Key Takeaways: Appointment of auditors under Singapore Companies Act Exemption from auditors' appointment Powers and duties of auditors Remuneration of auditors Resignation and removal of auditors

1. How auditors are governed under
Singapore Companies Act?
CS Meenakshi Jayaraman

2. Credits and Acknowledgments
Sundar Rajan S
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3. 3
Legends used in the Presentation
Act Singapore Companies Act
AGM Annual General Meeting
FY Financial Year
LLP Limited Liability Partnership
Sec Section
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4. 4
Presentation Schema
Appointment of
auditors
Exemption from
appointment of
auditors
Exception to
exemption from
appointment of
auditors
Powers and duties
of auditors
Remuneration of
auditors
Appointment of
new auditor in
place of resigning
auditor
Resignation of
auditors
Removal of
auditors
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5. Appointment of auditors
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6. 6
How auditors are appointed under the Act?
Directors of a Company shall appoint an accounting entity or accounting entities
to be the auditor or auditors of the Company within 3 months from incorporation
Any auditor or auditors so appointed shall hold office until the conclusion of the
first AGM
A Company shall at each AGM appoint an accounting entity or accounting entities
to be the auditor or auditors of the Company, and any auditor or auditors so
appointed shall hold office until the conclusion of the next AGM
If the directors do not appoint an auditor or auditors as required above, the
Registrar may on the application in writing of any member of the Company make
the appointment
Sec 205

7. 7
What is meant by an Accounting entity?
 Accounting entity means a public accountant, an accounting corporation, an
accounting firm or an accounting LLP – Sec 4(1)
•A person who is registered or deemed to be registered
under the Accountants Act as a public accountant
Public
accountant
•A Company approved or deemed to be approved as an
accounting corporation under the Accountants Act
Accounting
corporation
•A firm approved or deemed to be approved as an
accounting firm under the Accountants Act
Accounting
firm
•A LLP approved as an accounting LLP under the Accountants
Act
Accounting
LLP

8. Exemption from appointment of auditors
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9. 9
A Company is dormant
during a period in
which no accounting
transaction occurs
A Company shall be
dormant from the time
of its formation or
since the end of the
previous financial year
The following Companies are exempt
from appointing auditors under the Act
1. Dormant Company 2. Small Company
A Company is a small Company if,
It is a private Company
throughout the financial
year; and
It satisfies any 2 of the following criteria for each of the 2 immediately
preceding financial year:
1. Company’s annual revenue is up to $10 million
2. Value of Company’s total assets is up to $10 million at the end of each FY
3. Has not more than 50 employees at the end of each FY
Sec 205B Sec 205C

10. Contd.
10
In case of a Company not completed 2 FYs since incorporation, then any 2 of such 3 criteria shall be
satisfied in respect of first or second FY as the case may be
Subsidiary Company shall be considered as a small Company if such Company is part of a small group
A group is considered as a small group if it satisfies, in aggregate, any 2 of the 3 criteria as mentioned
in previous slide for small Company (by replacing the word Company with group)

11. Exception to exemption from appointment of
auditors
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12. 12
and require that Company to lodge with him, within such time as may be specified in that notice,
audited financial statements and auditor’s report
by notice in writing to such Company (dormant or small Company) remove the exemption
provided under the Act with respect to appointment of auditors
Registrar may, if he is satisfied that there has been a breach of any provision of Sec 199 or 201 of
the Act or that it is otherwise in the public interest to do so
•Maintenance of accounting records and systems of controlSec 199
•Laying financial statements before AGM by directors of the CompanySec 201

13. Powers and duties of auditors
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14. 14
Powers of auditors
• Right of access at all times to the accounting and other records,
including registers, of the Company
• Entitled to require from any officer of the Company and any
auditor of a related Company such information and explanations
as he desires for the purposes of audit
• Auditor of a parent Company for which consolidated financial
statements are required has the right as mentioned in above two
points, with respect to subsidiary Company
• Entitled to attend any general meeting of the Company
• Receive all notices of, and other communications relating to, any
general meeting which a member is entitled to receive
• Right to be heard at any general meeting which he attends on
any part of the business of the meeting which concerns the
auditor in his capacity as auditor

15. 15
Duties of auditors
Report on whether the Financial Statements are in compliance with requirements of Accounting Standards
Report on whether the Financial Statements give a true and fair view of financial performance of the
Company or the group as the case may be
Report whether the accounting and other records required under the Act are properly kept
Report whether he has obtained all the information and explanations that he required
Report whether the returns received from branch offices of the Company are adequate
Immediate reporting of material breach by the Company to the Registrar
Immediate reporting of serious offence involving fraud or dishonesty to the Minister

16. Remuneration of auditors
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17. 17
Remuneration of the auditors of the Company shall be determined as follows:
In the case of an auditor appointed by the Company at a general meeting:
•It shall be fixed by the Company in general meeting or,
•If so authorised by the members at the last preceding AGM, fixed by the directors
In the case of an auditor appointed by the directors or by the Registrar:
•It shall be fixed by the directors or by the Registrar, as the case may be, and, if not so fixed,
shall be fixed as provided in previous point (in general meeting) as if the auditor had been
appointed by the Company

