On 16 December 2024, the Companies Commission of Malaysia (“CCM”) issued a new Practice Directive No. 10/2024 – Qualifying Criteria for Audit Exemption for certain private companies in Malaysia.
Are financial statements still required for audit-exempt companies? The answer is YES. A company that meets the audit exemption criteria must still prepare the full set of financial statements WITHOUT the auditors’ opinion to fulfill the CCM and tax filing requirements.
The primary benefit for audit-exempt companies is the reduced time spent liaising with the auditors, as they will no longer be required to conduct audit work. However, an audit-exempt company is still needed to prepare and submit the full set of financial statements to relevant authorities, without the need for auditor verification. In addition, tax agents might increase fees due to the additional workload required to ensure the accuracy of the tax payable amount.
Read More: What is Audit Exemption for Private Companies?
So, Is Your Company Eligible For Audit Exemption?
According to the new Practice Directive No. 10/2024, if a private company fulfills at least two (2) of the following criteria, the Company will qualify for audit exemption:
- The annual revenue of the company during the current financial year and in the immediate past two (2) financial years do not exceed RM3,000,000;
- The total assets of the company in the current statement of financial position and the immediate past two (2) financial years do not exceed RM3,000,000; or
- The number of employees at the end of the current financial year and in the immediate past two (2) financial years do not exceed thirty (30).
The threshold criteria for audit exemption will be implemented via 3 phases to facilitate the transition into a new audit framework:
| Year | 2025 (Phase 1) | 2026 (Phase 2) | 2027 (Phase 3) |
| Financial period | Commencing on or after 1st January 2025 until 31 December 2025 | Commencing on or after 1st January 2026 until 31 December 2026 | Commencing on or after 1st January 2027 |
| Submission year | Beginning on 1 January 2026 | Beginning on 1 January 2027 | Beginning on 1 January 2028 |
| Thresholds | |||
| 1) Turnover | RM1,000,000 | RM2,000,000 | RM3,000,000 |
| 2) Assets | RM1,000,000 | RM2,000,000 | RM3,000,000 |
| 3) Number of employees | 10 | 20 | 30 |
The annual revenue, total assets and number of employees for the immediate past two (2) financial years must not exceed the maximum threshold specified for the respective corresponding phase.
Companies Excluded from the Exemption
The exemption under this Practice Directive will not apply to:
(a) an exempt private company which has opted to lodge a certificate relating to its status as an exempt private company to the Registrar under section 260 of the Companies Act 2016;
(b) a public company including a listed company;
(c) a private company that is a subsidiary of a public company; and
(d) a foreign company.
Stay Compliant as an Audit-Exempt Company
Great news if your company qualifies for audit exemption! However, you’ll still need to prepare a full set of financial statements to meet regulatory requirements.
Reach out to us for statement preparation assistance or other relevant services. We’re here to support you!