Effective period and the complete test
Audit relief applies to financial years beginning on or after 1 July 2015. It replaces the former audit test for EPCs with revenue no more than S$5 million, rather than abolishing EPC status. A company must be private in the relevant year and meet at least two of three conditions in the immediately preceding two consecutive financial years: revenue no more than S$10 million, assets no more than S$10 million and no more than fifty employees. Revenue and assets follow the accounting standards and financial statements; employees are full-time staff at year-end. Having corporate shareholders does not prevent a private company from qualifying.
Group scope and continuity
A group member must itself qualify and the entire group must meet the same two-out-of-three thresholds on a consolidated basis for the two preceding consecutive years. Only Singapore-incorporated companies claim relief, but foreign group members count. Use the foreign parent’s consolidated statements and relevant standards; if none exist, aggregate every group member’s revenue and assets. Established qualification continues until private status is lost at any time or the quantitative criteria are failed for the two preceding consecutive years. Small-group continuity follows the quantitative rule. Audit of the parent does not exempt a small subsidiary in a group that is not small.
The first two years of transition or incorporation
An existing company can qualify in its first or second financial year starting on or after implementation by satisfying that year’s conditions. A company incorporated on or after 1 July 2015 similarly tests its first and second years separately. Failure in the first does not prevent second-year qualification. The illustrations assume continuing private-company status and FY2015 beginning on or after implementation; they do not alter every company’s financial-year calendar.
Transition examples 1a and 1b
In example 1a, quantitative results for FY2015–FY2020 are pass, fail, pass, fail, fail, pass. Small-company status is yes, yes, yes, yes, yes, no. Status gained in 2015 survives isolated failure, but failures in 2018 and 2019 remove status in 2020 despite improvement that year. In example 1b, quantitative results are fail, pass, pass, fail, fail, pass, while status is no, yes, yes, yes, yes, no. The second transition year permits qualification in 2016 despite the first-year failure; the later pair of failures again removes status in 2020. Passing the current year alone does not cancel the effect of the prior-year pair.
Established-company examples 2a and 2b
Example 2a has quantitative results of pass, fail, pass, fail, fail, pass for FY2017–FY2022. With 2015 and 2016 already qualifying and small status in 2016, subsequent status is yes, yes, yes, yes, yes, no; failures in 2020 and 2021 remove eligibility in 2022. Example 2b has results pass, pass, pass, fail, fail, pass. Since 2015 and 2016 failed and 2016 was not small, status is no, no, yes, yes, yes, no. Improvement in 2017 alone cannot establish eligibility in 2017 or 2018; qualifying 2017 and 2018 together establish status in 2019. The later failures remove it in 2022.
Example 2c: losing and regaining status
Example 2c starts with qualifying 2015 and 2016 and small status in 2016. Results for FY2017–FY2022 are fail, fail, pass, pass, pass, pass, while status is yes, yes, no, no, yes, yes. The first pair of failures removes eligibility in 2019. Although 2019 and 2020 improve, they first establish requalification in 2021, which continues into 2022. Both loss and requalification therefore require the appropriate preceding-year analysis rather than a copy of current-year results.
Audit relief does not settle financial-statement filing
The source expressly states that small-company criteria do not change financial-statement filing duties, which depend on solvent-EPC status under the described regime. Its FAQs repeat the measurement, transition, foreign-group and corporate-shareholder distinctions. The official PDF’s illustrations were reproduced with ISCA permission. This article independently explains their numerical sequences instead of reproducing the original panels.
Official source
This article independently explains the substantive contents of the official PDF, including the relevant conditions, procedures and annexes. The linked document remains the authoritative source for its original wording, and later changes should be checked separately.
Read the official PDF ↗