The Companies Act 2016 governs the audit requirements for businesses incorporated in Malaysia. Under this law, most companies are required to prepare and submit audited financial statements annually. The law aims to ensure financial transparency, proper governance, and accountability to stakeholders.
- Mandatory Appointment of Auditors
Section 267 of the Companies Act 2016 stipulates that every company must appoint at least one auditor who is approved by the Ministry of Finance and registered with the Malaysian Institute of Accountants (MIA). The appointment must be made within 30 days of incorporation or at least 30 days before the first annual general meeting (AGM).
- Annual Audit Obligation
All companies, except for certain exempt private companies, must prepare audited financial statements. These statements must be audited by an approved auditor who will issue an independent opinion on whether they present a true and fair view of the company’s financial performance and position.
- Exempt Private Companies
Some private companies may qualify for audit exemption if they meet the threshold criteria: total revenue of not more than RM100,00, total assets not exceeding RM300,000, and no more than 5 employees. However, this exemption is not automatic. The company must declare and apply for exemption annually, and the approval lies with the Companies Commission of Malaysia (SSM).
- Filing with SSM
Once the audited financial statements are approved by the board, they must be filed with SSM within 30 days from the date of the AGM. Non-compliance can result in fines or legal action against the company and its directors.
- Content of Financial Statements
Audited financial statements must comply with Malaysian Financial Reporting Standards (MFRS) or Private Entity Reporting Standards (PERS), depending on the type of company. The financials must include the auditor’s report, directors’ report, statement of financial position, profit and loss account, cash flow statement, and notes to the account.
- Role of the Auditor
The auditor’s responsibility is to express an opinion on the financial statements based on evidence and auditing standards. The auditor must be independent and free from any relationships that could impair their judgement.
At Jamal, Amin & Partners, we ensure that companies remain compliant with the Companies Act 2016 by providing reliable and efficient audit services. Our expert auditors help identify any gaps in internal controls, financial reporting, or regulatory adherence, ensuring timely and accurate filings.
In conclusion, the audit requirements under the Companies Act 2016 are comprehensive and mandatory for most companies. Understanding and fulfilling these obligations is crucial for business continuity, stakeholder confidence, and legal compliance.