For many small and medium-sized enterprises (SMEs) in Singapore, one of the first questions that comes up when an audit is required is simple: how much does an audit cost in Singapore?
Unlike some professional services with relatively standard pricing, audit fees can vary significantly from one company to another. Two companies with similar annual revenue may receive very different audit quotations because the amount of audit work required depends on much more than turnover alone.
The company’s transaction volume, quality of accounting records, number of bank accounts, inventory, subsidiaries, overseas operations, internal controls and complexity of its financial statements can all affect the amount of work an auditor needs to perform.
This guide explains how audit fees are generally determined in Singapore, what factors can increase the cost of an audit, how SMEs can prepare for an audit more efficiently, and what businesses should consider when choosing an audit firm.
This article provides general information only and should not be regarded as accounting, audit, tax or legal advice.
What Is a Statutory Audit?
Before looking at audit costs, it is useful to understand what businesses are actually paying for.
A statutory audit is an independent examination of a company’s financial statements performed in accordance with applicable auditing requirements.
The auditor performs procedures and obtains audit evidence before expressing an independent opinion on the company’s financial statements.
An audit is therefore substantially different from bookkeeping.
A bookkeeper or accountant may record transactions, reconcile accounts and assist in preparing financial statements.
An external auditor independently examines the financial statements and supporting evidence.
This independence is fundamental to the audit process.
Does Every Singapore Company Need an Audit?
No.
Many smaller private companies in Singapore may qualify for statutory audit exemption under the small-company framework.
Generally, a private company may qualify as a small company where it meets at least two of the following three quantitative criteria:
- Total annual revenue of S$10 million or less
- Total assets of S$10 million or less
- 50 employees or fewer
The applicable assessment period and additional requirements must also be considered.
Companies that belong to corporate groups may need to consider both their individual circumstances and the relevant group-level requirements when determining whether audit exemption applies.
Therefore, before asking how much an audit costs, an SME should first determine whether a statutory audit is actually required.
Some businesses may also choose to obtain an audit voluntarily even where they qualify for statutory audit exemption.
How Much Does an Audit Cost in Singapore?
There is no single fixed audit fee that applies to every Singapore company.
A relatively small business with straightforward transactions, organised accounting records and limited audit complexity will generally require less audit work than a business with complicated operations.
For example, compare two companies that each generate S$5 million in annual revenue.
Company A provides professional services.
It has:
One Singapore entity.
Two bank accounts.
No inventory.
A small number of employees.
No overseas operations.
No complicated investments.
Well-maintained accounting records.
Company B is a trading business.
It has:
Thousands of transactions.
Significant inventory.
Multiple warehouses.
Several bank accounts.
Foreign-currency transactions.
Overseas suppliers.
Related-party transactions.
Numerous customers with outstanding receivables.
Both businesses may report S$5 million in annual revenue, but their audits can require very different amounts of work.
This is why reputable audit firms generally need to understand the business before providing a meaningful quotation.
Why Do Audit Fees Vary?
Audit fees primarily reflect the resources required to complete the engagement appropriately.
An audit firm may consider factors including:
Company size.
Transaction volume.
Nature of the business.
Accounting complexity.
Audit risk.
Quality of accounting records.
Number of business entities.
Number of locations.
Inventory levels.
Internal controls.
Reporting deadlines.
Experience required from the audit team.
A more complicated engagement may require additional audit procedures and greater involvement from senior audit personnel.
Consequently, audit fees should not be assessed solely according to annual revenue.
1. Annual Revenue
Revenue is often one of the first figures requested when an audit firm prepares a quotation.
It provides a broad indication of the size of the business.
However, turnover alone does not determine the audit fee.
A consulting business generating S$3 million from 100 invoices may be significantly less transaction-intensive than an e-commerce company generating the same revenue through tens of thousands of individual sales.
Auditors therefore usually consider revenue together with the nature and volume of transactions.
2. Total Assets
The company’s balance sheet can also significantly affect audit complexity.
A business may have substantial assets such as:
Property.
Machinery.
Inventory.
Trade receivables.
Investments.
Cash balances.
Intangible assets.
Loans to related parties.
Each material balance may require different audit procedures.
For example, auditing a company with minimal assets may be relatively straightforward compared with auditing a business holding substantial inventory across multiple locations.
3. Number of Transactions
Transaction volume can have a major impact on the amount of audit work required.
