1.   NEW QUALIFYING CRITERIA FOR AUDIT EXEMPTION

Starting from 1 January 2025, a private company qualifies for audit exemption if it fulfils ANY TWO (2) of the following criteria:

• Threshold-qualified companies

Criteria	Preceding 2 F/Ys	Current F/Y
Revenue	≤ RM3 million	≤ RM3 million
Total Assets	≤ RM3 million	≤ RM3 million
No. of employees	≤ 30	≤ 30

To ensure a smooth transition to the new regime, the threshold criteria for audit exemption will be introduced in phases over a three (3) year period. The implementation details are as follows:

Year	2025 (Phase 1)	2026 (Phase 2)	2027 (Phase 3)
Financial period	Commencing on or after 1.1.2025 until 31.12.2025	Commencing on or after 1.1.2026 until 31.12.2026	Commencing on or after 1.1.2027 until 31.12.2027
Submission year	Beginning from 1.1.2026	Beginning from 1.1.2027	Beginning from 1.1.2028
Thresholds:
Revenue	≤ RM1 million	≤ RM2 million	≤ RM3 million
Assets	≤ RM1 million	≤ RM2 million	≤ RM3 million
No. of Employees	≤ 10	≤ 20	≤ 30

Note: The annual revenue, total assets, and number of employees for the immediate past two (2) financial years must not exceed the maximum threshold specified for the respective corresponding phase.

 

              SCENARIO 1: A Sdn. Bhd. financial year commences from 1 Jan to 31 Dec of the respective years:

Financial year	1.1.2022 – 31.12.2022	1.1.2023 – 31.12.2023	1.1.2024 - 31.12.2024	1.1.2025 - 31.12.2025
Revenue (RM)	80,000	90,000	100,000	200,000
Total Assets (RM)	80,000	80,000	150,000	500,000
No. of Employees	3	3	3	5
Qualify for audit exemption?	Yes, under old regime	Yes, under old regime	Yes, under old regime	Yes, under new regime

 

SCENARIO 2:  B Sdn. Bhd. financial year from 1 Oct to 30 Sept of the respective years:

Financial year	1.10.2022 – 30.9.2023	1.10.2023 – 30.9.2024	1.10.2024 – 30.9.2025	1.10.2025- 30.9.2026
Revenue (RM)	120,000	150,000	200,000	300,000
Total Assets (RM)	500,000	500,000	500,000	500,000
No. of Employees	5	5	5	5
Qualify for audit exemption?	No, under old regime	No, under old regime	No, under old regime	Yes, under new regime

 

              SCENARIO 3: C Sdn Bhd financial year from 1 Apr to 31 Mac of the respective years:

Financial Year	1.4.21 – 31.3.22	1.4.22 – 31.3.23	1.4.23 - 31.3.24	1.4.24 - 31.3.25	1.4.25 – 31.3.25
Revenue (RM)	90,000	95,000	100,000	120,000	500,000
Total Assets (RM)	80,000	80,000	80,000	500,000	500,000
No. of Employees	3	3	3	3	3
Qualify for audit exemption?	Yes, under old regime	Yes, under old regime	Yes, under old regime	No, under old regime	Yes, under new regime

 

SCENARIO 4: D Sdn Bhd financial year from 1 Jul to 30 Jun of the respective years:

Financial Year	1.7.22 – 30.6.23	1.7.23 – 30.6.24	1.7.24 - 30.6.25	1.7.25 - 30.6.26	1.7.26 – 30.6.27
Revenue (RM)	3,200,000	2,000,000	1,000,000	1,000,000	1,500,000
Total Assets (RM)	3,500,000	3,500,000	3,000,000	3,000,000	3,000,000
No. of Employees	10	10	10	10	10
Qualify for audit exemption?	No, under old regime	No, under old regime	No, under old regime	No, under new regime. Because it  meets the criteria for current year but not for the preceding 2 F/Ys	Yes, under new regime -Phase 2 Because it meets the criteria for current year and preceding 2 F/Ys

 

SCENARIO 5: E Sdn Bhd financial year from 1 Jan to 31 Dec of the respective years:

Financial Year	1.1.23 – 31.12.23	1.1.24 – 31.12.24	1.1.25 - 31.12.25	1.1.26 - 31.12.26	1.1.27 – 31.12.27
Revenue (RM)	4,500,000	3,500,000	3,000,000	2,500,000	2,000,000
Total Assets (RM)	3,500,000	3,500,000	3,000,000	3,000,000	3,000,000
No. of Employees	40	30	25	30	10
Qualify for audit exemption?	No, under old regime	No, under old regime	No, under new regime	No, under new regime-Phase 1 & 2.	Yes, under new regime -Phase 3 Because it meets the criteria for current year and preceding 2 F/Ys

             

              Other Conditions

Dormant companies will continue to be exempted from audit requirements

A dormant company is a private entity defined by the Malaysian Accounting Standards Board (“MASB”) as a company that: -

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

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

A company is dormant in a financial year if the company does not carry on business and no accounting transactions have occurred.

 

Non-Application

             The audit exemption will NOT apply to:

              a. Exempt private companies which have opted to lodge a certificate of an exempt private company

                 (EPC) to the Registrar pursuant to section 260 of the CA 2016;

             b. Public companies (both listed and non-listed);

             c. Private companies that are subsidiaries of public companies; and 

               d. Foreign companies.

 

2.    MANDATORY IMPLEMENTATION OF MALAYSIAN BUSINESS REPORTING SYSTEM (MBRS 2.0) BY COMPANIES COMMISSION OF MALAYSIA (SSM)

Following the launch of the MBRS 2.0 on 25 September 2024, the SSM will make the submission of the following documents and applications mandatory via the MBRS 2.0 in phases.

Companies must use the XBRL format for submissions of financial statements (“FS”). The system will be fully mandatory by 1 June 2025. Therefore, companies are advised to coordinate with their auditors or accountants to ensure the XBRL file is prepared for FS submission.

Phase 1 1 December 2024	Phase 2 1 March 2025	Phase 3 1 June 2025
Annual Returns (“AR”) CA2016; Unaudited Financial Statement and Report (“UFS”) CA2016; Certification for Exempt Private Companies (“EPC”) CA2016; Application & submission of Rectification/Court Order for AR and UFS CA2016; and Extension of Time for AR, UFS & EPC CA2016.	AR CA1965; Audited Financial Statement (“AFS”) CA1965; EPC CA1965; AFS for Financial Institutions regulated by Bank Negara Malaysia (BNM) CA1965 & CA2016; Statutory Declarations and AFS from Head Office for Foreign Companies under CA1965 & CA2016; and Application & submission of Rectification/Court Order for AR and AFS CA1965.	AFS CA2016; Application & submission of Rectification/Court Order for AFS CA2016; and All applications relating to extension or exemption of AFS CA2016.

Stay tune for our upcoming update!

References

1. Practice Directive No. 10/2024

https://www.ssm.com.my/Pages/Legal_Framework/Document/PD10-2024-Qualifying-Criteria-for-Audit-Exemption-for-Certain-Categories-of-Private-Companies.pdf

2. SSM Audit Exemption FAQS

https://www.ssm.com.my/Pages/Legal_Framework/Document/PART%20Q%20LATEST.pdf

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