Navigating the regulatory landscape of Singapore can be daunting for small business owners, especially when the Annual General Meeting (AGM) season approaches. Preparing unaudited financial statements is a critical obligation for Singapore SMEs that qualify for audit exemptions, offering a streamlined path to ACRA compliance without the heavy financial burden of a full statutory audit. However, “unaudited” does not mean “unregulated”; these reports must still adhere rigorously to the Singapore Financial Reporting Standards (SFRS) to avoid penalties and maintain good standing. Whether you are determining your eligibility for the “Small Company” exemption, distinguishing between audited and unaudited reports, or looking for a step-by-step preparation guide, this article covers every essential detail. At Koobiz, we understand that accurate financial reporting is the backbone of your business credibility, and we are here to guide you through the complexities of Singapore’s corporate compliance.
[Note: This guide is current as of December 2025. Always refer to ACRA’s latest guidelines for specific amendments.]
What Are Unaudited Financial Statements in Singapore?
Unaudited financial statements are comprehensive financial reports prepared by a company’s management or external accountants that strictly follow the Singapore Financial Reporting Standards (SFRS) but do not undergo independent verification by an external auditor.
The key distinction from audited financial statements lies in the absence of an external auditor’s opinion. Audited accounts include a professional assurance confirming that the financial statements present a true and fair view of the company’s financial position. Unaudited financial statements, by contrast, are supported by the directors’ responsibility and declaration that the accounts are accurate and properly prepared.
Importantly, for regulatory and tax authorities such as the Accounting and Corporate Regulatory Authority (ACRA) and the Inland Revenue Authority of Singapore (IRAS), unaudited financial statements carry full legal significance. They form the basis for corporate tax assessments, statutory filings, and regulatory reviews of solvency and compliance. As a result, audit exemption does not reduce the standard of accuracy or compliance required. These financial statements must still be prepared with the same level of care, consistency, and adherence to SFRS as audited accounts.
Is Your Company Eligible for Audit Exemption?
Yes, your company is eligible for audit exemption if it qualifies as a “Small Company” under the rigorous criteria set forth by ACRA in the Companies Act.
The “Small Company” concept was introduced to reduce regulatory costs for smaller entities. To qualify, a private company must meet at least two of the following three quantitative criteria for the immediate past two consecutive financial years:
- Total Annual Revenue: Less than or equal to SGD 10 million.
- Total Assets: Less than or equal to SGD 10 million.
- Number of Employees: Less than or equal to 50 employees.
If your company is part of a group, the entire group must collectively meet these criteria on a consolidated basis to qualify.
Eligibility is not permanent and must be reviewed annually. If a company exceeds the prescribed thresholds as its operations expand, it will be required to appoint a statutory auditor and transition to audited financial statements in the subsequent financial year.
At Koobiz, we assist directors in conducting year-end eligibility assessments to determine whether audit exemption can be maintained or whether a statutory audit will be required, ensuring timely compliance and avoiding regulatory breaches.
Unaudited vs. Audited Financial Statements: What is the Difference?
Audited and unaudited financial statements serve distinct regulatory and business purposes. Audited financial statements are primarily intended to provide independent assurance to external stakeholders, while unaudited financial statements are designed to meet statutory filing requirements in a more cost-efficient and timely manner.
Although both sets of financial statements present the same underlying financial information, the critical distinction lies in the degree of independent verification, regulatory requirement, and intended users. The comparison below highlights these differences.
| Feature | Unaudited Financial Statements | Audited Financial Statements |
|---|---|---|
| Validation | Compiled based on information provided by management. No independent verification or assurance opinion. | Systematically reviewed by an independent Public Accountant who tests the validity of transactions. |
| Legal Basis | Must follow SFRS; Directors’ declaration (Sec 201). | Must follow SFRS; Auditor’s opinion (Sec 207). |
| Cost & Time | Low Cost, Fast Turnaround. Ideal for SMEs operating on tight budgets; can be prepared quickly. | High Cost, Time-Consuming. Process often takes weeks to complete due to rigorous testing standards. |
| Purpose | Sufficient for tax filing (IRAS), ACRA annual returns (for small private companies), and internal management. | Required for stock exchange listings, large venture capital funding, or soliciting significant loans. |
| Assurance Level | Relies on Directors’ declaration of accuracy. | Carries a positive assurance opinion from a licensed auditor. |
Key Components of a Complete Unaudited Financial Report
A standard unaudited financial report comprises five essential components: the Statement of Financial Position, Statement of Comprehensive Income, Statement of Changes in Equity, Statement of Cash Flows, and the Directors’ Statement.