Consider a holding company with only a few transactions each month compared with a retailer processing thousands of transactions every day.
Even where the two companies have similar asset values, their accounting systems and audit risks can be very different.
Businesses with high transaction volumes may therefore require more extensive audit procedures.
4. Quality of Accounting Records
The condition of the company’s accounting records is one of the most important practical factors affecting audit efficiency.
Well-maintained accounts may include:
Properly reconciled bank accounts.
Accurate receivable listings.
Accurate payable listings.
Updated fixed asset registers.
Proper inventory records.
Supporting invoices.
Documented loan balances.
Clear related-party schedules.
Properly maintained general ledgers.
When these records are organised, auditors can obtain supporting information more efficiently.
Poor accounting records can make the process considerably more difficult.
For example, if bank balances do not reconcile with the general ledger, management may need to investigate discrepancies before audit procedures can be completed.
Similarly, unexplained balances in receivables, payables or director accounts may require additional investigation.
Good bookkeeping therefore does more than help a company understand its finances. It can also make year-end financial reporting and audit work substantially smoother.
5. Inventory
Inventory can add complexity to an audit.
Businesses dealing with physical goods may need to maintain accurate records showing:
Inventory quantities.
Inventory locations.
Purchase costs.
Costing methods.
Damaged goods.
Slow-moving inventory.
Obsolete stock.
Goods in transit.
Depending on the circumstances, auditors may also need to perform procedures relating to physical inventory counts.
A company with one small inventory location may present a different audit situation from a distributor operating several warehouses.
Businesses carrying substantial inventory should therefore mention this when requesting an audit quotation.
6. Number of Bank Accounts
A company operating one or two Singapore bank accounts may be relatively straightforward.
Another company may maintain:
Multiple SGD accounts.
USD accounts.
EUR accounts.
Payment gateway balances.
Fixed deposits.
Foreign bank accounts.
Other financial accounts.
The auditor may need to perform procedures over relevant cash and bank balances.
A large number of accounts can therefore increase the amount of work required.
7. Overseas Operations
International operations may increase audit complexity.
For example, a Singapore company might:
Operate overseas branches.
Own foreign subsidiaries.
Purchase goods internationally.
Receive revenue in multiple currencies.
Maintain foreign bank accounts.
Enter into transactions with overseas related parties.
Different currencies, jurisdictions and corporate structures can increase financial reporting complexity.
A simple Singapore SME operating entirely domestically will generally have a different audit profile from an international corporate group.
8. Number of Subsidiaries
Group structures are another major consideration.
A standalone Singapore company may require only one set of financial statements.
A holding company may own multiple subsidiaries.
Depending on the circumstances, consolidated financial statements and additional audit procedures may be required.
The audit firm may need to consider:
Subsidiary financial information.
Intercompany transactions.
Intercompany balances.
Consolidation adjustments.
Group accounting policies.
Foreign operations.
Non-controlling interests.
The larger and more complicated the group, the greater the potential audit workload.
9. Related-Party Transactions
Transactions between related parties can require particular attention.
Examples may include transactions involving:
Directors.
Shareholders.
Subsidiaries.
Holding companies.
Sister companies.
Businesses controlled by related individuals.
Common balances can include:
Amounts due from directors.
Amounts due to directors.
Intercompany loans.
Management fees.
Shared expenses.
Related-party sales and purchases.
Companies should maintain proper documentation for these transactions.
Poorly documented related-party transactions can create difficulties during the audit process.
10. Fixed Assets
Businesses with significant fixed assets may require more extensive audit work than businesses with very few assets.
Examples include:
Office equipment.
Computers.
Vehicles.
Manufacturing machinery.
Renovation assets.
Furniture.
Commercial property.
Companies should maintain an updated fixed asset register showing relevant information such as acquisition dates, costs, depreciation and disposals.
Where fixed asset records are incomplete, additional reconciliation work may be necessary.
11. Loans and Financing
Borrowings can also increase financial statement complexity.
Companies may have:
Bank loans.
Shareholder loans.
Director loans.
Hire-purchase arrangements.
Other financing facilities.
Auditors may need to examine supporting agreements and relevant accounting treatment.
Businesses with multiple financing arrangements should maintain proper records and documentation throughout the year.
12. Industry of the Company
Audit complexity can differ considerably between industries.
A professional services company might have relatively straightforward operations.
