Preparation of unaudited financial statements
An unaudited financial statement is one that you have not subjected to an independent verification and review process by ACRA. Your financial statements remain unaudited until they are scrutinized and approved by a certified external auditor.
Unaudited financial statements
All companies in Singapore, except small companies and dormant companies, are required to file audited reports to ACRA. Under Companies Act, it is mandatory to appoint an auditor within 3 months of its incorporation. The directors would have to appoint an auditor to audit the accounts.
Failure to maintain proper accounting records could result in Directors being fined up to S$2,000 or imprisoned for a term of up to 3 months in addition to a default penalty. Directors could also be fined up to S$50,000 if the financial statements do not comply with the FRS.
Exemptions from Statutory Audit
Even if your company is exempt from statutory audit, you are still required to prepare and file unaudited annual financial statements. The annual financial statements help to compute and prepare the corporate tax returns of your company. However, when your company is exempt from audit, you don’t need to appoint an auditor within 3 months of incorporation and your accounts do not undergo official auditing.
At Tianlong Services, you can engage us to perform the necessary schedules and prepare the unaudited financial statements reports in accordance to Singapore Financial Reporting Standards so long as your business qualifies as a ‘small company’ or ‘dormant company.’
Qualifications for Small Companies
According to the Singapore Company’s Act, corporations that qualify for the “small company” category must be private companies in the current financial year, and must meet at least two of the following three criteria within the last two consecutive financial years:
- Total annual revenue of SGD$10 million or less;
- Total assets of SGD$10 million or less; or
- 50 employees or less.
Qualifications for Dormant Companies
The IRAS defines a dormant company as a business that has not generated any income during a specific period of time, typically a financial year. However, it may have incurred expenses.
On the other hand, ACRA defines a dormant company to have no accounting transactions during a financial year. However, certain activities of a Singapore company are not considered accounting transactions. These include:
- The appointment of an auditor;
- The appointment of a company secretary;
- The maintenance of a legal address;
- The payment of fees and/or penalties applied by ACRA;
- The maintenance and bookkeeping of registries and company books; and
- Transactions related to the taking of shares by a new shareholder or subscriber under certain conditions.
The Outcome of our Preparing Unaudited Annual Financial Statements
The compilation report or unaudited financial statements is usually tabled when filing income tax with IRAS and filing Annual Returns with ACRA. In addition to filing with ACRA and IRAS, it is also important to get the compilation report or unaudited financial statements ready when tabled during the AGM.
Tianlong Services helps you keep track of all the changes and implement them in the unaudited financial statements as required, making sure that your company is always in the good books of the financial market regulators.
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You will get a month’s worth of bookkeeping. Whether or not you continue with us, your reports for the month are yours to keep.