Importance of Singapore Compilation of Accounts
Compilation of accounts Singapore means unaudited financial statements of a private company. Profit and loss statements, balance sheet and financial statement are compiled to give an outlook on the company’s financial standing. This has been going on since 2004 after the introduction of the current Singapore Companies Act Chapter 50, private companies that met several criteria were exempted from presenting audited reports.
Reporting on the financial performance is a necessity rather than a choice for all businesses in Singapore, regardless of their size. Be it a private enterprise, a public firm or a nonprofit organization, it is important for them to create financial reports to be presented at their annual general meetings. In addition, they need quarterly or mid-year reports to help the owners and the managers make informed decisions regarding the various operations of the company.
Anytime they are accessing credit services, most creditors will rely on the information provided in the reports. Individuals too require the reports, to know whether the firm is worthy investing their money on. Compilation of accounts Singapore is necessary for private and public companies and businesses for the aforementioned reasons.
Who should go for compilation of accounts Singapore?
Accounting services can be in three forms namely:
Each of the services is geared towards meeting a certain need. Usually, a compilation of accounts is needed for small businesses or privately owned firms in Singapore and in particular those that require help in preparing financial statements.
Compilation is necessary for the entities that intend to present their financial report to third parties. The outside parties could be like for compliance purpose to the local authorities of Singapore or even creditors. Lastly, business owners who are never actively involved in the management of their businesses may call for a compilation of the company’s accounts to understand their company’s financial position.
What does compilation of accounts Singapore entail?
Compilation of accounts in Singapore is done by an accredited accounting firm through a seasoned CPA using the information provided by the company’s management. Using the accounting data provided, they can produce monthly, quarterly or annual financial reports, depending on the requirements of the client. However, they rarely do any probing with the management, unless they notice that the information provided is insufficient or has errors. It is quite different from auditing where there is consistent interaction between the CPA, management and the staff.
After the compilation of accounts, these outsourced accounting firms will proofread the financial statements to ensure that there are no errors. Then, they create a standard report to affirm that the financial reports were compiled, but attach no opinions since the information was neither reviewed nor audited.
Not all private companies qualify for compilation of accounts Singapore
To qualify for compilation of accounts Singapore, the company needs to fulfill the following four conditions and if it fails to meet one of them, the company must hire an auditor
- To qualify for the compilation of accounts Singapore, a company must be 100% wholly owned by individuals, no corporations.
- The company’s annual revenue must not exceed SGD$5 million dollars
- Must have no more than 20 individual shareholders
- There must be no shareholder with more than 5% of company stake who has asked for an audit
Compilation of accounts Singapore is important for private companies because:
However, for the business to be successful, compilation is not enough. They need to outsource auditing and reviewing services from a reliable firm.
Last but not least, compilation of accounts is mandatory for all companies in Singapore, as required by the authorities of Singapore like ACRA and IRAS. A company needs to be in compliance and prepare the Singapore compilation of accounts. Failure to comply would lead to fines and penalties incurred.
J Accounting Services would like to remind the public on the importance of an unaudited financial statements compilation of accounts report. If you need help in this area, you will be happy to know that J Accounting Services do offer you with such a service.