Appointing Auditor - ACRA
- a22162
- Jan 10
- 6 min read
Updated: Mar 6
Singapore Company Auditor Appointment
The Appointment Process:
Research and Shortlist: Identify potential auditors.
Request Proposals: Send requests for proposals (RFPs) to shortlisted auditors, outlining your company's specific needs and requirements.
Interviews: Conduct interviews with the shortlisted auditors to discuss their approach, experience, and fees.
Due Diligence: Conduct thorough due diligence on the selected auditor, including checking their professional qualifications and any disciplinary actions.
Obtain Consent: Obtain written consent from the chosen auditor to act as your company's auditor. The proposed successor auditor is required to inquire in writing from the predecessor auditor whether there are any professional or other reasons for the proposed change in auditor that the successor auditor should be aware of. The auditor sends an audit engagement letter.
Appoint at GM: Present the auditor's appointment for approval at the company's General Meeting.
Initial Appointment:
The directors formally appoint the chosen auditor through a board resolution. This resolution should clearly state the auditor's name and the terms of the appointment.
Change of Auditor in Singapore
A change of auditor in Singapore typically involves the following steps:
Shareholders' Approval: The change of auditor requires the approval of shareholders through a special resolution at a general meeting. This typically requires a 75% majority vote.
Appointment of New Auditor: At the same shareholders' meeting or a subsequent meeting, the company appoints a new auditor through a special resolution.
ACRA Notification: The company must notify the Accounting and Corporate Regulatory Authority (ACRA) of the change of auditor within 14 days of the appointment/change of the auditor.
Appointing Auditor - ACRA
The appointment of an auditor in Singapore is governed by the Companies Act (Cap. 50) and overseen by the Accounting and Corporate Regulatory Authority (ACRA). Here's a breakdown of the process:
Eligibility:
Public Accountants or Accounting Firms: Only individuals or firms registered and approved by ACRA as public accountants or accounting entities can be appointed as company auditors.
Appointment Process:
Initial Appointment:
Within three months of a company's incorporation, the directors must appoint an auditor.
The appointed auditor holds office until the conclusion of the next Annual General Meeting (AGM).
Reappointment:
At each AGM, the company can either reappoint the existing auditor or appoint a new one.
A resolution for reappointment or new appointment requires approval by at least 75% of the voters.
Removal of an Auditor:
An auditor can be removed by passing a special resolution at a general meeting.
The company must provide written notice to ACRA about the removal.
Key Points:
Auditor's Role: Auditors examine a company's financial statements to ensure they are prepared in accordance with accounting standards and provide an independent opinion on their fairness and accuracy.
ACRA's Oversight: ACRA plays a crucial role in regulating the auditing profession in Singapore, including approving auditors and setting auditing standards.
Factors to Consider When Appointing an Auditor:
Independence: The auditor must be independent of the company to ensure objectivity and impartiality in their assessment. This means avoiding any conflicts of interest or relationships that could compromise their judgment.
Expertise: The auditor should possess the necessary expertise and experience in the company's industry and accounting standards. This ensures that they can effectively evaluate the financial statements and provide valuable insights.
Reputation: Choose an auditor with a strong reputation for professionalism, integrity, and quality work. Consider their track record, client base, and any disciplinary actions or complaints.
Fees: Obtain quotes from several potential auditors to compare their fees and services. While cost is a factor, it's crucial to prioritize quality and independence over the lowest price.
Communication and Service: Evaluate the auditor's communication style and responsiveness. A good auditor will be proactive in addressing your concerns and providing clear and concise reports.
Additional Considerations:
Internal Controls: A strong internal control system within the company can enhance the audit process and potentially reduce audit fees.
Technology: Some auditors utilize advanced technology and data analytics tools to improve efficiency and effectiveness. Consider if this is a valuable feature for your company.
Specialization: If your company operates in a specialized industry (e.g., technology, healthcare), consider selecting an auditor with specific expertise in that sector.
Remember: The appointment of an auditor is a crucial decision for any company. By carefully considering the factors outlined above and following a thorough selection process, you can ensure that you choose an auditor who will provide valuable services and support to your business.
