To support SME growth, Malaysia’s Companies Commission (SSM) has updated the rules for audit exemption criteria to ease regulatory burdens while ensuring transparency.
Who Qualifies for Audit Exemption?
Under Practice Directive No. 10/2024, certain private companies in Malaysia may be exempted from appointing an auditor if they meet at least two of the following criteria:
Annual revenue does not exceed RM3,000,000 for the current and past two financial years.
Total assets do not exceed RM3,000,000 for the current and past two financial years.
Number of employees does not exceed 30 at the end of the current and past two financial years.
Phased Implementation (2025 - 2027)
The exemption criteria will be implemented in three phases.
Year | Financial Period | Submission Year | Turnover Threshold | Assets Threshold | Employee Limit |
2025 (Phase 1) | From 1 Jan 2025 to 31 Dec 2025 | From 1 Jan 2026 | RM1,000,000 | RM1,000,000 | 10 |
2026 (Phase 2) | From 1 Jan 2026 to 31 Dec 2026 | From 1 Jan 2027 | RM2,000,000 | RM2,000,000 | 20 |
2027 (Phase 3) | From 1 Jan 2027 onwards | From 1 Jan 2028 | RM3,000,000 | RM3,000,000 | 30 |
A company with a turnover of RM800,000 and RM1,000,000 total assets and 25 employees would qualify for audit exemption for the financial year 2025 onwards, as it meets two out of the three eligibility criteria set by the SSM.
However, if the company's turnover was RM2,500,000 with total assets of RM3,000,000, it would only qualify for audit exemption in 2027 (Phase 3), in accordance with the phased implementation timeline set by SSM.
Who is NOT Eligible for Audit Exemption?
Public companies (including listed companies).
Subsidiaries of public companies.
Foreign companies
Exempt private companies that have opted to file a private exempt certificate under Section 260 of the Companies Act 2016**
Filing a Private Exempt Certificate**
Companies seeking to maintain financial privacy may opt to file a Private Exempt Certificate. However, this process requires an audit to verify financial accuracy and compliance before it is formally endorsed by the auditor, company secretary, and responsible director.
What If a Company Loses Eligibility?
If a company ceases to meet the exemption criteria, it must appoint an auditor for future financial years. However, previously exempted financial statements remain valid.
Can a Company Be Required to Conduct an Audit?
Yes, even if a company qualifies for audit exemption, an audit is still required if:
Shareholders holding at least 5% of shares request it in writing.
At least 5% of voting members request an audit.
The Registrar of Companies directs the company to conduct an audit.
It is required by the company’s constitution or shareholders' agreement.
It is a requirement under a bank’s financing or loan agreement.
The company is involved in legal disputes requiring audited financials, applying for government grants or incentives, undergoing mergers or acquisitions, or part of a group requiring audits.
Requirements for the Submission of Accounts
Companies that qualify for audit exemption must still:
Prepare unaudited financial statements in compliance with Malaysian Accounting Standards (MPERS or MFRS).
The unaudited financial statements shall be lodged together with the directors’ report, statement by directors, statutory declaration and any other reports that is required to be lodged with the Registrar including lodgements pursuant to sections 251 and 252 of the Companies Act 2016.
Provide an Audit Exemption Certificate, confirming compliance with the exemption requirements.
MBRS 2.0 Requirements
All audited and unaudited financial statements submitted to the Registrar must be filed through the MBRS 2.0 platform. This must be done in accordance with:
XBRL (eXtensible Business Reporting Language) format, ensuring structured and machine-readable financial data.
Preset taxonomy determined by the Registrar, ensuring consistency and compliance with reporting standards.
Conclusion
The audit exemption framework reduces compliance costs for small businesses while ensuring transparency. However, companies must still maintain accurate financial records and submit unaudited financial statements via MBRS 2.0 as required.
For guidance on audit exemption or MBRS 2.0 compliance, contact us for assistance.
コメント