Unaudited Financial Statements – Uses and Their Importance

For many business owners and management teams in Singapore, the term unaudited financial statements often surface during compliance, financing, or strategic planning discussions. While financial reports that external auditor audits are typically required for larger companies, unaudited financial statements remain essential for small and medium-sized enterprises (SMEs), startups, and exempt private companies.

In this article, we’ll explore what unaudited financial statements are, how they differ from audited statements, when to prepare them, and how they add value to a business. If you’re a business owner, finance professional, or part of a company’s management team, understanding this topic is crucial for effective financial planning and regulatory compliance in Singapore.

What Is an Unaudited Financial Statement?

Unaudited financial statements refer to financial reports prepared internally or by an external accountant that have not been independently audited. In some instances, an unaudited financial statement may also be known simply as management accounts. An unaudited financial statement may be prepared on a month, quarterly or yearly basis and is usually determined by the management of the company. There are many uses for an unaudited financial statements such business operations monitoring, decision making and conveying key financial information to stakeholders. A well prepared unaudited financial statements will typically include:

• Statement of Profit or Loss and Other Comprehensive Income (Income Statement)

• Statement of Financial Position (Balance Sheet)

• Statement of Changes in Equity

• Cash Flow Statement

• Notes to the financial statements

  
  

Although unaudited, these statements must still be prepared in accordance with Singapore Financial Reporting Standards (SFRS). They reflect a company's financial health, financial information and performance for a given financial year but do not carry the formal assurance that comes with an audit.

Audited vs Unaudited Financial Statements – What’s the key difference?

While both types of financial statements present similar financial data, the primary difference lies in the level of assurance provided.

In Singapore, companies classified as Exempt Private Companies (EPCs)—with annual revenue of less than SGD 10 million—are not required to have their financial reports audited. The detailed audit exemption criteria are as follows:

A company is generally exempt from audit if it meets two out of three of the following criteria: 

1. Total annual revenue: The company's total annual revenue does not exceed S$10 million.

2. Total number of employees: The company has 50 or fewer full-time employees.

3. Total assets: The company's total assets do not exceed S$10 million.

   
   

However, EPCs are still required to prepare unaudited financial statements for submission to ACRA during Annual General Meetings (AGMs) and annual return filings.

When Do I Need to Prepare Unaudited Financial Statements?

Even if your company is not subject to statutory audit requirements, preparing unaudited financial reports is often necessary for various reasons, including:

• Annual General Meetings (AGMs): Singapore-incorporated companies must present financial reports at the AGM. For EPCs, unaudited statements are acceptable.

• Filing with ACRA: The Companies Act mandates that financial statements be lodged when filing annual returns.

• Corporate Secretary Reporting: Ensuring statutory compliance in company secretarial matters often involves referencing financial performance.

• Bank Loans or Credit Applications: Financial institutions may require up-to-date unaudited statements to assess creditworthiness. As part of the regulatory requirements, banks must assess a company's financial health, finances, and business activities before engaging in business transactions.

• Tax Filing and IRAS Submissions: Unaudited annual statements provide the basis for corporate income tax calculations and annual returns filing.

Depending on the company magnitude, complexity and internal requirements, unaudited financial statements may be prepared on a monthly basis. For small companies, management may opt to prepare them on a quarterly or even a yearly basis.

Uses of Unaudited Financial Statements

Unaudited financial statements are not just for ticking compliance checkboxes. They serve as a strategic tool for financial management and planning. Here’s how:

1. Business Performance Monitoring

Regular preparation of unaudited financial reports helps business owners track revenues, costs, profit margins, and cash flow. This is critical for making informed decisions for business operations, including key financial activities and long-term planning. It also inevitably ensures that the accounting records maintained by the internal accounting team are up-to-date and accurate.

2. Facilitates External Financing and Banking facilities

Banks, investors, and grant agencies often request unaudited financial statements to evaluate a company’s financial health and financial standing. Such external scrutiny is common and may extend to key stakeholders such as customers and suppliers. A financial report will facilitate financial decisions and fulfill stakeholders' internal controls/internal processes. They may not require a full audit for smaller business loan applications or early-stage investments.

3. Informed Strategic Decisions

Management relies on accurate financial data to make informed choices on budgeting, expansion, staffing, and capital expenditure. Unaudited statements provide valuable insights that may not be possible if companies wait for year-end audits. Accurate accounting records may be the basic requirements in fulfilling business objectives.

4. Supports Tax Planning and Compliance

Accurate financial reporting ensures smooth tax filings with the Inland Revenue Authority of Singapore (IRAS) and helps avoid penalties or audits due to discrepancies. Accurate financial statements will ensure companies file the right corporate tax returns.

5. Investor and Stakeholder Communication

Startups and SMEs seeking seed or Series A funding often present unaudited statements during investor pitches to demonstrate viability and traction. Having a clear and well-prepared financial statement may boost stakeholder confidence. It also signals the firm's commitment to having well-defined reporting periods and meeting compliance requirements.

How an Accounting Service Provider Can Assist?

Engaging a professional accounting service provider is like having a business partner. As expert accountants, they can significantly ease the process of preparing accurate and timely unaudited financial statements. For many SMEs and exempt private companies in Singapore, managing internal accounting processes while keeping up with changing financial regulations can be both time-consuming and prone to error. This is where the value of outsourcing becomes clear.

A qualified accounting firm ensures that your financial statements are prepared in accordance with the Singapore Financial Reporting Standards (SFRS), offering clarity, consistency, and compliance. Experienced accountants can help interpret complex transactions, ensure proper classification of accounts, and maintain accurate ledgers—all of which contribute to reliable accounting reports.

Moreover, accounting service providers bring in-depth knowledge of local statutory requirements. They stay updated with the latest regulatory changes issued by ACRA and IRAS, ensuring your financials are compliant and strategically aligned with your tax obligations. This minimizes the risk of non-compliance penalties or delays in filing.

Moreover, most service providers use accounting software and adopt functional templates to prepare financial statements. The accounting process is incredibly streamlined and largely efficient, keeping costs at an affordable rate.

Partnering with a reliable accounting service provider transforms unaudited financial statements from a compliance necessity into a powerful business management tool. While ensuring compliance to accounting standards, service providers ensure accuracy of your financial records and is certainly a cost-effective way to take one's business forward.

How We Can Help

At OakTree Accounting & Corporate Solutions, we specialise in preparing professional unaudited financial statements in Singapore that comply with regulatory standards and add value to your business.

Our team of qualified accounting experts works closely with clients to ensure their financial statements:

• Are compliant with the relevant accounting framework

• Accurately reflect business performance for business decision-making

• Are suitable for submission to IRAS, banks, or potential investors

• Integrate seamlessly with your tax and corporate secretarial obligations

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We also provide end-to-end support that includes bookkeeping, GST reporting, corporate tax filing, and AGM support—allowing you to focus on growing your business while we handle your compliance.

Conclusion

Unaudited financial statements play a crucial role in the financial ecosystem of a business. While they may not carry the assurance of audited reports, their importance in internal decision-making, statutory compliance, financing, and strategic planning cannot be overstated.

If you’re a Singapore-based business owner or part of a management team, ensuring the accurate and timely preparation of unaudited financial statements is a step towards sustainable financial health.

Need assistance preparing your company’s unaudited financial statements? Contact us today to learn how we can support your accounting, taxation, and compliance needs.

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DISCLAIMER: The views and opinions expressed in this article are those of the author and do not necessarily represent the views and opinions of any individuals or organizations with which the author may be affiliated, either in a professional or personal capacity, unless explicitly stated.

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