Auditor (Mandatory Unless Exempted)
In Singapore, the requirement for a company to have an auditor depends on whether it qualifies for audit exemption. Here's a breakdown:
General Requirement:
Generally, under the Singapore Companies Act, companies are required to have their financial statements audited annually.
This audit must be conducted by a public accountant or an accounting firm registered with the Accounting and Corporate Regulatory Authority (ACRA).
Audit Exemption (Small Company Concept):
Singapore has introduced the "small company" concept, which allows certain private companies to be exempt from audit requirements.
A company qualifies as a "small company" if it meets at least two of the following three criteria for the immediate past two consecutive 1 financial years:
Total annual revenue ≤ $10 million
Total assets ≤ $10 million
Number of employees ≤ 50
Also small groups can be exempt from audit if they meet certain criteria.
Dormant companies are also generally exempt.
Key Points:
Even if a company is exempt from audit, it is still required to maintain proper accounting records and prepare financial statements.
Public companies in Singapore are generally required to have mandatory audits.
It is very important to keep up to date with ACRA regulations, as those regulations can change.
In essence, while audits are generally mandatory, exemptions exist for qualifying small and dormant companies.
Where to Find More Information:
ACRA Website: The official website of the Accounting and Corporate Regulatory Authority (ACRA) provides detailed information on company law, including the requirements for appointing auditors. You can find it at: https://www.acra.gov.sg/
How Bestar can Help
Appointing Auditor - ACRA
Bestar plays a crucial role in ensuring the accuracy and reliability of financial information, providing valuable benefits to businesses and stakeholders. Here are some key ways Bestar can help:
1. Enhancing Financial Reporting Accuracy:
Independent Verification: Bestar provides an independent assessment of a company's financial statements, ensuring they adhere to accounting standards and accurately reflect the company's financial position.
Detection of Errors and Fraud: Through rigorous examination and testing, Bestar can identify potential errors, irregularities, or fraudulent activities that may have gone unnoticed.
Improved Financial Reporting Quality: By identifying areas for improvement in financial reporting processes, Bestar helps companies enhance the quality and reliability of their financial information.
2. Strengthening Internal Controls:
Assessment of Internal Controls: Bestar evaluates a company's internal control systems, which help prevent and detect errors and fraud.
Recommendations for Improvement: Bestar provides recommendations for strengthening internal controls, such as improving segregation of duties, enhancing information technology security, and implementing better controls over financial transactions.
Reduced Risk of Fraud and Errors: By helping companies improve their internal controls, Bestar contributes to a reduced risk of fraud and errors, safeguarding the company's assets and reputation.
3. Enhancing Credibility and Trust:
Independent Assurance: Bestar's opinion provides independent assurance to stakeholders, such as investors, lenders, and regulators, that the company's financial information is reliable.
Increased Investor Confidence: Accurate and reliable financial information can boost investor confidence, making it easier for companies to raise capital and access financing.
Improved Reputation: A clean audit opinion can enhance a company's reputation and credibility in the market.
4. Providing Valuable Insights and Recommendations:
Operational Efficiency: During the audit process, Bestar may identify areas where a company can improve operational efficiency and reduce costs.
Compliance with Regulations: Bestar helps companies ensure compliance with relevant accounting standards, tax laws, and other regulations.
Strategic Decision Making: By providing insights into a company's financial performance and risk profile, Bestar can help management make informed strategic decisions.
5. Mitigating Legal and Regulatory Risks:
Reduced Risk of Legal Action: Accurate and reliable financial reporting can help reduce the risk of legal action from investors, regulators, or other stakeholders.
Compliance with Regulations: Bestar helps companies ensure compliance with relevant laws and regulations, minimizing the risk of penalties and legal consequences.
Enhanced Corporate Governance: By promoting transparency and accountability, Bestar contributes to good corporate governance practices, which can help mitigate legal and regulatory risks.
In summary, Bestar plays a vital role in ensuring the accuracy, reliability, and integrity of financial information, providing valuable benefits to businesses and stakeholders. By enhancing financial reporting, strengthening internal controls, and providing valuable insights, Bestar helps companies operate more efficiently, make informed decisions, and mitigate risks.
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