Every Singapore company must keep accounting and other records that sufficiently explain its transactions and financial position and allow true and fair financial statements to be prepared and audited, under section 199 of the Companies Act 1967. The records must be kept for at least five years from the end of the financial year in which the transactions are completed, and be open to inspection by the directors at all times. If the company fails to comply, the company and every officer in default commit an offence punishable by a fine of up to S$10,000 or imprisonment of up to 12 months, plus a default penalty. Separately, section 67 of the Income Tax Act 1947 requires businesses to keep sufficient records for five years so that IRAS can ascertain income and deductions. Poor records also cost money long before any prosecution: rejected tax claims, audit qualifications and failed bank reviews.
Raffles Corporate Services works with a panel of experienced Singapore law firms who offer cost-effective and efficient legal service and advice. This article is general information only and is not legal advice.
This guide is for directors who have inherited messy books, who are behind on bookkeeping, or who simply want to know where the legal line is.
What counts as “proper” accounting records?
| Requirement | In practice | Source |
|---|---|---|
| Explain transactions and financial position | Ledgers, bank reconciliations, sales and purchase records, payroll, fixed asset register, loan records | CA s 199(1) |
| Allow true and fair financial statements | Records complete enough to prepare statements at any time, not reconstructed at year end | CA s 199(1) |
| Can be conveniently audited | Organised, with supporting documents traceable to entries | CA s 199(1) |
| Retained 5 years from end of the relevant financial year | Including electronic records and supporting documents | CA s 199(2) |
| Kept at registered office or where directors decide; open to directors | Every director, including a non-executive or nominee, can inspect | CA s 199(3) |
| Records kept abroad | Statements and returns sufficient to prepare true and fair financial statements must be sent to and kept in Singapore | CA s 199(4) |
| Internal controls (public companies and their subsidiaries) | A system of internal accounting controls | CA s 199(2A) |
| Tax records for 5 years | Books, invoices, vouchers, receipts and business records; serially numbered receipts above turnover thresholds | ITA s 67 |
GST-registered businesses have their own record-keeping rules for tax invoices and GST returns. Our explainer on the difference between bookkeeping and accounting sets out which records belong to which process.
Who is liable?
The offence in section 199(6) is committed by the company and by “every officer of the company who is in default”. Officers include directors and the company secretary. A director cannot escape responsibility by saying the bookkeeper or the other director handled the accounts; directors must take reasonable steps to ensure records are kept. Nominee and overseas directors are not exempt. Poor records can also feature in wider claims, for example by a liquidator examining directors’ conduct, and in disqualification considerations. See what the accounts can cost a director personally.
Warning signs your records are not good enough
- Bank statements have not been reconciled for months.
- Sales are recorded from bank receipts only, with no invoices.
- Expenses are paid from personal cards with no receipts or claims.
- Customer money has gone into a director’s personal account; see repairing the accounting trail.
- The previous bookkeeper left and nobody has the login to the accounting software; see recovering records after a bookkeeper leaves.
- Stock, fixed assets or loans exist but are not recorded in any register.
- The financial statements were prepared from estimates because supporting records were missing.
A remediation plan
- Take stock. List every bank account, payment platform, credit card and loan. Download statements for the full period.
- Recover source documents. Ask suppliers and customers for copies of invoices; retrieve e-invoices and InvoiceNow records; collect payroll records and CPF statements.
- Rebuild the ledgers. Record transactions from bank statements, matching each to documents. Flag items without support.
- Reconcile. Reconcile bank, receivables, payables, GST and payroll. Investigate differences rather than plugging them.
- Document unsupported items. Where documents cannot be recovered, record the facts, the evidence available and the director’s explanation, approved by the board.
- Fix filings. If past financial statements, tax returns or GST returns were wrong, consider revisions or voluntary disclosure with advice.
- Put controls in place. Monthly reconciliations, approval limits, an expense claims process, cloud storage and a retention policy that keeps records at least five years.
Records and retention: a quick checklist
| Record | Keep at least |
|---|---|
| General ledger, trial balance, financial statements | 5 years from end of the financial year concerned |
| Sales and purchase invoices, receipts, vouchers | 5 years (Companies Act and Income Tax Act) |
| Bank statements and reconciliations | 5 years |
| Payroll, CPF and IR8A records | 5 years, subject to employment record rules |
| Fixed asset register and depreciation schedules | Life of the asset plus 5 years is prudent |
| Contracts and loan agreements | Life of the contract plus 5 years is prudent |
For small businesses using cash floats, see petty cash records.
Example
Example only, not a client case. A director of a two-person trading company discovers that the books have not been updated for 14 months and the financial year end has passed. The company engages an accountant, downloads 14 months of bank statements, recovers most invoices from email and supplier portals, and reconstructs the ledgers. Eleven payments to a former supplier have no invoices; the board minutes record the evidence available. The financial statements are prepared and the company moves to monthly bookkeeping with receipt capture.
Frequently asked questions
Can we keep records only in electronic form?
Yes, if they are complete, accessible, readable and retained for the required period. Keep backups and make sure directors can access them.
Our records are kept by the parent company overseas. Is that allowed?
Yes, but the company must send to and keep in Singapore statements and returns sufficient to prepare true and fair financial statements, open to the directors.
Does a dormant company need accounting records?
Yes. Section 199 applies to every company, though a dormant company’s records will be simple.
Will ACRA prosecute us for poor records?
Enforcement depends on the facts. The safest course is to fix the gaps quickly and document the steps taken.
Need help putting your records right?
If your company’s books are behind or incomplete, contact the Raffles Corporate Services accounting team at [email protected] or on WhatsApp at +65 8501 7133. We reconstruct ledgers, reconcile accounts, prepare financial statements and tax filings, and set up monthly bookkeeping so the problem does not return.
Kevin Yeo, Raffles Corporate Services