Audits which are strictly in compliance with Thai Auditing Standards are Statutory Audit in Thailand. It is mandatory for both Thai and Foreign businesses earning profit in Thailand to go for this audit. In Thailand, qualified experts execute the functions of Statutory Auditors for companies with headquarters elsewhere. These experts must be Certified Public Accountants without whom the Statutory Audit is not possible in Thailand.
In Thailand, all legal entities have to keep and prepare accounts on mandatory basis. Limited businesses, registered partnerships, and foreign juristic persons conducting business in Thailand are all included. Failure to do so may result in a criminal charge and a fine of up to 200,000 THB. Before writing an audit report, there are several processes that needs completion. It’s critical that your organization is honest and transparent about pricing, not simply about the task of writing and signing an audit report.
Key Points: Statutory Audit in Thailand
- For the assigned accounting period, all Thai corporations, partnerships, joint ventures, and foreign company branches must submit financial accounts to the Ministry of Commerce.
- Thailand’s tax system is on the basis of self-assessment, where the fiscal year is a 12-month period ending on December 31 each year. There is a change in this deadline due to the pandemic crisis.
- Foreign enterprises must file financial statements within 150 days of the fiscal year’s conclusion. Without formal permission from the Revenue Department, one cannot modify an accounting period after choosing it.
- All financial statements needs examination and certification of an Independent Certified Auditor or Certified Public Accountant in Thailand.
- The Thai Ministry of Commerce requires all foreign enterprises, joint ventures, partnerships, and branches to prepare financial statements for their allocated accounting period.
- The following legal frameworks outline the current audit and compliance regulations:
- The Accounting Act of 2000.
- The Securities and Exchange Act of 1992.
- The Bank of Thailand Act B.E. 2485.
- Insurance Commission Act B.E. 2550.
- Financial Institutions Business Act B.E. 2551.
Statutory Audit in Thailand Standards
Any foreign company or firm operating in Thailand, by Thai law, must keep records and undertake annual audits, regardless of its kind of incorporation or responsibility.
The financial statements of these businesses must comply with Thai Financial Reporting Standards. International Financial Reporting Standards (IFRS) compliance is mandatory. The Thai Revenue Department follows international accounting norms. This is also applicable in case of Statutory Audit in Thailand. In addition to the international standards’ mission, it may also incorporate some local elements.
Foreign companies and businesses may employ international standards. In Thailand, however, the vast majority of SMEs adhere to Thai Accounting Standards’ (TAS) norms and mandates. They also follow Thailand’s Non-Publicly Accountable Entities Accounting Standard (Thai Accounting Standard for Non-Publicly Accountable Entities). Companies have to prepare financial statements for quarterly audits by Thai auditors for companies listed on the Thailand Stock Exchange.
Requirements for Statutory Audit in Thailand
Annual General Meeting (AGM)
Thailand’s Civil and Commercial Code mandates that every year, companies and businesses operating in Thailand hold an Annual General Meeting. To do so, the Board of Directors of the concerned company must write a letter to the appropriate bodies and officials announcing the AGM within four months of the fiscal year’s end. In addition, the AGM should include the following items on its agenda:
- To clarify the previous Annual General Meeting minutes.
- Approval of the director’s report on the company’s business actions.
- Recognize the company’s operating results from the previous year.
- Selection of new directors to replace the ones who are no longer working.
- The selection of an auditor and the calculation of audit fees.
- Dividends are taken into consideration.
Auditing Standards
The audit opinion of a CPA is essential when filing financial statements and tax returns.
This audit should be undertaken regardless of whether the company is publicly traded or not. The only exception to this requirement is the financial statements of a Thai-registered partnership whose total capital, assets, and revenue do not exceed those defined in Ministerial Regulations.
Fiscal Year
Thailand’s foreign company self-assessment tax system works on a 12-month cycle that concludes on December 31. Businesses also have the option of choosing their own accounting period. It is conceivable if the period does not exceed 12 months. To choose an accounting period, you must first get authorization from the Director-General of the Revenue Department.
An announcement was made in April 2020. It states that all international enterprises in Thailand must electronically file their financial statements with the Department of Business Development of the Thai Ministry of Commerce (DBD).
Annual Reports
Both public and private companies in Thailand with limited liability must present the following documentation. At the end of each accounting period, they are compelled to do so.
The document validates the company’s name and type of business.
- Personal and professional information about the directors.
- Financial Statements for the Company are prepared in line with Thai Auditing Standards.
- The balance sheet of the corporation, which shows all of the transactions for each accounting period.
- Profit and loss statements for the company.
- The following is a list of shareholders as of the date of the most recent Annual General Meeting.
- Minutes of the Annual General Meeting.
For reporting purposes, businesses must prepare their documentation in Thai. While international corporations are permitted to draft documents in any language other than Thai, a translation is required.
At the end of the fiscal year, both private and public limited firms must have their financial statements examined by an independent auditor.
The Accounting Act of 2000 mandates that businesses preserve their books of accounts for at least five years. The Director-General of the Revenue Department may extend it for another seven years depending on the company activities.
Penalties on Non-Compliance
A punishment of up to 200000 baht can be imposed on any Thai firm or business that fails to follow these requirements. It is the equivalent of US$6400 for the defaulting corporation.
A 20% surcharge will be applied to any company in Thailand that understates its annual earnings by more than 25%. The surcharge is 100 percent if the filing is erroneous, and 200% if any company fails to file a return. There is a provision for a penalty reduction of 50%. It is up to the tax officer’s decision if a defaulting corporation approaches the authorities in writing.
The Bottomline
Let us make one thing very clear – however prepared and transparent you are to share your accounts report, you must have a Certified Public Accountant to audit and certify your financial statements every fiscal year. You will never be able to make this happen with your in-house accountant. Therefore, to book a free round of quick consultation with our CPA, feel free to email us at [email protected].
