A new small company concept was introduced for exemprtion from statutory audit.
FAQ 1. How does the small company criteria apply and what is the criteria to enjoy small company exemption?
To determine if a company qualifies as a small company, the company must assess if it fulfils the requirements in each of the years. E.g. in order to determine whether a company would qualify in FY2021, the company should look at whether it is a private company in FY2021 and whether it meets the 2 out of 3 quantitative criteria in FY2021. If it does not qualify for that year, it will still get a chance to qualify for FY2022, if it is a private company and meets the 2 out of 3 quantitative criteria in FY2022.
- total annual revenue ≤ $10m
- total assets ≤ $10m
- of employees ≤ 50
FAQ 2. How do companies determine their total assets and total revenue?
The total revenue and total assets of a company would be determined by the accounting standards and what appears as the total revenue or total assets in the financial statements of the company.
FAQ 3. How do companies determine their number of employees?
The number of employees is based on the number of full-time employees employed by the company at the end of the financial year.
FAQ 4. If a company has corporate shareholders and meet the criteria, can they enjoy the small company audit exemption?
There is no longer a requirement that the company has to be an exempt private company (one of the requirements for which is that there is no corporate shareholder) to qualify for the audit exemption. A private company which has corporate shareholders but fulfils the criteria can be entitled to the small company audit exemption.
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