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AUDIT EXEMPTION (AE):DOES THE COMPANY NEED AN AUDIT?

This article is for general information only, and should not be used as a substitute for professional advice, nor as a basis for any business decision or action taken (or not taken).

MIA shall not be liable for any loss, damage or costs howsoever arising, as a result of any person acting on reliance of the article, or arising out of any omission from it.

*Malaysian Accounting Standards Board

Is the company a private entity as defined

by the MASB*?AUDIT REQUIRED

Does the company qualify as dormant under Para. 7 of the Practice Directive

(PD) 3/2017 (Note 1)?

Does the company qualify as zero-revenue companies

under Para. 9 of the PD 3/2017 (Note 3)?

Does the company qualify as threshold-qualified

companies under Para. 10 of the PD 3/2017 (Note 5)?

Does the company meet the requirements of Para. 6

of PD 3/2017 (Note 2)?

Does the company meet all the requirements of Para. 8

of PD 3/2017 (Note 4)?

QUALIFY FOR AUDIT EXEMPTION

(Note 6)

QUALIFY FOR AUDIT EXEMPTION

(Note 6)

Criteria for Exemption

Additional Requirement

NO

NO

NO

NO

NO NO

YES

YES

YES

YES YES

YES

NOTE 1

Para. 7(a): A company is dormant in a financial year if the company does not carry on business and there is no accounting transaction occurred.

Para. 7(b): “Accounting transaction” means a transaction, accounting or other records of which is required to be kept under Section 245(1) of the Companies Act 2016, excluding a transaction arising from any obligations that the company is required to abide by any laws to pay and its related costs to comply.

NOTE 2

Para. 6: …the company is qualified for audit exemption if –

a) It has been dormant from the time of its incorporation; or

b) It is dormant throughout the current financial year and in the immediate preceding financial year.

NOTE 3

Para. 9(a) “Revenue” does not include credit entries for reversal of accounting entries arising from earlier entries, accounting entries related to taxation, reversal of provisions made earlier and gain on derecognition of property, plant, equipment and investment property in the Statement of Comprehensive Income;

Para. 9(b) A company ceases to be active where there are revenue received or receivable; and

Para. 9(c) Any expenses incurred in maintaining the company is disregarded.

NOTE 4

Para. 8: …the company is qualified for audit exemption if –

a) It does not have any revenue during the current financial year;

b) It does not have any revenue in the immediate past two financial years; and

c) 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.

NOTE 5

Para. 10: …the company is qualified for audit exemption if –

a) It has revenue not exceeding RM100,000 during the current financial year and in the immediate past two financial years;

b) Its total assets in the current Statement of Financial Position does not exceed RM300,000 and in the immediate past two financial years; and

c) It has, at the end of its current financial year and in each of its immediate past two financial years end, not more than five employees.

NOTE 6

Effective date:

CompaniesIncorporation

Date

AE on financial statements with annual

periods commencing on or after

Dormant

On or after 31 January 2017

31 January 2017

On or before 30 January 2017

1 September 2017

Zero-revenue Companies

1 January 2018

Threshold-qualified Companies

1 July 2018