Statutory Compliance Requirements (Cover)

Statutory Compliance

Bookkeeping

Bookkeeping is essential for all companies in Singapore and involves recording all business income and expenses, allowing businesses to keep track of their operating costs and business financial status.

As required by the Inland Revenue Authority of Singapore (IRAS), every company must maintain proper accounting records and supporting documents for five years.

Proper bookkeeping, alongside financial statements, is critical for business owners to make informed business decisions, especially in strategic planning and budgeting. Losses, fraud and cash flow issues can be foreseen and mitigated to reduce possible business risks or damages.

Reliable financial reporting also impacts business growth by equipping potential investors with increased transparency of its financial health, thereby influencing investment decisions.

 

Financial Statements

Financial statements are a set of reports that give a truthful and fair view of a company’s financial health. Company financial statements must be prepared and presented to its shareholders annually. It is also necessary for the filing of annual corporate tax returns. All Singapore incorporated companies, unless exempted, are required to file their financial statements with the Accounting and Corporate Regulatory Authority (ACRA).

To avoid erroneous reports, a competent and qualified accountant should be engaged to prepare the financial statements. Company directors are responsible for ensuring the financial statements for their companies comply with the Singapore Financial Reporting Standards (SFRS) issued by the Accounting Standards Council. They must have a sufficient understanding of the accounting standards and exercise diligence when reviewing the documents.

 

Audit

Except for companies exempted from audit, every company must appoint an auditor within three months from its incorporation and have its accounts audited annually.

Audited financial statements undergo independent checks and evaluations conducted by an approved auditor per the auditing standards and guidelines issued by the Institute of Singapore Chartered Accountants (ISCA). The key objective is to obtain reasonable assurance that the statements are free from material misstatements.

ACRA applies a ‘small company’ concept for audit exemption where only companies that fulfil the criteria are exempt from audit. Group companies (holding and subsidiary companies) can be considered for audit exemption if they are a ‘small company’ or ‘small group’. Any company or group that has been identified as a ‘small company’ or ‘small group’ respectively shall remain so in subsequent years until it gets disqualified.

 

Board Resolutions

A Board Resolution is a formal and legally binding document that records in writing the decisions made by the Board of Directors on matters concerning the company or by Shareholders on company equity affairs.

Such resolutions may include:
– Appointment of Company Officers (Directors, Secretaries, Auditors)
– Appointment of Nominee Director (if applicable)
– Allotment or Transfer of Shares
– Changes to Registered Office Address
– Changes to Financial Year End (FYE)

Approved board resolutions authorise the company to take action on the matters discussed and guide management decisions. All board resolutions must:
– Be prepared on the company letterhead
– Indicate the date, time and location of the board meeting held
– Outline the series of resolutions passed

 

Annual General Meeting (AGM) and Filing Annual Returns (AR)

Conducting an annual general meeting and filing annual returns are two main compliance requirements for Singapore companies under the Companies Act. Companies must hold their first AGM within 18 months of incorporation, with subsequent AGMs at intervals of not more than 15 months. A company’s financial year end will determine its AGM and AR due dates.

The purpose of an AGM is for shareholders to discuss, vote, and decide on the approval of financial statements, appointments or removal of directors and auditors, director fees, dividend declaration and more. All companies must hold an AGM unless they meet the exemption conditions or have dispensed with AGM.

To ensure up-to-date information on ACRA’s register, all Singapore-incorporated companies must file their annual returns with ACRA via Bizfile+. Other ad hoc filings, such as changes to company details, must also be completed within a set timeframe. Failure to file may result in penalties or enforcement action for company officers.

 

Tax

Under the Income Tax Act and GST Act, businesses liable to pay Income Tax and GST must retain records of their business transactions for five years from the relevant Year of Assessment (YA). These records include source documents, accounting ledgers and schedules, bank statements and other supporting documents of transactions connected with the business.

Business owners bear the onus of establishing effective record keeping systems to ensure reported company figures for Income Tax and GST purposes are accurate. Good record keeping practices are pertinent to proper bookkeeping and financial statements. It aids in generating detailed reports on the business’s financial status and reduces the time and costs involved in filing annual tax returns and quarterly GST reporting.

IRAS may request records for verification purposes unanticipatedly. Hence, companies must be able to produce sufficient supporting documents where relevant.

 

Conclusion

The list above covers the main statutory compliance requirements that new business owners must note. It is not exhaustive.

Still worried about your company’s compliance matters? Contact our team to find out how we can help you achieve peace of mind.