Malaysia recently introduced a new audit threshold, which officially comes into effect in 2025. This marks a significant change in compliance requirements for small businesses across the country. As a business owner, staying updated on these changes is crucial to managing your financial reporting effectively.
What Is the New Audit Threshold?
The new threshold is designed to reduce compliance burdens for smaller companies, allowing them to qualify for audit exemptions under certain conditions. A company may now be exempt from mandatory audits if it meets two out of three criteria for two consecutive financial years:
• Revenue Threshold: Annual revenue does not exceed RM1 million.
• Assets Threshold: Total assets do not exceed RM1 million.
• Employee Threshold: The company has no more than 10 employees.
This change reflects Malaysia’s ongoing commitment to supporting small and medium-sized enterprises (SMEs) by lowering administrative costs.
Why Does This Matter?
1. Immediate Savings on Compliance Costs
Eligible businesses can now save on audit fees, which were previously required for all companies, regardless of their size. This reduction allows smaller companies to redirect funds toward growth and other business priorities.
2. Ongoing Financial Accountability
While audits may no longer be mandatory for qualifying companies, directors are still required to prepare accurate financial statements in compliance with approved accounting standards. Failing to do so can lead to legal consequences.
3. Future Growth Considerations
Companies that are growing or nearing the audit thresholds should prepare for reintroducing audits into their compliance processes as they scale up.
What Should Businesses Do Next?
• Evaluate Your Eligibility: Determine if your company meets at least two of the three criteria over the last two financial years.
• Engage Your Company Secretary: A professional company secretary can help ensure your financial statements remain compliant even without an audit.
• Think Strategically: Even if not required, consider voluntary audits to boost stakeholder confidence and improve access to funding or partnerships.
Final Thoughts
The new audit threshold is a game-changer for many small businesses in Malaysia, but it requires careful planning to ensure compliance. With this regulation still in its early days, it’s essential to stay informed and consult with experts.
At Ashton, we specialize in helping businesses navigate regulatory changes like this. Reach out to us today to learn how we can support you in adapting to these new requirements while keeping your business on track for success. Call or WhatsApp us at 016 324 0990.
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