Audit Exemption for Private Companies
How is a company can be exempted from audit ? Are there any categories to get an audit exemption ? Let’s see below!
By AZIZAM AZIZAN
On 4 August 2017, the Companies Commission of Malaysia (SSM) brought into action audit exemption for certain categories of private companies. An auditor shall not be required to be appointed in order to prepare and audit financial statements if the company fulfil the criteria given.
Companies opting for audit exemption must provide a complete collection of unaudited financial statements, as well as a declaration stating that the company qualifies for audit exemption and that no request for an audit has been received from its shareholders for a specific year.
Categories of private companies qualify for audit exemption as stipulated by SSM:
- Dormant company
A private entity which has been dormant from time of its incorporation or throughout the current financial year and in the immediate preceding financial year. A dormant company does not carry on any business and there is no accounting transaction occurred.
- Zero-revenue company
A private entity which does not have any revenue during the current financial year; does not have any revenue in the immediate past two financial years and its total assets in the current Statement of Financial Position (FS) does not exceed RM300,000 as well as in the FS of the immediate past two financial years.
- Threshold-qualified company
A private entity which its revenue does not exceed RM100,000 during the current financial year and in the immediate past two financial years; its total assets in the current FS does not exceed RM300,000 and in the immediate past two financial years and which has not more than five employees at the end of its current financial year and in each of its immediate past two financial years end.
The Registrar’s requirements for exempting audit were focused on approaches that included a combination of both economic structure and scale of leading jurisdictions that have successfully introduced audit exemption policies, as well as SSM’s four-month consultation that ended on February 28, 2017. More than 65 percent of stakeholders agreed with the audit exemptions plan, according to feedback from stakeholders, which included 61 percent audit/accounting/related technical firms and 39 percent from the general public.