Tax Relief and Exemption for Businesses in 2022
Auditing involves a comprehensive examination of an organization’s financial data and documents to ensure transparency and prevent fraud. Organizations should not be afraid of getting audited because transparent audits yield a variety of benefits for a company.
The legal requirements for audits related to different companies like private businesses, public companies, and non-profits vary for a variety of reasons.
Generally, the goal of an audit is to ensure compliance with legal rules and obtain sufficient financial information about the companies.
Professional audit firms in Malaysia can help companies go through audits easily and efficiently.
This post will help you get familiar with the audit process in Malaysia and what companies are required by Malaysian law to go through the audits.
What is an Audit?
An audit in Malaysia involves a thorough inspection of a company’s financial records and financial statements to obtain evidence about its dealings and financial disclosures.
The purpose of an audit is to get sufficient information that the auditor can use to determine whether the prepared financial statements are in accordance with the accounting standards and financial reporting framework.
Which Companies Require Auditing?
The Companies Act, 2016 of Malaysia makes it clear that every private limited company in Malaysia must go through an audit on an annular basis, regardless of the size of the company.
However, a business registered as a sole proprietor or partnership in Malaysia can claim audit exemption.
It is also important to note that the Companies Act 2016 does not require private companies to hold an Annual General Meeting.
As a result, important procedures like electing the auditors and submitting the audited annual returns are dealt with separately now. However, public companies are still required to hold an Annual General Meeting.
Generally, foreign investors should be using the services of professional audit firms in Malaysia to ensure they can keep up with the latest requirements and ensure compliance with the regulations.
Audit Exemptions
Malaysian law also provides exemptions from audits in certain situations. For example, a company that has been dormant from the time of incorporation or from the current accounting year qualifies for audit exemption.
Similarly, a zero-revenue company that has not made any revenue in the current financial year can also claim audit exemption.
Other companies that meet the following requirements can qualify for audit exemption:
The company has a revenue of less than RM100,000 during the current accounting year and in the first two accounting years.
The total assets of the company are not more than RM300,000 in the last two financial years.
Hiring an Approved Auditor
According to Malaysian legislation, a company’s yearly audit must also be completed by an authorized corporate auditor. In Malaysia, an authorized auditor is someone who has been approved by the Ministry of Finance.
The Ministry may approve a person as a company auditor in Malaysia if he is satisfied that the individual is of good character and capable of performing his responsibilities as a business auditor.
The Ministry will provide authorized auditors in Malaysia with an audit license that is renewed every two years.
To be accepted as a corporate auditor in Malaysia, the candidate must be a member of the Malaysian Institute of Accountants (MIA), have a recognized academic or professional certification, and have appropriate professional experience.
The authorized corporate auditor auditing the Malaysian company must also be external or independent. Because they are not hired by the organization being audited, these auditors are referred to as external.
In Malaysia, a partnership firm of auditors may be designated as the company’s auditors.
In practice, the majority of auditor appointments in Malaysia are made in the name of the audit company. In Malaysia, every partner of an audit firm must be a certified business auditor.
Due to these requirements, it is always a good idea for companies to hire professional services from an audit firm in Malaysia.
You will not have to worry about the changing legal requirements by relying on the experts, as they will take care of these important measures and implement the best audit and accounting standards.
All In All
The bottom line is that both accounting and auditing hold great significance in the success of a company and compliance with the law.
By hiring accounting services in Malaysia and relying on audit firms, companies can maintain maximum transparency so that reliable financial statements are being produced and distributed to the investors and concerned parties.
Ultimately, these factors contribute to the success of the organizations by preventing fraud.
