Why Mall Stores in Singapore Need a Sales Turnover Audit
Introduction
In Singapore, mall tenants, especially retail and F&B businesses, often operate under revenue-linked rental agreements. This means that instead of paying a fixed rent, businesses pay rent based on a percentage of their gross turnover (GTO). To ensure transparency and fairness in rental calculations, shopping mall landlords often require businesses to undergo a Sales Turnover Audit.
A Sales Turnover Audit is an independent verification of a business’s total revenue, ensuring that the reported sales figures are accurate and free from manipulation. Failure to comply with a Sales Turnover Audit can lead to penalties, lease termination, or disputes with landlords.
This article explores why mall stores in Singapore need a Sales Turnover Audit, how the audit process works, and how businesses can prepare for it.
1. What is a Sales Turnover Audit?
A Sales Turnover Audit is an official financial review conducted by an audit firm or Certified Public Accountant (CPA) to verify the actual revenue of a business. It ensures that sales figures reported to landlords match the real income of the business and prevents underreporting of revenue to reduce rental payments.
A Sales Turnover Audit is not a statutory requirement under the Singapore Companies Act but is a contractual obligation for many retail and F&B businesses operating in malls.
Key Features of a Sales Turnover Audit
✔️ Ensures businesses report accurate gross sales figures.
✔️ Helps prevent financial disputes between landlords and tenants.
✔️ Ensures businesses pay the correct percentage-based rental fees.
✔️ Builds trust and transparency between landlords and tenants.
2. Why Do Mall Stores in Singapore Need a Sales Turnover Audit?
A. Compliance with Gross Turnover (GTO) Rent Agreements
Many shopping malls in Singapore operate on a GTO rent model, where tenants pay rent based on a percentage of their sales instead of a fixed rental amount. A Sales Turnover Audit ensures:
✅ Accurate rent calculation – Prevents tenants from underreporting revenue to pay lower rent.
✅ Transparency in financial reporting – Ensures that both tenants and landlords operate fairly.
✅ Prevention of rental disputes – Avoids conflicts regarding revenue discrepancies.
📌 Example: A retail store in a Singapore shopping mall pays rent based on 6% of monthly sales turnover. If they report $100,000 in sales, their rent is $6,000. If they underreport sales at $80,000, they would only pay $4,800, causing financial losses for the landlord.
B. Preventing Revenue Underreporting & Fraud
Some businesses may intentionally underreport revenue to reduce their rental obligations. A Sales Turnover Audit helps prevent:
❌ False reporting of cash sales.
❌ Manipulation of POS (Point of Sale) systems.
❌ Artificial discounting or invoice adjustments to lower declared revenue.
By conducting regular audits, malls ensure tenants adhere to fair business practices.
C. Required by Shopping Malls & Property Management Firms
Many Singapore shopping malls, such as Paragon, Ion Orchard, and Marina Bay Sands, require their tenants to submit audited financial statements to verify sales turnover. Failure to comply may lead to:
❌ Legal action for breach of contract.
❌ Lease termination or penalties for failing to report accurate sales figures.
D. Business Growth & Financial Transparency
A Sales Turnover Audit helps businesses:
✔️ Improve financial record-keeping by maintaining clear and accurate sales records.
✔️ Avoid penalties and legal risks associated with false financial reporting.
✔️ Build credibility with landlords, banks, and investors who may request audited turnover figures.
3. How is a Sales Turnover Audit Conducted?
A Sales Turnover Audit follows a structured process to verify actual business revenue. Here’s how it works:
Step 1: Engaging a CPA or Audit Firm
- Businesses must hire a Certified Public Accountant (CPA) or audit firm to conduct the audit.
- The audit firm reviews the lease agreement and revenue reporting requirements.
Step 2: Reviewing Sales & Revenue Records
The auditor verifies sales records, including:
📌 Point-of-Sale (POS) Reports – Checks sales recorded at the cash register.
📌 Daily/Monthly Sales Reports – Verifies consistency in reported revenue.
📌 Bank Statements – Ensures deposits match recorded sales.
📌 Invoices & Receipts – Confirms transactions with suppliers and customers.
📌 Credit/Debit Card Transactions – Ensures electronic payments match reported income.
Step 3: Identifying Discrepancies
- Auditors cross-check revenue reports against bank deposits and invoices.
- Any discrepancies or signs of underreporting are flagged for investigation.
Step 4: Issuing the Audit Report
- Once the review is complete, the audit firm provides a Sales Turnover Audit Report.
- The business submits the verified sales turnover report to the landlord or mall management.
4. Consequences of Not Conducting a Sales Turnover Audit
Failure to comply with a Sales Turnover Audit can result in serious financial and legal issues:
❌ Breach of Lease Agreement – The shopping mall may impose penalties or terminate the lease.
❌ Legal Action – Landlords may take legal action if businesses falsify sales figures.
❌ Loss of Credibility – Businesses that fail an audit may struggle to secure future rental agreements or bank loans.
❌ Financial Penalties & Back Payments – Tenants may have to pay additional rent if underreporting is discovered.
5. How to Prepare for a Sales Turnover Audit
To ensure compliance and a smooth audit process, businesses should:
✔️ Keep Accurate Financial Records – Use cloud-based POS systems and accounting software to maintain sales records.
✔️ Reconcile Bank Deposits with Sales Reports – Ensure bank deposits match recorded revenue.
✔️ Organize Invoices & Receipts – Maintain a clear paper trail of all transactions.
✔️ Conduct Internal Sales Audits – Regularly check for inconsistencies in reported revenue.
✔️ Engage a Professional Audit Firm – Work with an experienced CPA firm to handle the audit process efficiently.
6. Choosing the Right Audit Firm for a Sales Turnover Audit
When selecting an audit firm, consider:
🔹 Accreditation – Ensure the firm is a Certified Public Accountant (CPA) firm in Singapore.
🔹 Experience in Retail & F&B Audits – Choose an audit firm with expertise in mall store audits.
🔹 Transparent Reporting – A professional firm should provide clear and detailed audit reports.
🔹 Client Testimonials & Reputation – Look for audit firms with strong track records in turnover audits.
7. Conclusion
A Sales Turnover Audit is essential for mall stores in Singapore that operate under revenue-linked rental agreements. It ensures fair rental payments, prevents revenue underreporting, and helps businesses comply with lease agreements.
By maintaining transparent sales records, reconciling financial transactions, and working with a reputable CPA firm, businesses can navigate the audit process smoothly and avoid compliance risks.
If your retail or F&B business needs a Sales Turnover Audit in Singapore, consult a licensed audit firm today to ensure financial accuracy and compliance. ✅
