Whether a Malaysian private company needs an audit is not decided by company law alone. The Companies Act 2016 requires a private company to appoint an auditor for each financial year, and allows the Registrar to exempt private companies according to criteria it sets. SSM’s audit exemption page publishes those criteria in Practice Directive No. 10/2024, which applies to financial statements with annual periods commencing on or after 1 January 2025.
What the exemption does and does not change
The directive states that a company that has elected to be exempted from audit must still lodge its unaudited financial statements with the Registrar, accompanied by the required certificate, and that those financial statements must comply with the applicable approved accounting standards. An eligible company must still have its accounts audited if it receives a qualifying written notice during the financial year, no later than one month before year end. Under paragraph 14, the notice may come from voting members holding at least 5% of the issued shares or a class of shares, at least 5% of voting members, or the Registrar. The directive lists companies to which the exemption does not apply, including public companies and private companies that are subsidiaries of public companies.
Other parties who may require an audit
Even where the law does not require an audit, others may. Lenders may require audited financial statements under facility terms, grant providers may make them a condition, a group auditor may require specified work on a subsidiary’s financial information, and a prospective buyer may request audited historical statements. Checking these arrangements before deciding not to be audited is a sensible step. Our statutory audit preparation checklist covers what to prepare where an audit goes ahead.
This article is general information only. Requirements depend on each company's circumstances; please refer to SSM's official audit exemption material, and see Saifudin & Co's audit and assurance services if you would like assistance.