Beyond Compliance: The Social and Economic Impact of Audit Exemption

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The proposal to revise the audit exemption criteria for private companies in Malaysia has sparked a significant debate among stakeholders.

The Companies Commission of Malaysia (SSM) initiated a consultative process to gather feedback.

This article aims to discuss the implications of the proposed changes, focusing on the perspectives of various stakeholders and the broader impact on the accounting profession and the economy.

Reduction of Business Costs

One of the primary arguments in favour of increasing the threshold for audit exemption is the potential reduction in the cost of doing business.

Proponents believe this change would benefit Small and Medium Enterprises (SMEs) by alleviating financial burdens and encouraging their growth.

However, this perspective overlooks the essential role of audit fees as part of a company’s operational costs.

Arguably, suppose a business cannot sustain the costs necessary for its operation, including audit fees. In that case, it may need to reassess its viability rather than seek exemptions that could compromise financial transparency and accountability.

Impact on the Accounting Profession

Some have argued that raising the audit threshold would eliminate bogus accountants or auditors.

However, the claim that audit exemptions can eliminate bogus accountants or auditors is fundamentally flawed.

The analogy of not eating at home to avoid cockroaches, only to starve, aptly illustrates the counterproductivity of such a rationale.

Increasing the audit threshold could indeed have a detrimental effect on the accounting and auditing industry.

With a significant portion of SMEs potentially exempt from auditing, small and medium-sized practices could see a drastic reduction in revenue, leading to job losses and a contraction in the professional market.

This scenario could force professionals to seek alternative employment or lower their service prices to unsustainable levels, ultimately harming the industry’s integrity and viability.

Social and Economic Implications

Audit firms play a crucial role in the economic ecosystem, not only by employing accounting graduates but also by contributing to the country’s Environmental, Social, and Governance (ESG) goals.

The starting salaries offered by audit firms are competitive, especially when compared to other sectors struggling to offer minimum wages to fresh graduates.

Reducing the demand for audited financial statements could, therefore, have broader social and economic repercussions, including diminished employment opportunities for accounting professionals and a potential decrease in the quality of financial reporting.

The Value of Auditing to SMEs

The core issue at hand is whether auditing provides tangible value to SMEs.

While reducing the cost of doing business and addressing the presence of unqualified practitioners are concerns that might compromise the integrity of financial reporting, the real question should be centred on the value auditing brings to SMEs.

Auditing is not merely a compliance exercise; it provides assurance of the accuracy of financial statements, identifies areas for improvement in financial controls, and enhances the credibility of the business in the eyes of investors, lenders, and other stakeholders.

Therefore, the debate should shift towards enhancing the audit process to ensure it delivers tangible benefits to SMEs rather than diluting its significance through broader exemptions.


1. Enhanced Communication and Education: Regulatory bodies and professional associations must educate SMEs on the benefits of auditing beyond compliance. This highlights how audits can provide valuable insights into business operations and financial health.

2. Flexible Audit Framework: Consideration should be given to developing a more flexible, cost-effective audit framework that provides the necessary assurance for SMEs. This could include scaled-down audits or review engagements that are less intensive than full audits but still offer a level of assurance.

3. Monitoring and Enforcement: SSM and professional bodies should strengthen their monitoring and enforcement mechanisms to address concerns about unqualified practitioners. This includes ensuring that only qualified accountants perform audits or review engagements, thereby maintaining the profession’s integrity and protecting businesses from potential harm.

4. Staged Implementation of Audit Exemption Threshold: It is recommended to implement the new audit exemption threshold of RM3,000,000 in stages, similar to the approach taken for the e-invoicing system in Malaysia.

This phased approach would allow Small and Medium Practices (SMPs) to be well-informed about the implementation timeline, enabling them to plan effectively in terms of manpower and explore potential mergers and acquisitions to adapt to the changing landscape.

A clear, staged implementation plan would ensure a smoother transition for all stakeholders involved, minimizing disruptions while maintaining the integrity and quality of financial reporting.


While the proposal to increase the threshold for audit exemption aims to reduce the cost of doing business for SMEs, it is essential to consider the broader implications on the accounting profession and the overall economy.

Auditing plays a critical role in ensuring financial transparency and accountability, which are foundational to a healthy business environment. Therefore, any adjustments to the audit exemption criteria should be carefully balanced to support SME growth without compromising the quality of financial reporting and the integrity of the audit profession.

In conclusion, while we recognise and support the rationale behind the proposed audit exemption policy by the Companies Commission of Malaysia (SSM) as a means to alleviate financial burdens on smaller businesses and align Malaysia’s practices with international standards, it is imperative that SSM does not overlook the broader implications, particularly the Environmental, Social, and Governance (ESG) impact of such a policy.

The audit profession plays a crucial role in upholding not only financial integrity but also in contributing significantly to the social aspect of ESG.

Audit firms, especially Small and Medium Practices (SMPs), are vital in nurturing the next generation of accounting professionals.

They provide essential training and employment opportunities to accounting graduates, offering them a platform to develop their skills and contribute meaningfully to the economy.

The proposed exemption could potentially reduce these opportunities, impacting the professional growth and livelihood of many aspiring accountants. This is not just about numbers on a balance sheet; it’s about the futures of young professionals and the ethical backbone of our financial systems.

Moreover, audits serve as a mechanism to ensure businesses are accountable not only in financial terms but also in their commitment to sustainable and ethical practices.

In an era where consumers and investors are increasingly making decisions based on ESG criteria, the role of audits in verifying and reinforcing these commitments cannot be understated. Reducing the scope of mandatory audits could inadvertently diminish the emphasis on these crucial aspects, potentially eroding trust and transparency in the business ecosystem.

Therefore, while we agree with the principle of making business operations more efficient and cost-effective through the audit exemption policy, SSM must carefully consider the broader ESG implications.

The policy should be implemented in a manner that continues to support the development of accounting professionals and maintains the high standards of corporate governance and accountability that are essential for sustainable economic growth. It is not merely a question of regulatory compliance but of nurturing a business environment that values transparency, integrity, and social responsibility at its core.

超越合规: 审计豁免的社会和经济影响



马来西亚公司委员会 (SSM) 启动了咨询程序,以收集反馈意见。








有的人这么说:提高审计门槛可以杜绝假会计师或假审计师。 然而,审计豁免可以杜绝假会计师或假审计师的说法存在根本性缺陷。






审计公司在经济生态系统中发挥着至关重要的作用,不仅为会计专业毕业生提供就业机会,还为国家的环境、社会和治理 (ESG) 目标做出贡献。









1. 加强沟通和教育: 监管机构和专业协会必须向中小型企业宣传审计在合规性之外的益处。这将强调审计如何为企业运营和财务健康提供有价值的见解。

2. 灵活的审计框架: 应考虑制定更灵活、更具成本效益的审计框架,为中小企业提供必要的保证。这可以包括缩减审计或审查工作的规模,这些工作的强度低于全面审计,但仍能提供一定程度的保证。

3. 监督与执行: SSM 和专业机构应加强其监督和执行机制,以解决对无资质从业人员的担忧。这包括确保只有合格的会计师才能执行审计或审查业务,从而维护行业诚信,保护企业免受潜在损害。

4. 分阶段实施审计豁免门槛: 建议分阶段实施新的 300 万令吉审计豁免门槛,类似于马来西亚电子发票系统的做法。













因此,虽然我们同意通过审计豁免政策提高企业运营效率和成本效益的原则,但 SSM 必须仔细考虑更广泛的 ESG 影响。


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