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Beginner’s Guide on Starting an Audit Firm in Singapore
Singapore, as a global commercial hub, has attracted entrepreneurs from all around the world to start a company. The city-state truly has it all – world-class infrastructure, high-speed connectivity, a diverse talent pool and a competitive tax regime. According to ACRA (Accounting and Corporate Regulatory Authority), Singapore has 544,957 business entities as of June 2021. Thus, there is a huge demand for professional audits and starting an audit firm can be a lucrative business idea.
Business success depends on many factors but usually hinges on how well a company deploys its financial strategies. Accurate records are necessary – by law and equity – to ensure transparency and confidence in business activities and transactions. This generates the need for professional audit firms as businesses seek to comply with Singapore’s statutory laws.
3E Accounting Singapore discusses some must-know knowledge in this guide about audit firms. You’ll get to know all about audits, including start-up requirements, compliance obligations and tips to grow your business. Our carefully curated read will ensure that you have a firm understanding before you begin your entrepreneurial journey.
What is an Audit Firm?
An audit firm provides accounting and auditing services to other companies. Such activity aims to promote good accounting standards, control organisational risk and inefficiencies, ensure compliance, etc. An audit firm can provide accounting, bookkeeping, or consulting services but tend to focus and specialise on audit work.
Generally, auditors are associated with the world of finance and accounting, where they play the role of financial gatekeepers. They are experts in this area and adopt an investigative position, verifying the work of accountants. The purpose of this scrutiny is to ensure the legality and validity of records, the accuracy of statements, etc. An audit is a ‘fair and true’ review of a company’s financial statements.
All auditors must issue an opinion or report known as the Audited Financial Statement. They are required to be objective and independent to promote efficient governance and compliance. Auditors can be:
- Internal Auditors – usually employees who review their company’s financial statements, risk, etc.
- External Auditors – hail from outside the company to handle accounting and financial statements.
Mention the word ‘audit’ and what usually comes to mind is a review of a company’s books. In all fairness, this is what audits generally are. However, there are quite a few types of audits that a company can do, and these include:
- Statutory and non-statutory financial audits
- Group or consolidated audits
- Tax and VAT inspection audits
- Business operations audits
- Risk management audits
- Systems performance and security audits
- Forensic audits
Why Start an Audit Firm in Singapore?
In Singapore, the Companies Act requires non-dormant businesses to submit their financial statements for annual company audits. Done by external auditors or a public accountant, statutory audits are the sole province of public accounting firms. Currently, there are only 443 public accounting firms in Singapore. Hence, starting an audit firm is a viable business idea that underpins the nation’s economic blueprint.
Singapore’s status as a business hub continues to drive the growth of the accounting services industry. Company audits follow the Singapore Standards on Auditing (SSA) set by the Institute of Singapore Chartered Accountants (ISCA). Exemption to statutory audits applies to companies that meet any two of the following criteria per financial year:
- Where the total annual revenue is below SGD 10 million.
- Where the total assets are below SGD 10 million.
- The number of employees is below 50.
Aside from the compulsory statutory audit, companies benefit from regular audits of their business. Such audits provide impartial information to owners and shareholders about the management and financial situations. Audit firms thus form the cornerstone of trust and obligation between all relevant stakeholders.
What Does an Audit Firm Need?
When considering the needs of an audit firm, the most obvious one has accountants and auditors. By law, only public accountants or registered agents can establish an auditing or accounting firm in Singapore. 3E Accounting Singapore is an example of a registered agency that can incorporate an audit firm. Our Singapore company incorporation services are comprehensive and customisable, enabling entrepreneurs to start up quickly and seamlessly.
You will need a solid business plan as an audit firm. Research and set your objectives, financial scope as well as target market. This will enable you to determine the services and pricing structure so that you retain a competitive edge. You should also invest in appropriate technology and software to ensure your business remains agile.
