When seeking professional financial services, many businesses in Singapore often face a choice between hiring an audit firm or an accounting firm. While both play vital roles in maintaining a company’s financial health, their functions, focus areas, and benefits differ. Understanding these differences can help businesses make informed decisions that meet their needs.
The Role of an Audit Firm
Audit firms in Singapore specialise in reviewing financial records to ensure compliance with regulations. Their primary function is to examine whether a company’s financial statements present a true and fair view of its financial position. Auditors follow strict standards and work independently to provide an unbiased opinion. The process involves identifying potential discrepancies, reviewing internal controls, and assessing compliance with local financial reporting frameworks.
Auditors have no role in the day-to-day bookkeeping or financial management of a business. Instead, they focus on verifying the accuracy of the financial records prepared by an accounting firm or the company’s internal accountants. Engaging an audit firm in Singapore is often mandatory for businesses of a certain size, as stipulated by the Companies Act.
The benefit of hiring an audit firm lies in its ability to enhance credibility. Investors, creditors, and stakeholders often rely on audited financial statements to make decisions. Having audited accounts demonstrates a business’s commitment to transparency, which can boost its reputation and credibility in the market. Audit services also reduce the risk of legal issues by ensuring financial statements comply with Singapore’s statutory requirements.
What an Accounting Firm Offers
An accounting firm provides a broader scope of services than an audit firm. Accountants in Singapore handle daily financial transactions, such as bookkeeping, payroll, tax filings, and preparing financial reports. Their role is integral to a company’s operational success as they maintain accurate financial records and assist with strategic planning.
Accounting firms offer more than just record-keeping; they play an active role in financial planning, helping businesses to manage cash flow, reduce expenses, and optimise their tax positions. Accountants work closely with management to ensure financial goals are met and offer advice on long-term financial strategies.
Choosing an accounting firm can be more beneficial for businesses looking for ongoing financial management services. They provide support on a regular basis, making them crucial for SMEs that may not have the resources to employ a full-time finance team. Additionally, accounting firms in Singapore assist with tax planning, ensuring that businesses remain compliant while minimising their tax liabilities.
Key Differences in Services
The primary difference between hiring an audit firm and an accounting firm lies in their services. While both manage a business’s financial health, their scope is distinct. An audit firm focuses on evaluating and verifying the accuracy of financial records, ensuring compliance with local laws and regulations. In contrast, accounting firms provide comprehensive financial management services, including day-to-day operations, tax filings, and financial reporting.
Another distinction is the frequency of services provided. Audit firms typically engage with businesses annually or bi-annually, depending on statutory requirements. Their work is more focused on reviewing financial statements from a regulatory perspective. Accounting firms, on the other hand, work continuously with businesses, managing everything from payroll to financial planning throughout the year.
Businesses may require an audit and an accounting firm, but the type of services they choose will depend on their needs. Large organisations that require statutory audits will benefit from hiring an audit firm, while smaller businesses may focus more on hiring accountants in Singapore for their operational needs.
When to Hire Each
Deciding whether to hire an audit firm or an accounting firm depends largely on a company’s size and financial complexity. Large corporations that require regular audits by law must engage an audit firm in Singapore to meet their statutory requirements. These businesses also benefit from an independent review of their financial records to maintain trust with stakeholders.
Smaller companies that do not meet the audit threshold may not require audit services regularly. Instead, they benefit more from working with an accounting firm. Accountants in Singapore are essential for managing financial statements, filing tax returns, and advising on business growth strategies.
In some cases, companies may choose to work with both types of firms. For example, a business may engage an accounting firm for daily financial management while relying on an audit firm to provide independent audits annually. This dual approach ensures compliance with regulatory standards while addressing operational financial needs.
Conclusion
Audit and accounting firms offer valuable services to businesses, but their roles are distinct. Audit firms focus on providing independent verification of financial statements, ensuring compliance with regulations. Accounting firms, meanwhile, offer a broad range of financial management services that support day-to-day operations and long-term planning. Deciding which service to choose depends on the size, nature, and financial needs of the business.
For those seeking professional accountants in Singapore, Credo Assurance offers expert accounting services to help manage your financial records, provide tax advice, and ensure that your business remains compliant with local regulations. Contact us today.