18. Contd.
18
Companies are required to disclose auditor remuneration in a general meeting if a request for
details of all payments paid to or receivable by the Company auditor is made by:
 At least 5% of the total number of members of the Company; or
 Shareholders who hold at least 5% of the total number of issued Company shares (excluding
treasury shares)
 Treasury shares are those shares acquired by a Company in accordance with
Sec(s) 76B to 76G of the Act
 In simple words, these are shares of the Company acquired by itself through
various modes

19. Appointment of new auditor in place of
resigning auditor
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20. 20
If an auditor of,
a non-public interest Company (other than a
subsidiary of a public interest Company) gives notice
of resignation under Sec 205AA(1); or
a public interest Company, or a subsidiary of a public
interest Company, gives notice of resignation under
Sec 205AB(1), and the Registrar approves the
resignation of the auditor under Sec 205AB(2)
Directors of the Company
shall perform the following:
1. Call a general meeting of the Company within 3 months of the auditor’s resignation, for the
purpose of appointing an auditor in place of the auditor who desires to resign or has resigned
2. Upon appointment of the new auditor, lodge with the Registrar a notification of such
appointment within 14 days of the appointment
Sec 205AF(1)

21. Contd.
21
If the directors of a Company fail to appoint an auditor in place of the auditor who
desires to resign or has resigned, Registrar may, on the application in writing of any
member of the Company, make the appointment – Sec 205AF(2)
Sec 205AF (1) & (2) shall not apply if the financial statements of the Company are not
required to be audited under this Act, or where the resigning auditor is not the sole
auditor of the Company
An auditor appointed in place of resigning auditor shall, unless he is removed or
resigns, hold office until the conclusion of the next AGM of the Company

22. Resignation of auditors
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23. Meaning of relevant terms
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•A Company which is listed or in the process of issuing its debt or
equity instruments for trading on an approved exchange in
Singapore; or
•Such other Company as the Minister may prescribe
Public interest
Company
•A Company other than a public interest Company
Non-public interest
Company

24. Resignation of non-public interest Company auditors – Sec 205AA
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An auditor of a non-public
interest Company (other
than a Company which is a
subsidiary of a public
interest Company)
may resign before the end
of the term of office for
which he was appointed
by giving the Company a
notice of resignation in
writing
Where a notice of resignation is given as stated above, the auditor’s term of office expires,
•at the end of the day on which notice is given to the Company; or
•if the notice specifies a time on a later day for the purpose, at that time
Within 14 days beginning on the date on which a Company receives a notice of
resignation as stated above,
the Company must lodge with the Registrar a notification of that fact
in such form as the Registrar may require

25. 25
Resignation of auditors of public interest Company or subsidiary of
public interest Company – Sec 205AB
An auditor of a public interest Company, or a subsidiary of a public interest Company, may by giving the Company
a notice of resignation in writing, resign before the end of the term of office for which he was appointed, if
the auditor has applied for consent from the Registrar to
the resignation and provided a written statement of his
reasons for his resignation and,
at or about the same time as the application, notified the
Company in writing of the application to the Registrar and
provided the Company with the written statement of his
reasons for his resignation; and
the consent of the Registrar has been given

26. Contd.
26
Registrar shall, as soon as practicable after receiving the application from the auditor, notify the auditor and the
Company whether it consents to the resignation of the auditor
Resignation of an auditor of a public interest Company, or subsidiary of a public interest Company, takes effect on
later of the following 3 days:
•on the day (if any) specified for the purpose in the notice of resignation;
•on the day on which the Registrar notifies the auditor and the Company of his consent to the resignation; or
•on the day (if any) fixed by the Registrar for the purpose

27. Removal of auditors
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28. 28
An auditor of a Company may be removed from office by resolution of the Company at a general
meeting of which special notice has been given, but not otherwise – Sec 205(4)
Where special notice of a resolution to remove an auditor is received by a Company
• it shall immediately send a copy of the notice to the auditor concerned and
to the Registrar; and
• the auditor may, within 7 days after the receipt by him of the copy of the notice, make
representations in writing to the Company (not exceeding a reasonable length) and
• request that, prior to the meeting at which the resolution is to be considered,
• a copy of the representations be sent by the Company to every member of the Company to
whom notice of the meeting is sent

29. Contd.
29
Unless the Registrar on the
application of the Company
otherwise orders,
the Company shall send a copy
of the representations as so
requested and the auditor may,
without prejudice to his right to
be heard orally, require that
the representations be read
out at the meeting
Where an auditor of a Company is removed from office in
pursuance of Sec 205(4)
 the Company may, at the meeting, by a resolution
passed by at least 75% of such members of the
Company
 as being entitled to do so vote in person or, where
proxies are allowed, by proxy
 immediately appoint another accounting entity
nominated at the meeting as auditor; or
 the meeting may be adjourned to a date not
earlier than 20 days and not later than 30 days
after the meeting
 and the Company may, by ordinary resolution,
appoint another accounting entity as auditor,
being an accounting entity
 notice of whose nomination as auditor has, at least
10 days before the resumption of the adjourned
meeting, been received by the Company
Sec 205(7)

30. 30
Contd.
A Company shall, immediately after the removal of an auditor from office in pursuance of Sec 205(4), give
notice in writing of the removal to the Registrar and,
if the Company does not appoint another auditor under Sec 205(7), the Registrar may appoint an auditor
An auditor appointed in pursuance of Sec 205 (7) or (8) shall hold office until the conclusion of the
next AGM of the Company – Sec 205(9)
Sec 205 (8)

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