Requirements to Start an Audit Firm in Singapore
Businesses in Singapore have a legal requirement to register or incorporate their company structures. 3E Accounting’s guide to company registration offers an in-depth read of the incorporation process and business entities available.
Registration is usually a straightforward process and can be done online via ACRA’s business platform, BizFile. However, company incorporation is slightly more complex for firms that offer audits and reporting of financial statements.
Public accounting firms can only offer public accountancy services with an ACRA registration under the Accountants Act. The ACRA website specifies three types of accounting business structures that apply:
- Public Accounting Firms (PAFs) – sole proprietorship or partnership business structures.
- Accounting Limited Liability Partnerships (ALLPs) – incorporated LLP and has registration requirements under the LLP Act and the Accountants Act.
- Public Accounting Corporations (PACs) – Exempt Private Companies with registration requirements under the Companies Act and the Accountants Act.
You will need to log in to BizFile and first get approval for your company name. Next, you’ll need to apply to incorporate your firm. There are specific rules and procedures to be aware of, which include the following:
- The sole proprietor or two-thirds of the partnership or corporation must be a public accountant partner(s).
- At least one public accountant partner must be ordinarily resident in Singapore.
- Submit incorporation documents (Articles and Memorandum of Association, Partnership Deed, directors and shareholders information, registered business address, etc.)
- Pay the relevant fees.
- Register with the Inland Revenue Authority of Singapore (IRAS).
Your audit firm will receive a Unique Entity Number (UEN) and a free business profile upon successful registration. Opening a bank account, getting business insurance and setting up an office should also be on your to-do list. An easier option is engaging 3E Accounting – we’ll handle everything, giving you the luxury to focus on your business.
Approvals for an Audit Firm in Singapore
Any public accountant wishing to start a firm will need to meet certain criteria, which include the following:
- Aged over 21 years old with a minimum of three years of relevant audit working experience.
- Pass the Singapore Chartered Accountant Qualification and become a Charted Accountant (CA).
- Accreditation and qualifications from certified professional bodies such as ISCA, ACCA, CPA, etc.
- Membership with ISCA.
- Register as a Public Accountant.
- Proficient in local laws.
ACRA will also conduct periodic reviews of all public accountancy firms under its Practice Monitoring Programme. This ensures that all audit works comply with the SSA and other requirements.
Aside from these, you will need some essential licences and permits such as an advertising licence, etc. Depending on the location of your premises, you may need approval from the Urban Redevelopment Authority of Singapore (URA).
For professional help, contact a corporate service provider.
How to Grow Your Audit Firm
While there is good demand for auditors in Singapore, audit firms tend to face intense competition. As a modern audit firm, you’ll need to utilise contemporary tools and strategies to secure a larger market segment. A tactic that is currently trending is diversifying with a full complement of business intelligence services.
Hence, while you specialise in audit, you can also provide a comprehensive consultancy that analyses a company’s business outlay. As long as your primary objectives remain as auditing and reporting of financial statements, providing value-added services is acceptable. Further, investing in the latest technology and software can be advantageous and provide greater business potential. It can streamline, speed up, and automate data and transaction analytics, providing seamless solutions for your clients.
You might also want to consider ramping up your social media presence and introducing strategies such as subscription-based services. Stand out from the competition by providing and maintaining impeccable professional services, which can garner your referrals. Overall, focus on building customer loyalty with reliable audits and excellent service.
It’s a simple truth of the commercial world – the existence of business activities predicates the need for auditors. An audit firm will always have jobs to do, and it is considered a high yield industry. Auditors enjoy stable earning potential and have exciting careers that intersect with various disciplines and industries.
If you’re thinking of starting an audit firm, 3E Accounting Singapore is the exceptional corporate service provider you need. We provide comprehensive and multidisciplinary expertise – an all-in-one solution to the discerning entrepreneur. Contact us today for a 21st-century suite of solutions created uniquely just for you.