Other businesses may involve more complex accounting considerations.
Examples can include:
Construction companies.
Property businesses.
Investment companies.
Manufacturing companies.
Retailers.
Importers and exporters.
Technology businesses.
Shipping companies.
Charities.
Non-profit organisations.
Companies holding investments.
Each industry can present different financial reporting and audit considerations.
An audit firm with experience in the relevant sector may therefore be helpful.
13. Audit Risk
Auditors plan their work based partly on risk.
Certain areas of the financial statements may present a greater risk of material misstatement.
Depending on the business, these might include:
Revenue recognition.
Inventory valuation.
Recoverability of receivables.
Asset impairment.
Accounting estimates.
Related-party transactions.
Going concern.
Complex financial instruments.
The higher the assessed risk in a particular area, the more extensive the audit response may need to be.
This is another reason two similarly sized companies may have different audit fees.
14. First-Year Audits
A first-year audit may require additional attention.
The auditor needs to understand the company, its business processes, accounting systems and relevant historical information.
Opening balances may also require consideration.
Companies undergoing their first statutory audit should therefore start preparing early.
Waiting until shortly before a filing deadline can create unnecessary pressure for both management and the audit team.
15. Urgent Audit Deadlines
Timing can affect audit engagements.
A company that approaches an audit firm well before its reporting deadline gives the firm more flexibility to plan resources.
By contrast, a business requesting an urgent audit with a very short deadline may create significant scheduling challenges.
Companies should therefore avoid treating the audit as a last-minute compliance exercise.
Ideally, discussions with the audit firm should begin well before the company’s reporting and filing deadlines.
What Information Is Usually Needed for an Audit Quotation?
When requesting an audit quotation, businesses should provide enough information for the audit firm to understand the engagement.
The firm may request information such as:
Company name.
Principal business activity.
Financial year-end.
Annual revenue.
Total assets.
Number of employees.
Number of bank accounts.
Whether inventory is held.
Number of subsidiaries.
Whether consolidated financial statements are required.
Whether overseas operations exist.
Previous audited financial statements.
Current management accounts.
Trial balance.
Expected audit completion date.
Whether this is the company’s first audit.
Providing accurate information helps the audit firm estimate the amount of work required.
Why Extremely Cheap Audit Fees Should Be Considered Carefully
Cost is naturally important to SMEs.
However, selecting an auditor purely because the quotation is the cheapest may not always be the most appropriate approach.
A statutory audit is a regulated professional engagement requiring appropriate planning, documentation, evidence and professional judgement.
Companies may therefore want to consider several factors alongside price.
These include:
Relevant experience.
Industry knowledge.
Responsiveness.
Communication.
Availability.
Audit team capacity.
Understanding of SME businesses.
Ability to meet deadlines.
Professional reputation.
An audit firm should have sufficient resources to perform the engagement appropriately.
How Can SMEs Keep Audit Costs Manageable?
Although businesses cannot eliminate the work required for a statutory audit, they can make the process considerably more efficient.
Maintain Monthly Accounts
Do not wait until year-end to prepare an entire year’s accounts.
Regular bookkeeping allows errors to be identified earlier.
Perform Bank Reconciliations
Every material bank account should be regularly reconciled against the accounting records.
Unreconciled differences should be investigated promptly.
Keep Supporting Documents
Maintain organised records for significant transactions.
Depending on the business, these may include:
Invoices.
Receipts.
Contracts.
Loan agreements.
Bank statements.
Purchase orders.
Payroll information.
Lease agreements.
Maintain a Fixed Asset Register
The register should be kept current when assets are purchased, disposed of or written off.
Reconcile Receivables
Management should understand outstanding customer balances and investigate long-overdue amounts.
Reconcile Payables
Supplier balances should similarly be reviewed.
Maintain Inventory Records
Businesses holding inventory should have systems capable of tracking quantities and values accurately.
Document Related-Party Transactions
Transactions involving directors, shareholders and related companies should be clearly recorded.
Respond Promptly to Audit Queries
Delays often occur because supporting documents or explanations are not provided promptly.
Assigning someone internally to coordinate audit requests can improve efficiency.
What Is an Audit Request List?
Before or during the audit, the auditor may provide management with a list of documents and schedules required.
This is sometimes called a prepared-by-client list or audit request list.
Typical requests may include:
Trial balance.
General ledger.
Bank statements.
Bank reconciliations.
