Charities and non-profit organisations rely on public donations, grants, membership fees, sponsorships and other funding to carry out their work. They are accountable to donors, beneficiaries, members, funders, governing boards and regulators for how those funds are received and used.
An independent audit examines an organisation’s financial statements and supporting records. It can help provide confidence that the financial information has been prepared appropriately and that significant balances and transactions are supported by evidence.
Koh & Lim Audit PAC provides audit services for charities and non-profit organisations in Singapore. We work with charitable companies, institutions of a public character (IPCs), societies, trusts, foundations, community organisations and other not-for-profit entities.
Audit services for charities and non-profit organisations
An audit involves gathering evidence to assess whether an organisation’s financial statements are prepared, in all material respects, in accordance with the applicable financial reporting framework and relevant requirements.
The audit needs of a non-profit organisation depend on its legal structure, activities, funding sources and reporting obligations. A charity set up as a company limited by guarantee may have different audit requirements from a society or trust. An IPC may also have additional reporting responsibilities.
Our audit approach begins with understanding the organisation’s purpose, programmes, funding arrangements and financial processes. We plan procedures around its circumstances and communicate the information needed from management and the governing board.
When does a charity need an audit in Singapore?
Audit requirements depend on the organisation’s legal form and status. Under the current guidance from the Office of the Commissioner of Charities:
- IPCs and charities set up as companies limited by guarantee must have their financial statements audited by a public accountant.
- For other charities, including societies and trusts without IPC status, the audit or examination requirement depends on the organisation’s income or expenditure.
- Where the relevant income or expenditure exceeds S$500,000, the financial statements must be audited by a public accountant.
- Where the amount is between S$250,000 and S$500,000, the accounts may be examined by a suitably qualified independent person or audited by a public accountant.
- At S$250,000 or less, the accounts may be examined by an independent person with the requisite ability and practical experience, examined by a suitably qualified ISCA member, or audited by a public accountant.
The thresholds use the higher of gross income or total expenditure in any of the last three financial years. Organisations should check the current requirements for their specific structure and circumstances. charities.gov.sg
An independent examination is different from an audit. The appropriate engagement depends on the charity’s status, legal structure and financial scale. An organisation should confirm the applicable requirement before appointing an auditor or independent examiner.
Charities and IPCs must also submit their annual reports, financial statements and, where applicable, governance evaluation materials to the Commissioner of Charities within six months after the end of the financial year. charities.gov.sg
Understanding non-profit income and expenditure
Charities and non-profit organisations may receive income from individual donations, corporate contributions, fundraising events, grants, membership fees, service income, sponsorships and investment returns. Funds may be unrestricted, restricted to a particular purpose or subject to specific conditions.
During an audit, we may consider how the organisation:
- Records donations and fundraising receipts
- Tracks grants and restricted funds
- Accounts for fundraising events and related costs
- Records programme and beneficiary support expenses
- Reconciles online and third-party payment collections
- Tracks membership fees, subscriptions and service income
- Accounts for property, investments and other assets
- Records amounts due to suppliers, staff or beneficiaries
- Monitors funds transferred to other organisations
- Prepares financial statements and required disclosures
Clear records help show how funds moved from receipt to expenditure and how they supported the organisation’s objectives.
Donations, fundraising and sponsorships
Donations may be received through bank transfers, online payment platforms, cheque, cash, fundraising events or third-party fundraising services. The organisation should keep records that allow donations to be reconciled to bank receipts, payment processor statements, donor records and fundraising reports.
Some donations may be given for a specific purpose, such as supporting a particular programme, beneficiary group or project. The organisation should identify any restrictions or conditions attached to contributions and track the related income and expenditure separately where needed.
Fundraising events may involve ticket sales, sponsorships, auction proceeds, donated goods and event expenses. The audit may examine event budgets, vendor invoices, ticket records, payment processor reports, sponsorship agreements and receipts. These documents help reconcile gross fundraising proceeds with the costs incurred and the amount ultimately available for charitable activities.
Where fundraising is conducted through an external platform, the organisation should reconcile the platform’s gross collections, fees, refunds and net transfers. This makes it easier to trace funds from donors to the charity’s accounts.
Grants and restricted funds
Grants may come with conditions, reporting requirements, project periods or restrictions on how funds may be spent. The organisation should retain grant agreements, approval letters, budgets, milestone reports and supporting expense records.
The audit may consider whether grant income has been recorded in the appropriate period and whether any unspent amounts remain subject to conditions or repayment. The treatment depends on the grant terms and the applicable accounting framework.
Restricted funds should be monitored separately from general funds. A fund schedule may show the opening balance, contributions received, programme expenditure, transfers and closing balance for each material restricted fund. This helps management and the governing board understand whether funds have been used for the purposes agreed with donors or funders.
Where a charity distributes grants or provides support to other organisations, it should maintain records showing the approval, purpose, recipient, payment and any follow-up reporting required. These records are especially important where funds are passed on for use in a particular programme or location.
Programme expenses and support for beneficiaries
Non-profits may spend funds on community programmes, healthcare, education, social support, training, outreach, events or direct assistance to beneficiaries. The audit may examine budgets, programme approvals, invoices, payment records and evidence that the activity took place.
Organisations should have clear processes for approving expenditure and documenting how it relates to their objectives. This can include grant application records, beneficiary support schedules, attendance or activity records, procurement documents and post-programme reports, depending on the nature of the work.
Shared costs such as rent, utilities, administration and staff salaries may support several programmes. The organisation should use a reasonable and consistent method to allocate these costs when preparing programme information. The allocation basis should be documented and applied consistently.