To ensure your report is accepted by ACRA, it must be holistic and tell the complete story of your financial year. Missing any of these sections can lead to rejection or queries from authorities.
Statement of Financial Position (Balance Sheet)
The Statement of Financial Position presents the company’s financial standing at a specific point in time. It sets out the company’s assets, liabilities, and shareholders’ equity, typically classified into current and non-current categories.
Within an unaudited financial report, this statement plays a critical compliance role. It enables ACRA and other stakeholders to assess the company’s solvency, demonstrating whether the company is able to meet its short- and long-term obligations as they fall due.
Statement of Comprehensive Income (Profit & Loss)
The Statement of Comprehensive Income summarises the company’s revenue, expenses, and costs over the financial period, culminating in the net profit or loss for the year.
From a regulatory and tax perspective, this statement forms the primary basis for corporate tax computation. The net results disclosed here are used to derive the company’s Chargeable Income for submission to IRAS under Form C or Form C-S, making accuracy and proper classification of income and expenses essential.
Statement of Changes in Equity
The Statement of Changes in Equity explains how the shareholders’ equity has changed over the financial year. It captures movements arising from share issuances, dividend distributions, and retained earnings generated from the company’s operations.
From a governance perspective, this statement allows shareholders and regulators to clearly understand how the company’s profits have been allocated and how the owners’ residual interest in the company has increased or decreased during the reporting period.
Statement of Cash Flows
Often overlooked in internal reports but mandatory for SFRS compliance, this statement shows the inflow and outflow of cash. It categorizes cash flow into operating, investing, and financing activities, providing a clear picture of the company’s liquidity that a P&L statement alone cannot offer.
Notes to the Financial Statements
These are detailed disclosures that explain the accounting policies used to prepare the statements (e.g., depreciation methods, currency translation). Under SFRS, the notes form an integral part of the financial statements. Without adequate disclosure, the financial statements may be considered incomplete or potentially misleading, even if the numerical figures are accurate.
How to Prepare and File Unaudited Financial Statements with ACRA
Preparing and filing unaudited financial statements with ACRA follows a structured, four-stage process: maintaining proper bookkeeping, preparing SFRS-compliant financial statements, obtaining shareholder approval, and lodging the Annual Return with ACRA.
Bookkeeping and Trial Balance
The foundation of any financial statement is accurate bookkeeping. You must record every transaction, sales invoices, expense receipts, bank statements, into your accounting ledger. At the end of the financial year, these records are summarized into a Trial Balance. Without a balanced and accurate Trial Balance, preparing the subsequent financial statements is impossible. Koobiz recommends using cloud accounting software (like Xero or QuickBooks) to automate this process throughout the year.
Drafting the Financial Statements
Once the figures are finalized, they must be formatted into the formal financial statements described in the previous section. This is where knowledge of SFRS is essential. You cannot simply submit a spreadsheet; the document must include the Directors’ Statement (replacing the Auditor’s Report) where directors formally declare the accounts are true and fair.
AGM and Authorization
Before filing, the unaudited financial statements must be approved by the shareholders. This is typically done at the Annual General Meeting (AGM), which must be held within 6 months of the financial year-end.
- AGM Dispensation: Private companies can dispense with holding a physical AGM by passing a resolution or if permitted by their constitution. In this case, the financial statements must still be sent to shareholders within 5 months of the financial year-end.
Filing the Annual Return
The final step is filing the Annual Return (AR) via ACRA’s BizFile+ portal. As part of this process, companies are required to submit their financial statements, typically in XBRL format, depending on the filing requirements. The deadline for filing is within 7 months after the financial year-end.
Real-World Scenarios: Who Qualifies? (Case Studies)
To illustrate how the “Small Company” and “Small Group” audit exemption rules apply in practice, below are three representative case studies commonly encountered by Singapore businesses:
Case Study 1: The Standalone Retailer (Eligible)
Company: Orchard Boutique Pte. Ltd.
Financial Metrics:
- FY 2023: Revenue $1.2M | Assets $400k | Employees 8
- FY 2024: Revenue $1.5M | Assets $500k | Employees 10
Conclusion: Eligible for audit exemption
Since the company is a private entity and meets all three criteria (well below the $10M/50 employee thresholds) for two consecutive years, it can file unaudited financial statements.
Practical Impact: Estimated annual savings of S$2,000–S$4,000 in statutory audit fees.
