Good preparation helps auditors obtain evidence and gives management time to address accounting errors. It does not guarantee an unmodified opinion: the auditor’s conclusion depends on the financial statements and the evidence obtained. For a Malaysian SME, preparation starts with confirming the audit requirement and the dates by which the financial statements must be circulated and lodged; see our article on filing deadlines.
What auditors typically ask for
The company’s accounting records are a starting point for audit evidence; the auditor decides what corroboration and further procedures are needed. The Companies Act 2016 requires a company to keep accounting and other records that sufficiently explain its transactions and financial position and that enable the financial statements to be conveniently and properly audited. Agree a requested-information list and timetable with the auditor. Prepare a reconciled trial balance, key reconciliations that are complete and documented, support for estimates and related-party information. If inventory is material, discuss the stocktake date and locations with the auditor well before the count.
Groups and technology
The MIA's list of International Standards on Auditing shows ISA 600 (Revised) as effective for audits of group financial statements for periods beginning on or after 15 December 2023. For a group audit, agree component reporting deadlines, intercompany reconciliations, data access and communication with the group auditor early. Auditors are also making more use of audit technology and data analytics, which depends on complete and consistent data.
Independence
Asking an auditor to prepare the records or estimates it will then audit can create a self-review threat under the independence requirements, so preparation is best done by the company. The proposed scope and any other services or relationships need an engagement-specific independence assessment under the applicable MIA requirements.
This article is general information only. Requirements depend on each company's circumstances; please refer to the MIA’s official standards, and see Saifudin & Co's audit and assurance services if you would like assistance.