What is Done During a Singapore GTO Audit?

In Singapore, a Gross Turnover (GTO) audit is a specialized type of audit that verifies the accuracy of a tenant’s reported sales revenue, particularly for businesses operating in retail spaces such as shopping malls. It is typically required by landlords or mall management companies who charge rent based partially or wholly based on the tenant’s reported gross turnover. This type of audit ensures transparency, trust, and accountability between landlords and tenants.

Why is a GTO Audit Important?

For many retail tenancies in Singapore, the rental agreement includes a variable rent component based on a percentage of the tenant’s gross turnover. This means a tenant might pay a fixed base rent plus a percentage of their monthly or annual sales. To ensure that the sales figures reported are accurate and that landlords receive the correct rent, a GTO audit is conducted.

Moreover, such audits also help detect underreporting, fraud, or errors in the financial reporting processes of tenants. For landlords managing multiple retail units or entire malls, accurate turnover reporting is essential for financial planning, investor reporting, and maintaining tenant-landlord relationships.

Who Requires a GTO Audit?

Typically, GTO audits are required in commercial properties such as:

• Shopping malls

• Department stores

• Airports (e.g., Jewel Changi Airport)

• Retail complexes (e.g., PLQ Mall, NEX, Junction 8)

• Tourist-focused retail areas

Landlords such as CapitaLand, Frasers Property, Lendlease, Mapletree, and Far East Organization frequently include clauses in tenancy agreements that mandate tenants to submit a certified Gross Turnover Report.

What is Covered During a GTO Audit?

A Singapore GTO audit generally involves a structured and comprehensive review of a tenant’s financial and point-of-sale (POS) records. The steps include:

1. Engagement and Understanding of the Tenancy Agreement

The audit begins with a review of the Tenancy Agreement (TA). The auditor will examine:

• Rent structure and clauses related to GTO reporting

• Reporting frequency (monthly, quarterly, yearly)

• Definitions of what constitutes “gross turnover” (e.g., include/exclude GST, discounts, gift cards)

• Format and method of submission

Understanding these terms is essential to establish the scope and criteria of the audit.

2. Data Collection and Reconciliation

The next step involves gathering all relevant financial data from the tenant. This includes:

• POS (Point-of-Sale) summaries

• Sales reports by day/month

• Bank statements showing sales deposits

• Credit card merchant statements

• Cash register tapes (if applicable)

• E-commerce or online sales data (if applicable)

• Management accounts or trial balances

• Internal inventory and stock movement records

The auditor will then reconcile these reports with the figures submitted in the GTO report provided to the landlord.

3. Verification of Sales Reporting Process

The audit includes a detailed review of how the tenant’s sales are recorded, including:

• Checking the completeness of POS entries

• Identifying and understanding how voids, refunds, or discounts are treated

• Evaluating daily cash-up procedures

• Testing internal controls for sales handling

• Reviewing system logs for unauthorized changes or anomalies

This helps to verify that all revenue is being properly captured and reported.

4. Sample Testing and Substantive Procedures

Auditors will often use sample testing methods to verify the accuracy of records. For example:

• Selecting random days to match POS sales with bank deposits and sales summaries

• Comparing card sales on merchant statements with recorded POS sales

• Matching daily Z-reports from cash registers with summarized monthly sales

• Verifying online sales or third-party sales platforms (e.g., GrabFood, Shopee, Lazada)

These substantive tests allow auditors to identify inconsistencies or possible underreporting.

5. Review of Adjustments and Exclusions

Tenants may sometimes exclude certain items from gross turnover, such as:

• GST

• Staff meals

• Complimentary items

• Refunds

• Loyalty rewards or vouchers

The auditor will assess if these exclusions are in line with the definitions provided in the TA. If exclusions are not allowed but were made, this may result in a finding of underreported GTO.

6. Cross-Verification With Other Documents

Auditors may also review:

• Inventory or stock control systems: To ensure that the volume of goods sold aligns with turnover

• Purchase records or invoices: To cross-verify if purchases match reported sales

• Payroll data: Especially for industries like F&B to validate sales relative to staff activity levels

The idea is to build a full picture of the business’s operational activities and revenue cycle.

7. Issuance of GTO Certification Report

After all procedures are complete, the audit firm will issue a Gross Turnover Certification Report. This report is submitted to the landlord and includes:

• Certified gross turnover figures for the relevant period

• Methodology used

• Observations on sales processes and systems

• Notes on any discrepancies or irregularities

• Management representation statements

If discrepancies are found, the landlord may request for back payments of additional rent or take further action based on the tenancy agreement.

Challenges Faced in GTO Audits

• Cash-heavy businesses: Harder to verify without strong controls

• Lack of POS integration: Manual processes make audits harder

• Multiple revenue streams: Including online sales or third-party platforms may complicate reporting

• Exclusion confusion: Misinterpretation of what is excluded from GTO

That’s why choosing an experienced and diligent auditor is crucial.

Benefits of Conducting a GTO Audit

For landlords, the benefits include:

• Assurance of accurate rent computation

• Better understanding of tenant performance

• Identifying trends or issues in sales reporting

For tenants, a GTO audit:

• Demonstrates transparency and credibility

• Helps detect internal control weaknesses

• Builds a more collaborative landlord-tenant relationship
  

Who Can Perform GTO Audits in Singapore?

GTO audits should be conducted by a qualified public accounting firm registered with ACRA. The auditor must be independent from the tenant and capable of issuing certification reports acceptable to the landlord.

Firms like Koh & Lim Audit PAC specialize in this service, offering reliable, efficient, and landlord-accepted GTO audits for tenants across Singapore’s top malls and retail spaces.

Conclusion

A Singapore GTO audit is a vital process that ensures accountability and trust in retail rental arrangements. It protects both landlords and tenants by validating reported turnover figures used for rental computations. With growing retail complexity including omnichannel sales and cashless transactions, the GTO audit process is evolving — requiring expertise, diligence, and professionalism.

If you are a retail tenant or a landlord in Singapore seeking a trusted GTO audit firm, it’s essential to engage an experienced audit team familiar with local practices and tenancy requirements.