Audit exemption is for private companies to get exempt from audit their financial statements yearly. The aim of audit exemption is to reduce regulatory compliance costs and administrative burdens for those small companies who meet the criteria of audit exemption issued by the Companies Commission of Malaysia (SSM). However, the audit exempted companies still need to prepare and lodge their unaudited financial statements with the Registrar accompanied with the required certificate in compliance with the Companies Act 2016.
Below are the current audit exemption criteria:
- Dormant companies
- Zero-revenue companies
- Threshold-qualified companies
- Revenue less than RM100,000 during the financial year and in the immediate past 2 financial years;
- Total assets less than RM300,000 in current financial year and in the immediate past 2 financial years; and
- Less than 5 employees at the end of the current financial year and in each of its immediate past 2 financial years end.
Recently, SSM has published a consultative document to propose to increase the threshold for the qualified companies and the companies are only required to fulfil any 2 of the 3 criteria instead of fulfilling all the 3 criteria which is the current audit exemption criteria.
The proposed new audit exemption threshold are as follows:
- Revenue less than RM3,000,000 during the financial year and in the immediate past 2 financial years;
- Total assets less than RM3,000,000 in current financial year and in the immediate past 2 financial years; and
- Less than 30 employees at the end of the current financial year and in each of its immediate past 2 financial years end.
SSM believes that with the implementation of the proposed new audit exemption criteria will reduce administrative burdens and promote better growth for SMEs in Malaysia, improve the overall efficiency and quality of auditing services by focusing on those larger entities, balance between economic reliefs and regulatory requirements.
Currently, SSM welcomes public’s feedback on the proposed new audit exemption criteria. If you have any comment on this matter, you may provide your name and the organisation you represent (where applicable) together with your comments to be submitted by email by 8 March 2024 to lrpia@ssm.com.my.
If you would like to know more about audit exemption, please feel free to contact us for further advise.