On 4 August 2017, the Companies Commission of Malaysia has issued a practice directive no 3 entitle “Qualifying Criteria for Audit Exemption for Certain Categories of Private Companies”. The directive set out the category of Company and its criteria toward the eligibility for audit exemption. The Category are:
Based on the staggered commencement date the Company will be exempt from audit effective from 1 January 2018.
The qualification for threshold-qualified companies:-
The Company must meet all qualification based on the current financial statement and the immediate past two financial year.
The Company must audited its financial statement if there is a request from members eligible to vote holding in aggregate of not less than 5% of the total number of shares issues. The request must be submitted in writing not later the one month before that end of that financial year.
However, the company exempted from audit must lodge it unaudited financial statement that comply with the approved accounting standard. The financial statement must also include directors’ report, statement by directors and statutory declaration pursuant to sections 251 and 252 of the Companies Act 2016.
A certificate signed by a director certifying that:-
The audit exemption is the main concern of Approved Company Auditors in Malaysia. However changes have created new services from assurance to compilation work. This will relieve the auditor to comply with rigid audit procedure and risk at a small fees. Most small companies are auditors dependent in preparing their financial statement, so there is no reduction in revenue.