accounting
The Importance of Annual Audit in Thailand: A Comprehensive Guide
30/06/2023
In Thailand, all legal entities, including limited companies, must prepare and maintain accounts and file an annual audit report. Failure to comply with these regulations can result in severe penalties.
The annual audit is crucial for all legal entities operating in Thailand. It ensures transparency, accountability, and compliance with the law.
This comprehensive guide aims to provide a detailed overview of the annual audit process in Thailand, highlighting its importance and the necessary steps involved.
Key points
- Annual audits are mandatory for all legal entities operating in Thailand, including limited companies and dormant companies.
- Non-compliance with the annual audit requirement can result in penalties of up to 200,000 THB.
- The annual audit involves gathering required documents, conducting the audit with an independent certified auditor, reviewing and signing the audit report, tax payment and settlement, and fulfilling shareholder requirements.
- Financial statements must be prepared, audited, and certified by an independent certified auditor.
- Annual general meetings (AGMs) must be held to discuss matters such as the approval of audited financial statements, the appointment of auditors, and the consideration of dividends.
- Annual reports providing an overview of the company’s operations and financial performance must be submitted to the Ministry of Commerce.
What are the Annual Audit Requirements?
Under Thai law, every registered legal entity must prepare and keep accounts, regardless of type or status. This includes limited companies, registered partnerships, and foreign juristic persons operating in Thailand. The annual audit aims to ensure transparency and accountability in financial reporting.
Please note that even dormant companies without transactions throughout the year must undertake an annual audit.
For the auditor to complete their work, the accountant must ensure the company’s bookkeeping and tax filings have been completed correctly. Furthermore, all the company’s invoices, transactions, receipts, and relevant documents must have been appropriately recorded. If there are any missing documents or incomplete filings, the auditor may not approve the audit or raise concerns about the accuracy of the accounts. In practice, the accountant will liaise with the auditor to ensure everything is satisfactory and in order.
What are the penalties for Non-Compliance?
Failing to fulfill the annual audit requirement is considered a criminal offense in Thailand. Failure to submit an annual audit may lead to up to 200,000 THB penalties. Companies must understand the seriousness of these penalties and take the necessary steps to comply with the regulations.
What is the annual audit process in Thailand?
The annual audit process in Thailand involves several steps, both before and after the audit report is prepared. It is essential to choose a service provider that offers transparency in pricing and understands the entire process. The key stages of the audit process are as follows:
Step 1: Gathering Required Documents
Before the audit can commence, the company must gather certain documents. These documents include income and expenses for the year, bank statements for all corporate bank accounts, and copies of any title deeds the company may have acquired.
Step 2: Conducting the Audit
Once the required documents are gathered, the audit can proceed. An independent certified auditor will analyze and certify the company’s financial accounts. This includes examining the general journal, general ledger, trial balance, and other relevant financial statements.
Step 3: Review and Sign the Audit Report
After completing the audit, a copy of the report is sent to the company for review and signing by a director. This step ensures that the company acknowledges and accepts the audit findings.
Step 4: Tax Payment and Settlement
If any taxes are to be paid based on the audit findings, payment must be made to the Revenue Department on behalf of the company.
Step 5: Meeting Shareholder Requirements
After the audit report is signed, the company must fulfill certain obligations, such as organizing and inviting the shareholders to the annual general meeting. During this meeting, adequate minutes for the meeting must be taken. These requirements must be completed within 30 days of the auditor signing the report.
What are the reporting and documentation requirements?
Thailand has specific reporting and documentation requirements for the annual audit process. The following must be satisfied by all companies:
Financial Statements
All legal entities in Thailand must prepare financial statements for each accounting period. These statements include the balance sheet, profit and loss accounts, and other relevant financial information. The financial statements must be audited and certified by an independent certified auditor.
Annual General Meetings (AGM)
Companies and partnerships in Thailand must hold annual general meetings (AGMs). During these meetings, various matters are discussed, including the approval of audited financial statements, the appointment of auditors, and the consideration of dividends. The minutes of the AGM must be recorded and maintained for future reference.
Annual Reports
At the end of each accounting period, companies must prepare annual reports that provide an overview of the company’s operations, financial performance, and other relevant information. These reports must be submitted to the Ministry of Commerce, along with other required documents.
Can my company’s accountant complete the audit?
No, this is not possible. The auditor must be an independent party and hired from a different company. The auditor must also be certified by the relevant authorities as well.
How much does an annual audit cost in Thailand?
The cost for an annual audit will vary from 20,000 to 100,000 + THB. The final cost depends on the number of transactions and income the company generates.
The amount of work required from the auditor will be considered as well; for example, if the company’s bookkeeping is up to date and all in order, the audit will be quick; however, if there are a lot of issues and back and forth between the auditor and accountant, the audit will cost more as it requires more work from the auditor.
How can Belaws help?
For more information about annual audits in Thailand, why not talk to one of our experts now?
Please note that this article is for information purposes only and does not constitute legal advice.
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Frequently asked questions
Is audit mandatory in Thailand?
Yes, audit is mandatory in Thailand for all legal entities, including limited companies and dormant companies.
How much is the audit fee in Thailand?
The cost for an annual audit in Thailand can range from 20,000 to 100,000+ THB. The final cost depends on factors such as the number of transactions and income generated by the company, as well as the amount of work required by the auditor.
How much does an annual audit cost?
The cost of an annual audit in Thailand varies based on factors such as the company’s transactions and income. The article mentions that it can range from 20,000 to 100,000+ THB.
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