Trade receivable ageing.
Trade payable ageing.
Fixed asset schedule.
Inventory listing.
Loan schedules.
Payroll information.
Related-party schedules.
Corporate information.
Major contracts.
Tax information.
GST records where applicable.
Management should review the list carefully and prepare complete information before audit fieldwork begins.
Should You Change Audit Firms Just to Save Money?
Businesses are generally free to consider alternative audit firms subject to the applicable appointment, resignation, removal and professional requirements.
However, changing auditors should not be viewed purely as a price negotiation exercise.
Companies should consider:
Quality of service.
Knowledge of the business.
Communication.
Continuity.
Industry experience.
Audit timetable.
Professional fees.
A lower quotation can be attractive, but businesses should understand what is included and whether the proposed firm has the resources and experience required for the engagement.
Audit Fee vs Accounting Fee
Businesses sometimes assume that an audit quotation includes bookkeeping or preparation of accounting records.
These are separate services.
An accounting fee generally relates to services such as bookkeeping, preparation of accounts and financial reporting support.
An audit fee relates to the independent external audit.
If the company’s accounting records are incomplete, additional accounting work may need to be completed before the audit can proceed efficiently.
SMEs should therefore clarify the scope of any quotation they receive.
Audit Fee vs Tax Fee
Corporate income tax compliance is also separate from statutory audit work.
Tax services may include:
Preparation of tax computations.
Estimated Chargeable Income matters.
Corporate income tax returns.
Tax correspondence.
Other tax advisory or compliance services.
Businesses should check whether their quotation covers only audit services or includes other professional services.
Are Audit Fees Tax Deductible in Singapore?
The tax treatment of professional expenses depends on the nature and circumstances of the expenditure and the applicable Singapore tax rules.
Businesses should therefore check the appropriate tax treatment with their tax professional rather than automatically assuming that every professional fee is deductible.
Do Dormant Companies Need an Audit?
Dormant companies may qualify for audit exemption where the applicable statutory conditions are satisfied.
However, business owners should not assume that simply having little or no revenue automatically makes a company dormant for statutory purposes.
The company’s transactions and circumstances should be reviewed against the relevant legal requirements.
Can an Audit-Exempt Company Still Choose to Have an Audit?
Yes.
Some businesses voluntarily obtain audited financial statements even where they qualify for statutory audit exemption.
Reasons may include requirements or expectations from:
Banks.
Investors.
Shareholders.
Parent companies.
Potential buyers.
Major customers.
Government bodies.
Other stakeholders.
For example, a company preparing for an acquisition or external investment may decide that independently audited financial statements are commercially useful.
Is a More Expensive Audit Necessarily Better?
Not necessarily.
Audit fees should be proportionate to the nature and complexity of the engagement.
A higher fee does not automatically guarantee a better experience, just as the lowest quotation does not automatically mean poor quality.
Businesses should evaluate the overall proposal.
Important considerations include whether the auditor understands the business, has suitable experience, communicates clearly and has sufficient resources to meet the required timetable.
Questions to Ask Before Appointing an Audit Firm
Before engaging an auditor, an SME may want to ask:
What information is required before the audit begins?
What is included in the audit quotation?
Are there circumstances where additional fees could arise?
What is the expected audit timeline?
Who will be responsible for the engagement?
Does the firm have experience auditing companies in our industry?
What accounting schedules should we prepare?
When should we provide our year-end accounts?
How will audit queries be communicated?
Clear expectations at the beginning can reduce misunderstandings later.
How Long Does an SME Audit Take?
There is no universal timeframe for completing an audit.
A straightforward SME with complete records may progress much more efficiently than a company with unresolved accounting issues.
Factors affecting timing include:
Company size.
Transaction volume.
Accounting complexity.
Availability of documents.
Number of audit adjustments.
Responsiveness of management.
Group structure.
Inventory.
External confirmations.
Reporting deadlines.
The best way to shorten the overall process is usually to ensure that the accounts are complete and supporting documents are ready before substantial audit work begins.
What Happens If the Auditor Finds Accounting Errors?
Auditors may identify misstatements or other issues during their work.
Management may need to consider whether adjustments to the financial statements are appropriate.
The significance of an identified issue depends on factors including its amount, nature and circumstances.
Not every small difference necessarily results in a change to the audit opinion.
Auditors apply the concept of materiality when planning and performing an audit and evaluating identified misstatements.
