The Companies Commission of Malaysia (CCM) has introduced significant updates to the audit exemption criteria for private companies, effective from 1 January 2025. These changes aim to streamline business operations for smaller companies while ensuring that financial transparency and accountability remain intact.
What’s Changed?
Under the new framework, private companies in Malaysia may qualify for an audit exemption if they meet at least two of the following conditions for both the current and preceding two financial years:
- Annual Revenue: The company’s revenue must not exceed RM3,000,000.
- Total Assets: The company’s total assets must not exceed RM3,000,000.
- Number of Employees: The company must have no more than 30 employees.
These criteria provide significant relief for small businesses that may otherwise find it burdensome to engage in full-scale audits. However, it’s important to note that the audit exemption applies only to private companies that are considered “small” under these thresholds, and businesses that exceed these limits will still be required to undergo a full audit.
Phased Implementation
While these changes officially take effect from January 1, 2025, companies will have a transitional period to adjust. The phased implementation is set to end by January 1, 2027. By this date, all qualifying companies must comply with the new criteria, ensuring that businesses have adequate time to understand the implications and make necessary adjustments to their operations and financial reporting practices.
Additional Requirements
Although the audit exemption allows for reduced financial scrutiny, qualifying companies will still be required to submit unaudited financial statements and directors’ reports in compliance with the Companies Act 2016. These reports must reflect the true and fair view of the company’s financial position and must be submitted annually to the Companies Commission.
It’s also important to note that certain types of companies, such as those involved in regulated industries or holding public funds, may not qualify for the audit exemption, even if they meet the size thresholds.
How This Affects Your Business
The introduction of these audit exemption criteria is part of Malaysia’s broader efforts to reduce the regulatory burden on small businesses and promote entrepreneurship. By easing the requirement for annual audits, companies that qualify can save on both time and costs associated with audit processes. This will allow small businesses to reinvest those resources into growing their operations, improving efficiency, or enhancing product and service offerings.
How Iconomy Corporate Can Help
At Iconomy Corporate, we understand the importance of staying compliant with ever-evolving regulations. As part of our commitment to offering comprehensive business solutions, we also provide company formation and corporate services through our Malaysian arm, Iconomy Malaysia Sdn. Bhd..
Whether you’re looking to set up a new business in Malaysia or ensure compliance with the latest audit exemption criteria, our team at Iconomy Malaysia is here to guide you every step of the way. From handling financial statement submissions to ensuring your company remains in good standing with local authorities, we offer tailored solutions to meet the unique needs of small businesses.
How to Stay Compliant
With the introduction of these new audit exemptions, it’s crucial for companies to evaluate their eligibility and ensure they comply with the new requirements by 2027. At Iconomy Malaysia Sdn. Bhd., we provide the necessary guidance to ensure your business can take full advantage of the audit exemption while remaining compliant with local law.
Reach out to Iconomy Malaysia today to learn more about the audit exemption criteria and how our expert services can help streamline your business operations in Malaysia.