Case Study 2: The “Small Group” Structure (Eligible)
Structure:
TechHoldings Pte. Ltd. (Parent – 100% ownership)
AppDev Pte. Ltd. (Subsidiary)
Individual Entity Metrics:
- TechHoldings (Parent): Revenue $0 | Assets $5M | Employees 2
- AppDev (Sub): Revenue $8M | Assets $2M | Employees 20
Consolidated Group Figures:
- Total Revenue: $8M (Under $10M)
- Total Assets: $7M (Under $10M)
- Total Employees: 22 (Under 50)
Conclusion: Eligible for audit exemption
Even though there are multiple entities, the consolidated figures remain under the thresholds. Both the parent and the subsidiary can file unaudited statements.
Case Study 3: The Disqualified Subsidiary (Not Eligible)
Structure:
Global Logistics Pte. Ltd. (Singapore subsidiary)
MegaCorp Inc. (Foreign parent company)
Financial Metrics:
- Global Logistics (SG Sub): Revenue $2M (Small)
- MegaCorp (Foreign Parent): Revenue $100M (Large)
Conclusion: Not eligible for audit exemption
While the Singapore subsidiary itself is “small,” it is part of a group that is “large” (consolidated revenue >$10M). Therefore, the Singapore subsidiary cannot claim audit exemption and must submit audited financial statements, unless it obtains a specific exemption or the parent has specific provisions.
Lesson: Always look at the entire corporate family tree, not just the local entity.
Unsure about your eligibility? Regulations can be complex, especially for group structures. Contact Koobiz for a free eligibility check to ensure you are on the right side of ACRA compliance.
Advanced Filing Requirements and Common Mistakes
There are specific technical pitfalls and formatting rules, particularly regarding digital data standards, that can cause compliance failures for unwary SMEs.
Beyond the basic preparation, companies often stumble on the specific digital requirements of the Singapore government. ACRA is one of the most digitally advanced registries globally, and simply uploading a PDF is rarely sufficient.
Understanding XBRL Filing Format for Unaudited Accounts
XBRL (eXtensible Business Reporting Language) is an international standard used for the electronic communication of financial data. In Singapore, ACRA requires most companies to lodge their financial statements in XBRL format as part of the Annual Return filing process.
Most SMEs are unaware that they cannot simply upload a PDF of their unaudited accounts. Depending on your company size, you will need to prepare the file in either “Full XBRL” or “Simplified XBRL.”
- Simplified XBRL: Generally applicable for smaller, non-publicly accountable companies (Revenue <$500k and Assets <$500k).
- Full XBRL: Required for larger companies.
Preparing this file requires specialized software or the use of the BizFinx preparation tool provided by ACRA. Errors in mapping your financial data to the XBRL taxonomy are common and can result in the rejection of your Annual Return. This is a technical step where professional assistance from Koobiz is highly recommended to ensure data integrity.
Does a Dormant Company Need to File Unaudited Financial Statements?
No, a “dormant relevant company” is generally exempt from both preparing and filing financial statements if its total assets are SGD 500,000 or less at any time during the financial year.
For ACRA purposes, a dormant relevant company is one that is unlisted, not a subsidiary of a listed company, and has no accounting transactions since incorporation or since the end of the previous financial year. Where a dormant company’s total assets exceed SGD 500,000, unaudited financial statements must still be prepared and lodged in XBRL format, despite the absence of trading activity.
Regardless of asset size, all dormant companies are required to file an Annual Return (AR) each year to formally confirm their dormant status with ACRA.
Compilation vs. Preparation: Is a Chartered Accountant Necessary?
A “Compilation Report” offers a higher degree of credibility than self-prepared accounts because it involves a Chartered Accountant arranging your financial data in compliance with SSRS 4410 (Singapore Standard on Related Services).
While you are legally allowed to prepare unaudited statements yourself (as a director), banks and potential partners often view self-prepared documents with skepticism. A Compilation Report serves as a middle ground. It is not an audit (no assurance opinion is given), but it carries the letterhead and professional signature of a qualified accounting firm like Koobiz, signaling that the information is presented correctly and professionally. This is often the “sweet spot” for SMEs—gaining professional credibility without the cost of a full audit.
Conclusion
Preparing unaudited financial statements is a core compliance obligation for Singapore SMEs, offering a practical balance between regulatory transparency and cost efficiency. By accurately assessing audit exemption eligibility, complying fully with SFRS requirements, and meeting ACRA’s XBRL filing standards, businesses can maintain both statutory compliance and stakeholder confidence.
At Koobiz, we specialize in simplifying corporate compliance for businesses in Singapore. Whether you need assistance with company incorporation, opening a corporate bank account, or require professional accounting and tax services to prepare your unaudited financial statements, our team of experts is ready to assist. Don’t let compliance worries slow down your business growth.
Contact Koobiz today for a consultation on your financial reporting needs.
- Website: koobiz.com
- Services: Singapore Company Incorporation, Bank Account Opening, Tax, Accounting, and Audit Services.