Why Audit Preparation Matters
For SMEs, audit preparation can make a significant difference to the overall experience.
Imagine two companies with essentially identical operations.
The first has:
Updated accounts.
Reconciled banks.
Organised invoices.
Complete receivable schedules.
Complete payable schedules.
An updated fixed asset register.
Clear explanations for unusual transactions.
The second has:
Unreconciled bank balances.
Missing invoices.
Old receivable balances.
Unexplained director accounts.
Incomplete fixed asset records.
Missing contracts.
The audit of the second company is likely to involve substantially more back-and-forth communication and management time.
Strong accounting processes throughout the year therefore make the year-end audit easier for everyone involved.
Frequently Asked Questions About Audit Costs in Singapore
How much should an SME budget for an audit?
There is no single appropriate amount for every SME. Audit fees depend on the size, transaction volume, complexity, risk profile and quality of the company’s accounting records.
The most reliable approach is to provide an audit firm with sufficient information to obtain a quotation based on the actual business.
Does higher revenue always mean a higher audit fee?
Not necessarily.
Revenue is an important indicator of business size, but transaction volume and complexity can be equally important.
A high-value professional services business with relatively few transactions may present a very different audit profile from a high-volume retailer.
Can poor bookkeeping increase the cost of an audit?
Poor accounting records can increase the amount of work required from the company and potentially affect the engagement process.
Keeping complete and properly reconciled records generally helps the audit proceed more efficiently.
Is accounting included in the audit fee?
Not necessarily.
Accounting and auditing are different services. Businesses should clarify exactly what is included in a quotation.
Is tax filing included in an audit?
Generally, audit and tax compliance are separate professional services unless a particular engagement explicitly includes additional services.
Do all Singapore companies require an audit?
No. Qualifying private companies may be exempt from statutory audit under Singapore’s small-company audit exemption framework.
Can I ask several audit firms for quotations?
Yes. Businesses can compare proposals from different firms before deciding which auditor to appoint, subject to the relevant professional and statutory requirements.
Choosing an Audit Firm in Singapore
For an SME, audit fees are important, but they should be considered alongside service quality and professional capability.
A suitable audit firm should understand the company’s operations and be able to clearly communicate what information is required.
SMEs may particularly value an audit firm that understands owner-managed businesses because smaller companies often have different accounting systems and internal processes from large multinational corporations.
Industry familiarity can also be useful.
For example, the accounting and audit considerations of a construction company can differ substantially from those of a professional services business, charity, investment holding company or retailer.
Planning Ahead Can Reduce Audit Stress
The worst time to start thinking about an audit is immediately before a deadline.
Businesses that know an audit will be required should plan ahead.
Several months before the expected audit period, management can review:
Whether bookkeeping is up to date.
Whether bank reconciliations have been completed.
Whether old receivable balances require investigation.
Whether supplier balances reconcile.
Whether fixed assets have been properly recorded.
Whether inventory records are complete.
Whether related-party balances are supported.
Whether major agreements are readily available.
Resolving these matters before the audit starts can prevent avoidable delays.
Conclusion
So, how much does an audit cost in Singapore?
There is no universal answer because audit fees depend on the actual amount and complexity of work required.
Annual revenue is only one consideration.
The auditor may also need to consider the company’s total assets, transaction volume, number of bank accounts, inventory, subsidiaries, overseas operations, financing arrangements, related-party transactions, accounting systems and quality of financial records.
For SMEs, one of the most effective ways to achieve a smoother and more efficient audit is to maintain good accounting records throughout the year.
Bank accounts should be reconciled, supporting documents should be retained, receivables and payables should be reviewed, and major balance-sheet accounts should have appropriate supporting schedules.
Businesses should also approach their auditor early rather than waiting until reporting deadlines are approaching.
When comparing audit firms in Singapore, SMEs should consider more than the headline audit fee. Relevant industry experience, communication, availability, professionalism and the ability to meet the required reporting timetable can all be important considerations.
Ultimately, the most meaningful way to determine the cost of an audit is to obtain a quotation based on the company’s actual financial information and operations.
For businesses looking for SME audit services in Singapore, providing the prospective audit firm with the latest management accounts, annual revenue, total assets, business activity and details of the corporate structure can help the firm understand the engagement and provide an appropriate quotation.
Find out more at Koh & Lim Audit PAC