Why Company Statutory Audit Is Mandatory in Singapore and Who Needs It

Start this blog by knowing what a statutory audit is. Like other types of audit this one is also an examination of financial statements of a company by qualified auditors. The companies appoint statutory audits to present their financial affairs in front of stakeholders, creditors, members etc. in a true and fair manner.

But in this blog we will see how we are answering a particular doubt. Why is statutory audit mandatory in companies in Singapore? And also who needs it to conduct? There are many reasons out of which we are citing below a few important ones. Kindly read them with attention to get them in little details about Company Statutory Audit.

Things To Know Why Company Statutory Audit Is Mandatory and Who Needs It

Accuracy of financial statements

A company needs to conduct a statutory audit in order to bring accuracy to financial statements. They portray the overall financial condition of the business in front of outsiders. And thus it must contain all figures and information in the correct way so that no one finds them misleading.

For this reason professional auditors come to carefully scrutinize these financial data. In turn it depicts the positive image of the company in front of stakeholders, creditors, debenture holders etc. Companies of any size and volume should therefore make statutory audits complete within a stipulated time period.

Helps to prevent frauds and errors

This is the main reason why audit has its existence in the financial world. As we know auditing means checking the accounting entries. And that will help to prevent frauds and errors. Experienced auditors go through this process in a very efficient way so that the company may not have any unpleasant experience to deal with its clients.

As and when any errors of omission or commission happen to come in their notice, they inform the proper authority to take necessary steps. Statutory audit helps a company for risk management. Audit involves different methods of such thorough examination for which it is important for companies to undertake it.

Guides in planning and budgeting

A statutory audit guides your company in more effective planning and budgeting. So that in the next financial year the company may earn much more improvement in its business activities. While conducting this audit service, companies can keep proper records of financial affairs, any changes, audit reports overall which leads them to plan well and prepare a budget for the next year.

Companies generally do not repeat the same mistakes again and also work out on the areas of mistakes. Ultimately this benefit of statutory audit helps your company to grow more successful in the long run. So every company should prepare a plan for statutory audit every year.

Compliance with laws

Every company has to compulsorily follow and abide by the laws of Companies Act. In that case a statutory audit ensures that your company is in compliance with laws. Otherwise your business will face some kind of legal issues and also have to bear heavy penalty charges.

This audit confirms through its various tools and techniques that accounting has been made following the accounting standards. The auditor must follow the auditing standards to make the process more efficient for Company Statutory Audit. And also all the financial records are there in safe custody of the company. This benefit is very helpful to the companies since it can save money and good fame in the industry.

Prepares clean audit report

A statutory audit can present a clean audit report through its expert auditors. By following every step with diligence and care, auditors can prepare an audit report which is a very vital matter in a company.

At the end of a financial year, companies need to show an audit report along with a balance sheet. Statutory audit can assure you that such a report is free of any bias or mistakes. Usually the company takes up this audit service in order to hold an uninterrupted good image in front of outsiders and rivalries.

Thorough review

Statutory audit is something that goes through detail reviews. Without thorough examination, auditors cannot reach the final conclusion. Each and every records of purchase, sales, revenues, expenses pass through their effective scrutiny. And that makes statutory audit most significant and mandatory. No company should skip this audit in a year. Secondly, they do not encourage any kind of intentional omission or methods.

Conclusion

In conclusion we want to say that statutory audit carries immense importance in your business life. No company should ever miss to conduct such an audit which takes place once in a financial year. It covers all the aspects of a company like purchase, sales etc. and all records are kept the company. After the whole process auditors sign in the audit report which too is a very important document of any company?

Statutory audit has an impact on overall management. It can detect any fraud and error in your accounting work and also helps to plan well for next year. The most important benefit is that it ensures accuracy of your finance and compliance of law. Along with this you can take help of professional who have Audit Certification and have lots of experiences in these fields. Hopefully our blog could solve this question and meet in great help to everyone.

FAQs

Who can conduct this statutory audit?

Any qualified auditor can conduct this statutory audit. Shareholders of a company elect him in the Annual General Meeting and fix his remuneration as per rules and regulations. Their tenure of work completes after a certain period of time.

Which companies can stay out of mandatory statutory audit limits?

It is not so that all the companies will have to conduct statutory audits annually. There are certain companies like small company or dormant company which are pit of this ambit. Otherwise there are some threshold limits which other companies have to follow.

In Singapore what standards do a company has to follow for audit?

In Singapore a company has to follow the Singapore Financial Reporting Standards (SFRS). Violating these rules and regulations company has to perform audit work. Otherwise they will face legal issues and pay penal charges. Statutory audit confirms such compliance and thereby presents true and fair view of the financial affairs of a company.