The audit does not determine whether a programme has achieved its social or charitable impact. Its focus is the financial statements and the supporting evidence for financial transactions and balances.
Payroll, volunteers and related costs
Charities and non-profit organisations may employ staff, engage contractors or rely heavily on volunteers. The audit may review payroll, employer contributions, leave balances, bonuses, contractor fees and amounts payable at year-end.
Volunteer time is valuable to an organisation, but its financial reporting treatment depends on the applicable framework and the nature of the services. Organisations should maintain clear records of staff and contractor payments and distinguish them from volunteer contributions.
Where staff costs support several programmes or locations, the organisation may allocate payroll using time records, job descriptions or another consistent method. Clear supporting records help explain the figures presented in programme or management reports.
Cash, payment platforms and financial controls
Many charities receive donations through multiple channels, including websites, QR payments, fundraising platforms and event systems. The organisation should establish regular reconciliations between its donor records, payment platform statements and bank accounts.
Cash collections require particular care. Useful controls include recording cash received, using numbered receipts where appropriate, having two people verify collections and depositing funds promptly. The governing board should ensure that the organisation has safeguards for collecting, approving, paying and recording money.
During the audit, we may review bank reconciliations, payment approvals, online platform records, cash collection procedures and access to financial systems. The audit team may also examine whether transactions were authorised and recorded in the correct period.
Investments, property and other assets
Some charities hold investments, property, equipment or other assets to support their activities. The audit may examine ownership records, investment statements, property documents, asset registers, valuation information and significant purchases or disposals.
Where an organisation receives donated equipment or property, management should consider how the donation is recorded under the applicable accounting framework and retain evidence of the transfer and valuation basis used.
Investments may generate interest, dividends or gains and losses. The organisation should reconcile investment statements and review any restrictions or conditions attached to the funds invested. Material changes in value may affect financial statement balances and disclosures.
Charities Accounting Standard and financial reporting
Singapore has a Charities Accounting Standard (CAS) for eligible charities. Whether an organisation can or must apply CAS depends on its circumstances and the applicable statement of applicability. Organisations should confirm which financial reporting framework applies before preparing their financial statements. Accounting and Corporate Regulatory Authority
A charity’s financial statements should present its financial position, income, expenditure, funds and cash flows in accordance with the relevant requirements. The organisation should also ensure that the annual report and financial statements align and explain significant activities and financial movements clearly.
The audit may examine accounting policies, fund balances, grant income, donations, programme costs, commitments and related party transactions. Clear documentation of management judgements and board decisions can help support the reporting process.
Related parties and governance
A charity may transact with related parties, such as board members, key management personnel, affiliated organisations, subsidiaries or entities connected to its officers. Examples may include shared premises, management services, staff secondments, loans, contracts or transfers of funds.
The audit may review approvals, agreements, invoices, payment records and declarations of interest for significant related party transactions. The organisation should maintain a register of interests and follow its conflict of interest procedures.
The audit is not a substitute for good governance. Governing board members remain responsible for overseeing the organisation’s finances, reviewing significant risks, approving budgets and ensuring that appropriate financial controls are in place.
Audit preparation for charities and non-profits
Preparing key records before the audit begins can help the engagement proceed efficiently. Organisations may find it useful to organise:
- The trial balance and draft financial statements
- Bank statements and reconciliations
- Donation records and fundraising platform reports
- Grant agreements, budgets and unspent fund schedules
- Programme expense schedules and supporting invoices
- Fundraising event income and cost records
- Payroll, contractor and volunteer-related records
- Investment, property and fixed asset schedules
- Related party declarations and transaction listings
- Board minutes and financial approvals
- Details of commitments, disputes and funds transferred to others
- Previous year’s audit adjustments and management responses
A staff member who can coordinate audit requests and explain the organisation’s records can help reduce delays. Management should also prepare explanations for significant changes in donations, grants, programme spending, reserves and fund balances.
Our audit process
Our audit process begins with understanding the organisation’s legal structure, charitable activities, funding sources, financial systems and reporting timetable. We discuss significant developments during the year, such as new programmes, major grants, fundraising campaigns, changes in governance or transfers to other organisations.
We then plan the engagement and agree on the information needed. Procedures may include testing transactions, reviewing grant terms, confirming balances, examining fundraising records and assessing financial statement disclosures.
At the end of the audit, we discuss significant findings and proposed adjustments with management. We issue the appropriate auditor’s report based on the audit evidence obtained and the applicable professional requirements.
The timing of the audit depends on the readiness of the records, the number of programmes and funding streams, the organisation’s structure and how quickly outstanding questions are resolved. Early preparation is especially helpful when the charity has restricted funds, multiple grants or reporting deadlines to meet.
Choosing an auditor for a charity or non-profit
When selecting an auditor, a charity or non-profit organisation may want to consider whether the audit team understands its legal structure, funding arrangements and reporting obligations. Clear communication and an agreed timetable can help staff and board members prepare.
The organisation should also ensure that the engagement is appropriate to its legal status and audit requirements. A statutory audit and an independent examination are different types of engagement, so the governing board should confirm which one is required.
Audit services for charities and non-profit organisations in Singapore
Koh & Lim Audit PAC provides audit services for charities and non-profit organisations in Singapore, including charitable companies, IPCs, societies, trusts, foundations and community organisations. We aim to understand each organisation’s purpose and funding model and conduct the audit with professionalism and care.
Whether your organisation needs an audit for statutory reporting, group requirements, financing or stakeholder assurance, we can discuss the engagement scope and the records needed to begin. Contact Koh & Lim Audit PAC to arrange a discussion about audit services for your charity or non-profit organisation in Singapore.