Under the Companies Act, all Singaporean companies must prepare and file their financial statements annually with ACRA, including unaudited financial statements for small companies that qualify for audit exemption.

Small companies, defined by meeting two out of three criteria (annual revenue, total assets, and employee count), can simplify their filing and compliance processes by remaining as Exempt Private Companies (EPC), although Private Companies (non-EPC) must prepare their financial statements in XBRL format, incurring higher costs due to the complexity of this requirement.

An Exempt Private Company (EPC) in Singapore refers to a private company with specific characteristics that exempt it from certain regulatory requirements, such as having no more than 20 shareholders, all of whom must be individuals (no corporate shareholders), and meeting the criteria of being a “small company” as per the Companies Act, which includes having annual revenue, total assets, and employee count below certain thresholds.

EPCs enjoy simplified filing and compliance processes compared to other private companies.

Non-Exempt Private Companies (non-EPC) in Singapore are private companies that do not meet the criteria to be classified as Exempt Private Companies (EPC).

These companies typically have more than 20 shareholders or may not meet the definition of a “small company” under the Companies Act, leading to different regulatory requirements for filing financial statements and compliance obligations compared to EPCs.

In Singapore, companies are legally required to prepare and file financial statements as part of their annual compliance obligations. Here are the detailed legal requirements for the compilation of unaudited financial statements:

• Companies Act (Chapter 50): The statutory basis for financial reporting in Singapore is primarily outlined in the Companies Act. Section 197 of the Act mandates that every company incorporated in Singapore must prepare financial statements that comply with the accounting standards specified in the Act.
• Accounting Standards: Financial statements must be prepared in accordance with the Singapore Financial Reporting Standards (FRS), which are based on the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB).
• Annual General Meeting (AGM): Companies are required to hold an Annual General Meeting within 6 months after the end of their financial year. During the AGM, directors are required to lay the financial statements before the shareholders for approval.
• Financial Year End (FYE): Companies must determine their financial year end, which is the date at the end of each accounting period for which financial statements are prepared. The financial year end should be within 18 months from the date of incorporation and subsequently within 12 months from the previous financial year end.
• Compilation of Financial Statements: The preparation of financial statements involves compiling the company’s financial data, including balance sheet, income statement, statement of changes in equity, cash flow statement, and notes to the financial statements. These statements must present a true and fair view of the company’s financial position and performance.
• Audit Exemption for Small Companies: Small companies in Singapore may be eligible for audit exemption if they meet certain criteria under the Companies Act. A company is considered a “small company” if it satisfies at least 2 of the following criteria for the immediate past two consecutive financial years:
  • Total annual revenue of not more than S$10 million
  • Total assets of not more than S$10 million
  • Not more than 50 employees
• Filing with ACRA: After the financial statements are prepared, they must be filed with the Accounting and Corporate Regulatory Authority (ACRA) along with the Annual Return and other required documents. The financial statements must be filed in XBRL format for non-exempt private companies.
• Director’s Responsibility: The directors of the company are responsible for ensuring that the financial statements are prepared in accordance with the law and accounting standards, are free from material misstatement, and fairly represent the company’s financial position.
• Penalties for Non-Compliance: Failure to comply with the legal requirements for financial reporting can result in penalties, fines, or legal consequences for the company and its officers.

It’s crucial for companies to understand and adhere to these legal requirements to ensure compliance with Singapore’s financial reporting standards and regulatory framework.