Co-operative Societies Audit Malaysia 2025: A Compliance Guide

The Evolving Landscape of Co-operative Audits in Malaysia for 2025

In 2025, the audit and regulatory landscape for co-operative societies in Malaysia is at a pivotal juncture. While the core principles of co-operative accountability remain, the environment is being actively shaped by a push towards digitalization and the anticipation of the most significant legislative reforms in decades. For co-operative boards, members, and auditors, staying abreast of these changes is crucial for ensuring compliance and fostering good governance.

The Foundation: Mandatory Audits under the Co-operative Societies Act 1993

The cornerstone of co-operative accountability is the legal requirement for an annual audit. Key provisions include:

Section 60: Mandatory Annual Audit: Every registered co-operative society must have its accounts audited at least once every financial year. This is a non-negotiable requirement that ensures transparency and protects the interests of members.
Section 61: SKM-Approved Auditors: The audit must be conducted by a person or firm that has been approved by the Suruhanjaya Koperasi Malaysia (SKM). Auditors must apply to SKM and demonstrate their competence and fitness to audit co-operatives, as outlined in the latest guidelines (GP26).
Auditor Rotation: To ensure auditor independence and fresh perspectives, an auditor cannot audit the same co-operative for more than six consecutive years.

Digitalization in 2025: Enhancing Audit Efficiency and Integrity

A key trend for 2025 is the digitalization of the audit process. A significant development is the integration of SKM with the eConfirm.my platform, effective from February 17, 2025. This platform streamlines and secures the process of obtaining bank confirmations, which is a critical part of any audit. By moving this process online, eConfirm.my enhances efficiency, reduces the risk of fraud, and modernizes a traditionally manual and time-consuming task.

On the Horizon: Major Legislative Reforms

The most significant development for the co-operative sector is the upcoming amendment of the Co-operative Societies Act 1993. The proposed changes, which are expected to be tabled in Parliament by the end of 2025, represent a major overhaul of the legislation. The key aims of the reform are to:

Strengthen the regulatory powers of SKM.
Liberalize the business activities of co-operatives, allowing them to operate more effectively as commercial entities.
Enhance the governance and transparency of the co-operative movement.

While the full details of the amendments are not yet public, they signal a clear move towards a more modern, robust, and commercially-oriented regulatory framework for co-operatives in Malaysia.

The Scope of a Co-operative Audit

The audit of a co-operative society is a comprehensive exercise that goes beyond just the numbers. The auditor's scope includes:

Financial Statements: An examination of the co-operative's financial statements to ensure they provide a true and fair view and comply with the relevant accounting standards (MFRS or MPERS).
Compliance with the Act: A review of the co-operative's operations to ensure compliance with the provisions of the Co-operative Societies Act 1993, including rules related to membership, share capital, and the allocation of surplus.
Internal Controls and Governance: An evaluation of the co-operative's internal control system and governance practices to identify any weaknesses that could pose a risk to the society and its members.

Conclusion

For co-operative societies in Malaysia, 2025 is a year of transition. While the fundamental requirement for a compliant and thorough annual audit remains unchanged, the process is being modernized through digitalization, and the entire regulatory framework is set to be updated. By embracing these changes and working closely with their SKM-approved auditors, co-operatives can enhance their governance, improve their operations, and build a stronger and more resilient future for their members.