AUDIT EXEMPTION
Effective from 01
st January 2025 to the Companies Commission of Malaysia (SSM) allows certain private companies to be exempted from the mandatory requirement to have their financial statements audited annually under the Companies Act 2016. This exemption aims to reduce the regulatory burden and compliance costs, especially for small and medium-sized enterprises (SMEs) that may find audits costly and time-consuming relative to their size.
What is Audit Exemption?
Audit exemption means eligible private companies do not have to appoint an auditor or conduct an audit of their financial statements for a financial year.
However, these companies still need to prepare and lodge their unaudited financial statements with SSM, along with other required documents such as directors’ reports and audit exemption certificates confirming compliance with accounting standards and legal requirements.
Eligibility Criteria for Audit Exemption in 2025.
To qualify for audit exemption starting from financial years beginning on or after 01
st January 2025, a private company must meet any two of the following three conditions for the current and preceding two financial years:
|
Criteria |
Threshold for Audit Exemption |
|
Annual Turnover |
≤ RM3,000,000 |
|
Total Assets |
≤ RM3,000,000 |
|
Number of Employees |
Number of Employees ≤ 30 |
|
Dormant Status |
Dormant since incorporation or current + prior year |
Additionally, companies that are dormant since incorporation or dormant throughout the current and preceding financial year also qualify for exemption.
Phased Implementation to Facilitate Transition
To facilitate the revised framework, SSM has adopted a phased implementation approach over a period of three years, thus allowing companies to adapt gradually to the new requirements.
Phase 1 will apply to financial periods commencing on or after 1 January 2025, with submissions starting from 1 January 2026. During this phase, the thresholds are set at annual revenue of RM1,000,000, total assets of RM1,000,000, and a maximum of 10 employees.
Phase 2 will follow for financial periods commencing on or after 1 January 2026, with submissions starting from 1 January 2027. In this phase, the thresholds are increased to an annual revenue of RM2,000,000, total assets of RM2,000,000, and a maximum of 20 employees.
Finally, Phase 3 will be fully implemented for financial periods commencing on or after 1 January 2027, with submissions starting from 1 January 2028, where the thresholds are fully implemented at a turnover of RM3,000,000, total assets of RM3,000,000, with a maximum of 30 employees.
The annual revenue, total assets, and number of employees for the immediate past two financial years must not exceed the maximum threshold specified for the respective corresponding phase.
In conclusion, the Audit exemption reduces compliance costs and administrative burden, enabling SMEs to focus resources on growth while maintaining financial accountability through submission of unaudited but compliant financial statements.
𝐕𝐢𝐬𝐢𝐭 𝐮𝐬
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