from information provided with no assurance on the figures. Each has different practitioner procedures and regulatory implications.
Step-by-step process
Follow these steps to determine and obtain the appropriate level of assurance.
- 1. Assess statutory and contractual obligations: Check the Companies Act audit exemption, lender or investor requirements, grant conditions and any MOM or Work Pass-related needs.
- 2. Consider stakeholder expectations: Identify whether shareholders, potential investors or banks need reasonable assurance (audit) or will accept limited/no assurance (review/compilation).
- 3. Choose the engagement type: Decide between audit, review or compilation based on obligations, cost and the level of assurance required.
- 4. Engage a qualified practitioner: Appoint a licensed public accountant or audit firm to perform the engagement and confirm the scope, timelines and fees in an engagement letter.
- 5. Prepare Financial Statements and records: Ensure accounting records, ledgers, payroll (including CPF contributions), GST records and supporting documentation are complete. Finalise the company’s Financial Year End and accounting policies.
- 6. Complete the engagement: The practitioner performs procedures appropriate to the engagement type, issues the report (audit opinion, review conclusion or compilation report), and returns the finalised Financial Statements.
- 7. File and distribute: Use ACRA BizFile+ and IRAS myTax Portal where required, and distribute reports to stakeholders. Retain documentation for statutory retention periods.
Common mistakes to avoid
- Assuming audit exemption means you never need audited accounts—many lenders and investors still require audits.
- Choosing a compilation instead of a review or audit when third parties expect assurance.
- Failing to check grant or investor agreements that mandate audited accounts for milestone payments.
- Neglecting payroll and CPF records—these are often reviewed during assurance engagements and for MOM or IRAS queries.
- Delaying engagement with a practitioner—late engagement can increase remediation costs and delay filings on ACRA BizFile+ or IRAS myTax Portal.
Practical examples
Three brief scenarios illustrate common choices.
- Example 1 — Small private trading company: Annual revenue SGD 800,000, 6 employees and assets below SGD 10 million. The company meets the small company test and may be audit-exempt. However, the bank requires audited accounts for a loan; the company therefore engages an auditor.
- Example 2 — Start-up seeking Series A funding: The investor requests limited assurance to validate revenue and cost trends. The company commissions a review to provide limited assurance faster and at lower cost than a full audit.
- Example 3 — New consultancy with simple accounts: No immediate third-party assurance requirement. The company opts for a compilation to produce Financial Statements for internal management and tax submissions, while noting compilation reports do not provide assurance to external parties.
How a corporate secretary can help
A corporate secretary in Singapore plays a central role in governance and compliance.
- Assess statutory filing obligations under the Companies Act and manage ACRA BizFile+ submissions, including annual returns and applicable Financial Statement filings.
- Coordinate with auditors or accountants to ensure timely delivery of reports and that the Financial Year End and board resolutions are in order.
- Help collate statutory records, minutes and accounting schedules that auditors or reviewers require.
- Advise on whether a small company audit exemption may apply and when external assurance will nonetheless be needed for stakeholders.
- Raffles Corporate Services can assist with filings, compliance, accounting, tax and payroll support to streamline the engagement with your practitioner.
Frequently Asked Questions
Do all private companies in Singapore need an audit?
No. Private companies that qualify as a small company under the Companies Act may be exempt from audit if they meet the small company criteria for two consecutive financial years. However, third parties such as banks, investors or grant providers may still require audited accounts.
What is the practical difference between a review and an audit?
An audit provides reasonable assurance and involves extensive testing of transactions, controls and balances. A review provides limited (negative) assurance, using enquiries and analytical procedures. Reviews are less extensive and generally faster and less costly than audits.
Can compiled accounts be used for IRAS tax filings?
IRAS requires accurate tax computations and supporting schedules. Compiled Financial Statements may be used for internal purposes and to prepare tax returns, but they do not provide assurance. Where IRAS or other parties request assurance, a review or audit may be needed.
Who can perform audits, reviews and compilations?
Licensed public accountants and audit firms registered in Singapore typically perform audits. Reviews and compilations are performed by qualified accountants; ensure the practitioner has appropriate experience and provides a written engagement letter setting out scope and deliverables.
Key takeaways
- Audit, review and compilation provide different levels of assurance: audit (reasonable), review (limited) and compilation (no assurance).
- Check statutory obligations under the Companies Act and ACRA, and consider third-party requirements from banks, investors, MOM or grant providers.
- Engage a qualified practitioner early and prepare complete accounting records, payroll (including CPF) and GST documentation.
- A corporate secretary can coordinate filings on ACRA BizFile+ and assist with compliance, while firms like Raffles Corporate Services can support filings, accounting, tax and payroll.
- Requirements may change, so always check the latest guidance from ACRA, IRAS or MOM, or consult a professional adviser.
If you would like to find out more about how Raffles Corporate Services can assist with your company’s compliance and corporate secretarial requirements, please get in touch with the team at [email protected].
Yours sincerely,
The editorial team at Raffles Corporate Services
Disclaimer: This does not constitute legal advice. If you require legal advice, please contact a lawyer.