In Malaysia, statutory audits are a key part of corporate compliance, particularly for private limited companies (Sdn. Bhd.). Many business owners are unsure whether they need an audit, what the process involves, and how it can benefit them beyond just fulfilling legal obligations. Here’s a clear overview of the audit requirements in Malaysia and why professional audit services matter.
Who Needs to Be Audited in Malaysia?
Under the Companies Act 2016, all companies in Malaysia are required to appoint an auditor annually unless they qualify as a dormant, zero-revenue, or threshold-qualified private company.
To qualify for audit exemption, a private company must meet two out of three of the following criteria for two consecutive financial years:
- Total revenue not exceeding RM100,000
- Total assets not exceeding RM300,000
- No more than 5 employees
Companies that do not qualify for this exemption must appoint an auditor and prepare audited financial statements to be submitted along with their annual return to the Companies Commission of Malaysia (SSM).
Purpose and Importance of Auditing
While auditing is a legal requirement, it also adds substantial value to a business:
- Credibility: Audited accounts build trust with banks, investors, and stakeholders.
- Transparency: A clear picture of the financial health of the business.
- Fraud Detection: Identifies internal control weaknesses and potential misstatements.
- Loan or Grant Applications: Audited reports are often required for financing or government grant applications.
Audits must comply with the Malaysian Approved Standards on Auditing and MPERS or MFRS, depending on the reporting framework adopted.
Resources : https://www.ssm.com.my/Pages/Home.aspx , https://www.mia.org.my