What is a GTO Audit and Why It’s Important for Singapore Retailers

In Singapore’s bustling retail landscape, where shopping malls serve as commercial hubs for thousands of businesses, Gross Turnover (GTO) audits have become a crucial part of tenancy agreements. If you’re a retailer or F&B business operating within a mall, chances are your lease includes a clause that requires regular GTO audits.

But what exactly is a GTO audit, and why is it so important? In this article, we’ll break down the concept of a GTO audit, explore its purpose, and explain how it affects retail tenants in Singapore.

What is a GTO Audit?

GTO stands for Gross Turnover, which refers to the total revenue a retail business earns through its sales activities. A GTO audit is a formal review conducted by an independent auditor to verify the accuracy of the gross turnover reported by a tenant to the landlord or mall management.

These audits are especially common in large shopping malls such as Junction 8, NEX, Waterway Point, Jewel Changi, PLQ, and many others in Singapore. Mall landlords use the GTO figures to calculate rental amounts or assess the performance of tenants.

Why Do GTO Audits Exist?

The main reason GTO audits exist is to ensure transparency and fairness between landlords and tenants. Many leases include a “base rent + GTO rent” model. This means the tenant pays a fixed base rent plus a percentage of their gross turnover. In such arrangements, it becomes essential for landlords to verify that tenants are accurately reporting their sales.

Key Purposes of a GTO Audit:

1. Verify Turnover-Linked Rent:
   Landlords want to make sure that tenants are paying the correct amount based on actual sales.

2. Prevent Underreporting:
   Tenants may unintentionally or intentionally underreport turnover. Audits discourage and detect discrepancies.

3. Inform Leasing Decisions:
   Accurate GTO data helps landlords decide on renewals, rent adjustments, and tenant mix strategies.

4. Build Trust:
   A third-party audit adds credibility to reported figures and ensures a healthy landlord-tenant relationship.

Who Needs a GTO Audit in Singapore?

In general, tenants of shopping malls or retail spaces who are subject to turnover-based rental clauses are required to undergo GTO audits. This includes:

• Fashion boutiques

• F&B outlets and cafes

• Beauty salons and clinics

• Supermarkets and convenience stores

• Electronic and gadget stores

• Lifestyle and wellness businesses

If your lease agreement includes a clause that states “an independent auditor must certify your monthly or yearly gross turnover,” then you are required to engage a licensed audit firm to do this.

How is a GTO Audit Conducted?

Step 1: Review of Lease Agreement

The auditor will first understand the terms of your lease to determine how turnover is defined and calculated.

Step 2: Review of Sales Records

They will then verify your reported sales figures against supporting documents such as:

• POS (Point of Sale) records

• Cash register summaries

• Bank statements

• Monthly sales summaries

• Receipts and invoices

• Credit card settlement slips

Step 3: Reconciliation and Verification

Auditors reconcile the reported GTO with the actual sales data and check for any inconsistencies or unexplained variances.

Step 4: Issuance of GTO Certificate

Once the audit is complete, the auditor will issue a GTO Certificate or Statement of Gross Turnover, which is then submitted to your landlord as proof of compliance.

What Happens If There Are Discrepancies?

If the auditor finds that actual sales are higher than reported, the tenant may need to pay back the rental shortfall and possibly face penalties or interest. If underreporting is significant, the landlord may even choose to terminate or not renew the lease.

This is why it’s crucial for businesses to maintain accurate, real-time sales records and ensure proper internal controls.

How Often Do You Need a GTO Audit?

This depends on your tenancy agreement. Some landlords require an annual GTO audit, while others may ask for quarterly or even monthly reports, especially for larger tenants or high-traffic outlets.

It is best to check your lease or consult your landlord to understand your obligations.

Benefits of Conducting Regular GTO Audits

While some tenants may view GTO audits as just another compliance task, there are actually several advantages to doing it right:

1. Better Financial Discipline

You’ll need to keep good sales records, which can improve your internal bookkeeping and financial management.

2. Stronger Landlord Relationship

Submitting timely and accurate reports builds trust and may give you leverage in lease negotiations.

3. Risk Mitigation

An independent audit helps you identify internal errors or fraud early before they become serious issues.

4. Business Insights

Sales trend analysis during audits may reveal insights into peak seasons, slow months, or product performance.

Choosing the Right Audit Firm for GTO Audits

Because GTO audits are usually time-sensitive and must comply with specific reporting formats required by landlords, it is important to choose a licensed audit firm in Singapore that is experienced in handling retail and mall-based GTO audits.

Look for:

• A registered public accounting firm

• Auditors with experience in retail and F&B audits

• Firms that offer quick turnaround times

• Transparent pricing and clear deliverables

At Koh & Lim Audit PAC, for example, we specialize in GTO audits for mall tenants across Singapore and provide hassle-free audit services tailored to lease compliance.

Conclusion

Gross Turnover Audits are more than just a formality – they are a key part of running a compliant and transparent retail business in Singapore. For shopping mall tenants, getting the GTO audit done properly and on time is critical not only for legal compliance but also for building credibility with landlords and improving internal operations.

If you’re a retail tenant and unsure about your GTO reporting obligations, it’s wise to speak with a qualified auditor early on. Getting it right from the start can save you from penalties, disputes, and financial surprises down the line.

Find help at https://www.auditservices.sg/gross-turnover-gto-audit-singapore/

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