New Qualifying Criteria for Audit Exemption (Issue 2 of 4)
Understanding the New Qualifying Criteria
Under the new rules, private companies can be exempted from the requirement if they meet any 2 of the following 3 criteria for the current financial year and the immediate past two financial years:
- Annual Income: The company’s annual income does not exceed RM3,000,000.
- Total Assets: The total assets of the company must not exceed RM3,000,000.
- Number of Employees: The company employs 30 or fewer employees.
It is important to note that while the criteria make it easier for certain small businesses to avoid the additional costs of audits, they are not automatically exempted.
Eligibility for Audit Exemption
There are certain companies that do not qualify for the audit exemption, including:
- Subsidiaries of public companies: These companies are still required to appoint auditors regardless of their size.
- Foreign companies: Companies incorporated outside Malaysia do not qualify for this exemption.
- Exempt private companies: Companies that are classified as exempt private companies and have filed a certificate relating to their exempt status are also excluded.
- Dormant companies: While companies that have been dormant (i.e., not conducting any business or operations) can qualify for audit exemption, certain requirements for dormant companies are also laid out in the regulations.
If a company ceases to meet the qualifying criteria, it will lose its audit exemption status. However, the company will remain exempt for the financial years it was eligible for, ensuring that the exemption applies only for the period in which the company met the criteria.
Stay tune for the upcoming newsletter, we will share with you more on New Qualifying Criteria for Audit Exemption.
