What to Expect During a Financial Audit in Singapore

A financial audit can sound intimidating for many business owners, especially those going through the process for the first time. However, when managed with the right expectations and preparation, it becomes a valuable exercise that strengthens your company’s financial health and regulatory compliance. Whether you’re running an SME or a growing enterprise in Singapore, understanding what to expect during a financial audit will help you navigate the process with confidence.

In this guide, we will walk you through the audit journey—what it involves, why it matters, and how professional audit services Singapore firms like https://www.auditservices.sg can make the process efficient and beneficial.

What Is a Financial Audit?

A financial audit is an independent examination of a company’s financial statements and related disclosures by a licensed public accounting firm. The primary goal is to determine whether the financial statements are prepared in accordance with applicable accounting standards, such as the Singapore Financial Reporting Standards (SFRS).

Auditors also assess the accuracy of the company’s books, the robustness of its internal controls, and the consistency of its financial reporting.

When Is a Financial Audit Required?

Under the Singapore Companies Act, a company is required to undergo a statutory audit if it does not qualify as a small company. A small company must meet at least two of the following three criteria:

• Total annual revenue ≤ S$10 million

• Total assets ≤ S$10 million

• Number of employees ≤ 50

If your company exceeds these thresholds for the past two consecutive financial years, a financial audit becomes mandatory.

Additionally, even exempt companies may voluntarily conduct financial audits for better financial management, to attract investors, or to prepare for business expansion.

Step-by-Step: What Happens During a Financial Audit?

Let’s explore what you can expect when your company undergoes a financial audit in Singapore.

1. Engagement & Planning

The first step is engaging an independent auditor or audit firm. This typically involves signing an engagement letter, which outlines the scope of work, timeline, fee structure, and responsibilities of both parties.

Once appointed, the audit team begins planning the audit. This phase includes:

• Understanding your business model, operations, and industry

• Identifying key financial risks

• Determining the materiality threshold (what qualifies as a significant error)

• Preparing an audit plan tailored to your business

A good audit firm—such as those listed at auditservices.sg—will proactively communicate during this phase to clarify any expectations and ensure smooth coordination.

2. Document Request List (Prepared by Client or PBC List)

Once the audit plan is set, your company will be asked to provide a list of financial documents. This is sometimes called a “Prepared by Client” (PBC) list. It typically includes:

• Financial statements

• General ledger and trial balance

• Bank statements and reconciliations

• Sales and purchase invoices

• Expense records and payroll summaries

• Inventory reports (if applicable)

• Tax filings and computations

• Fixed asset registers

• Loan agreements and contracts

Having these documents well-organized can significantly streamline the audit process.

3. Fieldwork and Testing

During the fieldwork phase, the auditors perform detailed testing and analysis of your financial records. This can happen on-site or remotely, depending on your business setup.

Some common audit procedures include:

• Substantive testing: Verifying income, expenses, assets, and liabilities

• Analytical procedures: Comparing financial data across periods to identify unusual fluctuations

• Internal control evaluation: Reviewing processes that prevent fraud or accounting errors

• Confirmation: Contacting third parties (e.g., banks or customers) to confirm balances

Auditors will document findings, raise queries, and seek clarification where necessary. It is important to respond promptly to auditor questions and provide requested documentation to avoid delays.

4. Audit Review and Draft Report

Once the fieldwork is complete, auditors will consolidate their findings and prepare a draft audit report. This includes:

• The auditor’s opinion on the financial statements

• Notes on any issues or misstatements found

• Recommendations for process or control improvements

Types of auditor opinions include:

• Unqualified (Clean): Financial statements are presented fairly and in accordance with SFRS.

• Qualified: There are minor issues, but overall statements are still fairly presented.

• Adverse: The financial statements are materially misstated and unreliable.

• Disclaimer: Auditors were unable to obtain sufficient evidence to form an opinion.

A clean opinion enhances your company’s credibility with banks, investors, and government bodies. Professional audit services Singapore providers help you work towards this outcome.

5. Final Audit Report & Filing

After management reviews and approves the audit findings, the auditors issue the final audit report. This report must be filed along with your company’s financial statements with ACRA during the annual return submission.

For companies also submitting corporate tax returns, audited accounts may need to be attached to Form C submitted to IRAS.

How Long Does a Financial Audit Take?

The duration of a financial audit can vary based on your company size, record-keeping quality, and the complexity of transactions. On average:

• SMEs: 2 to 6 weeks

• Mid-sized firms: 4 to 10 weeks

Delays usually occur when documents are missing or when accounts are not properly reconciled. To minimize delays, engage a reliable audit firm early and keep financial documentation well-organized year-round.

Common Challenges During a Financial Audit

While financial audits are routine, businesses may face challenges such as:

• Incomplete records or missing documentation

• Unreconciled bank statements or ledgers

• Inconsistent accounting practices

• Delayed responses to auditor queries

To avoid these, many businesses work with professional auditors found on https://www.auditservices.sg. These firms bring years of experience, ensure regulatory compliance, and offer valuable insights to improve financial operations.

Benefits of a Financial Audit

Aside from compliance, a financial audit brings several long-term benefits:

✅ Increased financial transparency
✅ Stronger internal controls
✅ Better investor and lender confidence
✅ Improved tax accuracy
✅ Readiness for business expansion or M&A activities

Final Thoughts

A financial audit is not just a statutory obligation—it is a critical part of maintaining transparency, improving operations, and preparing your business for growth. With the right partner, the audit process can be a smooth and even enlightening experience that adds real value to your company.

If your business is approaching the audit threshold or simply wants to build a strong financial foundation, now is the time to engage a professional audit firm. Visit
👉 https://www.auditservices.sg
to explore trusted audit professionals ready to assist your Singapore company.