A statutory audit is a legally mandated review of the accuracy of a company’s financial statements and records. In Malaysia, statutory audits are primarily governed by the Companies Act 2016, which requires most companies, particularly private limited (Sdn Bhd) and public companies, to submit audited financial statements annually to the Companies Commission of Malaysia (SSM).
The core purpose of a statutory audit is to express an independent opinion on whether a company’s financial statements provide a true and fair view of its financial performance and position. This process involves verifying financial transactions, assessing internal controls, and ensuring compliance with Malaysian Financial Reporting Standard (MFRS) or Private Entity Reporting Standards (PERS).
The benefits of statutory audits go beyond regulatory compliance. These audits help instill trust among shareholders, creditors, investors and other stakeholders. When financial reports are independently verified, they carry more credibility, making it easier for the company to attract funding or secure loans.
Additionally, statutory audits help detect discrepancies, fraud, or errors in financial reporting. Even if no fraud is found, the audit process can uncover inefficiencies or weaknesses in accounting systems and internal controls. The recommendations provided by the auditors can be invaluable for improving operational processes and reducing financial risk.
Statutory audits also provide assurance to tax authorities, such as the Inland Revenue Board (LHDN), that a company’s reported income and expenses are accurate. This can reduce the likelihood of tax audits or disputes and enhance the company’s reputation as a compliant taxpayer.
In conclusion, the purpose of a statutory audit is not just legal compliance, it is a fundamental part of good corporate governance. At Jamal, Amin & Partners, our audit professionals conduct statutory audits with thoroughness and integrity, helping companies meet their obligations while building a foundation of financial transparency and trust.