Understanding Audit Exemption in Malaysia: New Criteria

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Audit exemption in Malaysia allows certain private companies not to have their financial statements audited annually.

Here is an overview:

  • Audit exemption is voluntary for eligible private companies in Malaysia. It exempts them to get their financial statements audited each year.
  • It aims to reduce regulatory compliance costs and administrative burdens for smaller companies that meet certain criteria related to their size and complexity.
  • The current criteria are based on the following companies:
    • being dormant,
    • having zero revenue, or
    • meeting thresholds for annual revenue, total assets, and number of employees.
  • Companies fulfilling the criteria can get audit exemption. However, their financial statements will still need to be prepared and submitted annually.
  • Certain types of companies, like publicly listed companies and subsidiaries of public companies, do not qualify for audit exemption.
  • The criteria and thresholds are reviewed over time to keep them relevant. SSM has issued this consultative document proposing revised criteria and higher thresholds to enable more SMEs to qualify for exemption.

So, in essence, audit exemption allows eligible private companies in Malaysia to skip the statutory audit requirement to ease their regulatory compliance burden. It is time to review the current framework. The Companies Commission of Malaysia (SSM) has recently published this consultative document to propose new audit exemption criteria for private companies and seek public feedback by 8 March 2024.

The objective is to review and revise the current criteria to reduce regulatory burden while ensuring financial accountability.

The current criteria based on dormant, zero-revenue, and threshold-qualified companies will be replaced with criteria based on annual turnover, assets, and number of employees.

The thresholds will be increased as follows:

  1. Annual turnover and assets below RM3 million for the current and past 2 financial years
  2. Not more than 30 employees at the end of current and past 2 financial years
  3. Fulfilling any 2 out of the 3 criteria

The revised criteria aim to align with international practices, provide more opportunities for audit exemption to SMEs, address shortage of auditors, and balance between business reliefs and financial governance.


The proposed new audit exemption criteria intends to facilitate business growth while upholding accountability standards. SSM welcomes public feedback on the proposal by 8 March 2024 to develop an optimal solution. Companies Commission of Malaysia (SSM) is now inviting comments on the questions as set out in this Consultative Document on the Proposal of the New Audit Exemption Criteria for Private Companies in Malaysia.

Please provide your name and the organisation you represent (where applicable) together with your comments. SSM welcomes comments to be submitted by email by 8 March 2024 to [email protected].

We encourage readers to download this consultative document for full context on the proposal to revise Malaysia’s audit exemption criteria by clicking the attachment below:-

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